LONDON, UK: The Office of Rail and Road (ORR) has today set out its Final Determination of Network Rail’s five-year, £43.1bn (£38.5bn in England and Wales, £4.6bn in Scotland) plans to deliver a safe and customer-focussed railway. The plans cover the five years from 1 April 2024, known as Control Period 7 (CP7).

Since the ORR’s draft determination in June, Network Rail has revised its plans, responding positively to ORR’s challenge in a number of areas.

This includes Network Rail increasing spending on core railway infrastructure by approximately £600 million to bolster asset sustainability, safety and performance. Network Rail has also agreed with the ORR’s proposal to focus on a variant of its plan which releases more funding for risk.

ORR’s decisions are set out in its final determination. The key points are:

Outcomes with a focus on train performance

ORR’s final determination sets specific train performance requirements that protect the interests of passengers and freight. The targets are more challenging than originally proposed by Network Rail but are realistic. Meeting these targets will require Network Rail to work with operators to ensure that cancellations are reduced and that trains run more punctually across Great Britain, as passenger numbers return following the pandemic.

ORR recognises the current challenges to accurately forecasting train performance and for this control period only, will reassess passenger train performance trajectories for England & Wales in advance of year three of CP7. This two year window creates an opportunity for train companies to work with Network Rail to better align planning processes.

ORR has set appropriately challenging trajectories for what Network Rail delivers for freight operators. Network Rail will be required to reduce freight cancellations from current levels and ORR has set a freight growth target at 7.5% for England and Wales and 8.7% for Scotland. ORR supports Network Rail’s plans to upgrade its structures to better support freight. ORR is also continuing to cap track access charges for freight operators below cost.

Renewing the railway

ORR welcomes Network Rail’s increase in spending on renewing core assets (such as track, structures and earthworks) by approximately £600 million (for the GB network). This addresses our concerns from the draft determination and we consider that Network Rail has a suitable framework to understand and manage the change in risk from carrying out fewer renewals and a move to greater maintenance of existing assets.

Managing risks effectively

Significant uncertainty has shaped the development of Network Rail’s plans and our review of them. For example, inflation has increased the financial challenges in the plan and climate change presents further uncertainty.

ORR requires Network Rail to maintain sufficient and well-managed levels of risk funding and therefore welcomes the company’s agreement to focus on a variant of its plan which releases funding for risk. For England & Wales, we conclude that Network Rail should retain provisions for risk funding of £1.5 billion. For Scotland, our final assessment is that there is room within the budget for a risk fund of £225 million.

Delivering value for money

ORR recognises the tight fiscal context in which Network Rail’s plans have been developed. It is therefore vital that Network Rail continues to build on the success of recent efficiency initiatives, to help secure a financially sustainable railway and deliver value for money for passengers, users and funders of the railway.

ORR has carefully reviewed Network Rail’s efficiency targets for the next five years and, drawing on a range of evidence, found these to be stretching but achievable. This would see Network Rail deliver at least £3.2 billion in England & Wales and £0.4 billion of efficiencies in Scotland.

Protecting the environment

As part of Network Rail’s commitment to moving towards a low emissions railway, ORR will hold it to account for delivering a more than 20% reduction in Network Rail related emissions. ORR has also set a biodiversity improvement trajectory of 4.2%, which measures Network Rail’s efforts to conserve and enhance biodiversity.

Will Godfrey, Director, Economics, Finance and Markets at ORR said: “Our final determination sets out a stretching and pragmatic way forward for Britain’s rail network over the next five years.

“Network Rail has responded well to our challenges to its initial plans and the result is more robust and customer focussed plans which we believe will deliver better outcomes for passengers and freight.

“Network Rail must now produce a delivery plan which confirms how it will act on our final determination and provide clarity and stability for the supply chain.”

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