Network Rail told to prove £90m worth of savings

Network Rail (NR) has more work to do to justify all its claimed savings, rail regulators have said.

The rail infrastructure company had made progress against its efficiency targets in 2010-11, but had to justify claims more clearly, the Office of Rail Regulation (ORR) said.

The ORR added that NR had claimed to have achieved efficiencies of 13.2 per cent, or £629 million, since 2008-09 and that it was on course to meet its 23.5 per cent target by 2013-14.

But the ORR said yesterday that its own assessment was that in 2010-11 NR had achieved lower-than-expected savings in controllable operational expenditure and spent less on renewals – like-for-like replacement of existing infrastructure – partly due to deferring some work.

Spending on enhancements to the network was less than expected although the spending on maintenance had delivered higher-than-expected savings, said the ORR.

It added: “Until these deficiencies are rectified, ORR considers that Network Rail can more prudently claim efficiencies of around 11.3 per cent (£539m).”

ORR chief executive Richard Price said: “NR has achieved significant efficiency improvements in recent years. I welcome that.

“But I am concerned that the company has not been able to fully pin down how it measures its delivery of levels of infrastructure renewals across the network. This throws doubt on nearly £100m of its claimed efficiency savings.”

A spokesman for NR said: “The ORR agrees that we have already delivered almost £550m of savings in just 30 months.

“Cutting the cost of running the rail network and making it more affordable for taxpayers and users alike is one of our main priorities, as is delivering a safe and reliable service. We accept that there is more to be done.”