Network Rail is on course to meet its CP4 savings target, according to rail regulator the ORR.
In the past three years, Britain’s rail infrastructure owner has made efficiencies of £775 million and is set to meet the £1 billion a year savings target set by Sir Roy McNulty.
Transferring signalling to regional control centres and employing route managing directors to oversee regional maintenance programmes are two of the cost-saving initiatives that were highlighted by the Office of Rail Regulation’s report, which was published today (November 8).
ORR did, however, reduce Network Rail’s reported savings by £172 million after considering the organisation’s failure to meet punctuality and reliability targets.
ORR’s chief executive, Richard Price, said: “It is essential that the rail industry delivers significant improvements in value for money. Reducing the costs of Britain’s railways is vital to help ease the pressure on tax and fare payers and freight customers.
The railway’s popularity is a good thing that is to be welcomed but we, and our train operating company colleagues, cannot afford any complacency as there are yet more challenging targets ahead.
“We welcome the progress that Network Rail is making in improving its efficiency and that the company is currently on track to meet the stretching target we set for reducing its costs. However, we remain concerned about the company’s performance in line with regulatory targets, with serious problems still affecting punctuality on key services.
“Our assessment has been adjusted to reflect these shortfalls. We expect Network Rail to deliver improved performance and meet its targets by 2014, and will keep up the pressure on the company to do so.”
The McNulty Rail Value for Money report, which was published last year, estimated that the cost of running the UK rail network could be reduced by £2.5 billion and £3.5 billion per year by 2018-19, with 70 per cent of the savings coming from Network Rail efficiencies.
The report also set Network Rail the target of delivering a 21 per cent cost reduction by 2013-14 – a target that would require the organisation to save £1 billion a year up to the final year of CP4.
Paul Plummer, group strategy director at Network Rail, said: “We welcome today’s news from our regulator that we are meeting our targets for significantly reducing the cost of running Britain’s railway.
“Millions of pounds have been saved helping to reduce the railway’s cost for taxpayers and farepayers alike. This progress is being delivered while also maintaining high levels of safety, performance and investment and we’re determined to keep this momentum. That task is getting ever harder as growth and resulting congestion become more challenging to manage.
“The railway’s popularity is a good thing that is to be welcomed but we, and our train operating company colleagues, cannot afford any complacency as there are yet more challenging targets ahead.”
