Regulator approves £12.2bn of rail investment

The rail regulator has given the green light to £12.2bn of capital investment in the country’s rail infrastructure over the next five years.

In a draft determination on Network Rail’s spending and income plan for the period from April 2014 to April 2019 the Office of Rail Regulation approved a capital investment budget of £12.2bn – a slight reduction on the £12.4bn of spending Network Rail had put forward to the regulator in its proposed spending plan.

Around £3.7bn of the funding will be directed towards electrifying the railways; £3bn will be spent on Thameslink and Crossrail; and a further £1.2bn% will be spent on other specific upgrades such as improving freight capacity.

The ORR also approved £21.3bn of spending on operations, maintenance and renewal costs – but this was £2bn less than Network Rail had requested.

A spokesperson for Network Rail said: “A decision of this significance, which will be important not only for the railway’s four million daily passengers and freight users, but also the economic prosperity of the country and the future sustainability of the network, needs careful and detailed thought.

“There is no question that our railway needs to sustain the high levels of investment seen in recent years if we are to continue expanding the railway to provide for the ever growing numbers of passengers and trains.”

Alasdair Reisner, director of external affairs at the Civil Engineering Contractors Association, said he was “pleased” the regulator supported continued investment in rail.

He added: “The last decade has seen rapid escalation in the use of our railways, which has created a boom in construction on the network to meet growing demand. If we are to keep pace with this growing demand it is vital that Network Rail is supported to continue this investment.

“We believe the demands on efficiency will be deliverable, but will require co-ordinated effort and a continuation of Network Rail’s moves to improve its engagement with its supply chain to produce optimum results.”

Mark Cowlard, head of rail at EC Harris said: “Network Rail has, over recent control periods, been asked for, and provided, significant savings against its proposed levels of expenditure. The need to save a further £2bn over the next five years will be challenging but can be achieved through developing even closer relationships with their supply chain, and by looking at re-engineering processes to enable efficiency in planning and decision making.

“We should see the requested £2bn savings as a positive indicator that the ORR and Network Rail have, throughout the determination process, been working closely together and that it is a recognition of the efforts of the industry to date to provide savings and greater value for money.”