The Office of Rail and Road has now revealed its final determination for Network Rail‘s plans to deliver a safe and customer-focused railway across Great Britain. The plan will see a total investment of £43.1 billion, which will see £38.5 billion invested in England and Wales and £4.6bn invested in Scotland. The programme will get underway on the 1st of April 2024 and will take place over a five-year period called Control Period 7 (CP7).

Network Rail has altered its plans since ORR’s draft determination back in June, such as the increased spending on core rail infrastructure of £600 million, which will support asset sustainability, safety and performance.

The key points of ORR’s final determination are:

Train performance:

• The setting of specific train performance targets by ORR will support the interests of both passengers and freight. The targets will be more demanding than those initially set out by Network Rail, however, are attainable.
• In order to achieve the targets, Network Rail will need to work with rail operators in order to see that cancellations are reduced and punctuality is met despite any increases in passenger numbers.
• ORR understands that the accurate forecasting of train performance is challenging at present and therefore will reassess its passenger train performance targets for England and Wales prior to year three of Control Period 7.
• During this two-year period, rail operators will work with Network Rail in order to better develop planning processes.

Freight growth:

• Appropriately challenging targets have been set by ORR for what Network Rail delivers for freight operators and will see Network Rail required to cut freight cancellations from present levels.
• ORR has also set rail freight growth targets of 7.5% for England and Wales and 8.7% for Scotland. which will be fully supported by Network Rail. In order to achieve this, ORR will champion Network Rail’s plans to upgrade structures in order to support freight, alongside ongoing work with the industry, to support the conditions required to achieve these targets.
• Capping track access charges for freight operators below cost is also being continued by ORR.

Renewing the railway:

• The Office of Rail and Road is delighted with Network Rail’s plans to increase spending on renewal of core assets such as track, structures and earthworks. This investment will support ORR’s concerns raised in the draft determination and will strengthen asset sustainability, safety and performance, especially in the difficulties created by climate change.
• ORR feels that Network Rail’s framework, to understand and manage the potential change in risk created by undertaking fewer renewals in order to move to greater maintenance of current assets, is suitable.

Managing risks effectively:

• Network Rail’s plans have been shaped under significant uncertainty, as have ORR’s plans to review them. Examples of uncertainty include rising inflation, leading to increased financial challenges and climate change, which clearly lay out the importance of effective risk management and risk funding.
• Network Rail is required to maintain well-managed levels of risk funding set out by ORR of £1.5 billion for England and Wales and £225 million for Scotland.

Delivering value for money:

• Network Rail’s plans have been created under a tight fiscal context and this has been recognised by ORR which believes it is essential that Network Rail continues in the vein of its successful efficiency initiatives in order to create a financially sustainable railway, providing value for passengers, freight and those funding the railway.
• A thorough review of Network Rail’s efficiency targets has been carried out by ORR with targets laid out for the next five years.
• The targets have been created based on an array of evidence that ORR believes will be challenging yet attainable and would see Network Rail provide efficiencies of at least £3.2 billion in England and Wales and £0.4 billion in Scotland.

Protecting the environment:

• ORR will hold Network Rail accountable for providing a reduction of over 20% in carbon emissions as part of a move towards a low-emissions railway.
• ORR has also set Network Rail a target in regard to the conservation and enhancement of biodiversity.

Will Godfrey, Director, Economics, Finance and Markets at ORR said:

“I’m pleased to see that Network Rail has responded well to our challenges to its initial plans, and the result is more robust and customer-focused plans which we believe will deliver better outcomes for passengers and freight.”

“The plans are challenging but achievable. Our five-year funding and regulatory settlement provides stability and a platform for the industry to plan and invest. This is important not just for Network Rail, but also for passenger and freight operators and the supply chain.”

“Network Rail must now set out how it will deliver on our final determination.”