COMMONS

Rail users will pay price for failure in investment planning

20 November 2015

The Committee of Public Accounts raises serious concerns about rail investment in the UK.

Its ninth report of this session highlights severe planning and budgeting failures in Network Rail’s current five-year investment programme.

In particular it points to "staggering and unacceptable" cost increases in the project to electrify the Great Western Main Line from London to Cardiff, which is now expected to cost up to £1.2 billion more than the £1.6 billion estimated a year ago.

The Committee says there is still "far too much uncertainty" on costs and eventual delivery dates for the electrification of both the TransPennine route and the Midland Main Line – and warns more projects could be delayed in order to balance Network Rail’s budget.

In light of its findings, the Committee calls for a fundamental review of the regulator’s role and effectiveness in planning rail infrastructure.

It also urges the government to publish a revised and re-costed programme of electrification improvements, including the rationale for prioritising different schemes, following a review by Network Rail chairman Sir Peter Hendy.

Chair's comments

Meg Hillier MP, Chair of the PAC, said today:

"Network Rail has lost its grip on managing large infrastructure projects. The result is a twofold blow to taxpayers: delays in the delivery of promised improvements, and a vastly bigger bill for delivering them.

The potential near-doubling in cost of the electrification of the Great Western Line is a symptom of seriously flawed control and planning. Another is the continuing uncertainty over electrification of both the TransPennine route and the Midland Main Line.

The government has identified rail infrastructure as a vital part of its economic plans, for example in establishing what it describes as a ‘Northern Powerhouse’. It is alarming that, in planning work intended to support these plans, its judgement should be so flawed.

Our inquiry has found that the agreed work could never have been delivered within the agreed budget and timeframe. Yet Network Rail, the Department for Transport and the regulator – the Office of Rail and Road – signed up to the plans anyway.

Passengers and the public are paying a heavy price and we must question whether the ORR is fit for purpose."

Background

Based on government requirements for the rail network, Network Rail sets out the work it will carry out in five yearly cycles. The Office of Rail and Road reviews these five-year programmes, including the expected costs.

In October 2013 the Department for Transport, Network Rail and the ORR agreed a £38.3 billion rail spending programme covering the period from April 2014 to March 2019.

In June 2015 the government, concerned that the programme of work was costing more and taking longer than planned, announced three reviews into Network Rail and rail infrastructure investment.

One of these, led by Sir Peter Hendy, is looking at how the enhancements programme can be put back on a sustainable footing.

Report summary

The Department for Transport (the Department), Network Rail and the Office of Rail and Road (ORR) agreed an unrealistic programme of rail investments for 2014-2019.

The programme contained too much uncertainty around the costs of many large projects when it was signed off. Since then Network Rail’s work has cost more and taken longer than expected. We are concerned that the ORR, Network Rail’s regulator, lacks the capability to robustly scrutinise Network Rail’s plans and cost estimates.

The severity of the planning and budgeting failures is especially clear in the programme to electrify the Great Western Main Line from London to Cardiff, which is now expected to cost up to £1.2 billion more than the £1.6 billion estimated only a year ago.

We make clear our substantial concerns in this report.  We also look forward to Sir Peter Hendy’s detailed review into how the investment programme can be delivered.

Further information 

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