Network Rail to be fined £75million for poor performance?

Published 25th June 2013

Office of Rail Regulation and Network Rail publish annual performance results

The Office of Rail Regulation (ORR) has published its annual performance assessment of Network Rail’s (NR) for the accounting year 2012-13 and Network Rail has also published its annual accounts.

As rail.co.uk has reported, ORR highlights the growth in UK rail in the reporting period when there was a 4% increase in journeys and freight services carried 3% more than the previous year. Nationally, passenger satisfaction recorded a score of 85%, the highest since comparable monitoring has been carried out.

Olympic hurdles cleared

ORR says that Olympic hurdles cleared

NR’s best results were achieved during the Olympics as they worked closely with train operators providing high standards of information for passengers. Scotland was also singled out for praise due to effective planning and coordination between NR and train operators helped everyone deal with the harsh winter just experienced. Scottish train performance increased to 93% punctuality for passengers, 2.3 percentage points up over the year and 1.1 percentage points ahead of the ORR set target.

Investment success

The report also notes that NR remains on course to deliver the huge investment in upgrades to the UK rail network and in the reporting period completed extensions to the East London line, electrified the Paisley Canal branch line and lengthened East Coast main line platforms increasing capacity.

Signal failures?

The ORR says that there are significant areas where NR’s performance falls short of what it was paid to deliver. Notably these included failing to meet set and agreed punctuality targets for passenger trains in England and Wales and ORR is trying to establish if NR did everything it could have done to meet the targets in long distance and London and the South East sectors.

ORR has specified a financial penalty should NR continue to fail against punctuality commitments for long distance services by March next year. Worryingly, ORR says that NR does not have enough asset information concerning the condition of its tracks, bridges and other assets. Despite limited improvements, there is a good deal of work ahead before NR will be able to work as efficiently as possible and more ORR regulated targets may be imposed to increase the pace of improvements. ORR identified that a backlog of maintenance work exists on some routes, contributing to poor track quality on parts of the network.

They said:

ORR Chief Executive Richard Price said:

“Network Rail has contributed a lot to the successes of the railways over the past year. With the wider rail industry, the company delivered excellent levels of performance under the global spotlight of the 2012 London Olympics. It has also shown it can deliver these high standards consistently throughout the year in Scotland, where passengers have enjoyed excellent levels of punctuality.

“However, levels of punctuality for passenger services in England and Wales remain below what Network Rail has been funded to achieve. The company has some catching-up to do to get itself back on course by the time new and, in some areas, more stretching performance targets are introduced for its next funding period between 2014-19.”

How punctual is on time?

The ORR punctuality targets are defined by what is known as the public performance measure (PPM). This is made up of the percentage of trains arriving at their final destination within ten minutes of the advertised time for long distance trains, and within five minutes for London and South East services.

Long distance passenger trains scored just 87.0% PPM, a worsening of two percentage points down over the year which meant the target was missed by 4.5%. ORR has calculated that 70,500 long distance train services were either cancelled or more than 10 minutes late over the year. The ORR has threatened to fine NR for missing its long distance punctuality targets for this year (2013-14) which are set at 92% PPM. The penalty has been set at £1.5 million per 0.1 percentage point it misses the target by.

Commuter services in the London and south east scored 91% PPM a reduction of, 0.7% in the reporting year missing the annual target by 1.7%. This, ORR has calculated, means 361,000 London and south east train services were either cancelled or more than 5 minutes late over the year.

Train numbers - Taxpayers to lose again?

These performance statistics could lead to a massive £75million fine levied by ORR on NR for poor performance. This equates to seven days Government subsidy at current levels, money provided by taxpayers to run the railway. It would be a tad ironic if the taxpayer funded ORR fined NR, another taxpayer funded company which has just awarded its executive directors a 17% bonus........

Debt grows

NR now has a debt that exceeds £30 BILLION according to their latest accounts just published. Operational costs rose by just under a million pounds a day in the last financial year due to the bad weather (costing £58million) and profits reduced by £62million to £699million. These it could be argued are all notional figures as the company is guaranteed by Government-signed assurances. Given debt interest payments, it will clearly be several decades before the debt is cleared, if ever.

NR was tasked with making savings of 23% over the five years to April 2014 by the ORR and is not in course to achieve these despite receiving around £10million every day to carry out work. Maintenance work not carried out resulted in the asset base value being reduced by £113million by NR itself. The company spent around £5billion on capital expenditure improving the railway.

Written by Phil Marsh

External Links

• ORR publishes assessment of Network Rail’s performance in 2012-13
• Network Rail Monitor
• Network Rail Website