Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Supplementary note to questions 807 and 808 (PRF 53A)



  The Rail Regulator undertook to provide a note to the Sub-Committee on a question raised by Mr Grayling. This is referred to in paragraphs 807 and 808 of the transcript.


  Mr Grayling asked "May I get a point of clarification from you on the sums of money you allocated to Railtrack in your most recent allocation of funding to them? Would it be correct to say that in period one the figure for spending on renewals, maintenance and operational expenses was £12.9 billion and that you were only offering an increase from £12.9 billion to £13.3 billion in your most recent calculation for the next five years?"


  It is correct to say that, on the basis set out in Railtrack's Report and Accounts, the total amount spent by Railtrack in control period one on renewals, maintenance and operational expenses was approximately £12.9 billion.

  It is not correct to say that the amount allocated for these items in the most recent funding settlement was £13.3 billion. The amount was £14.9 billion. Moreover, to obtain a fair comparison between the two periods it is necessary to compare the amount allocated (as opposed to the amount spent), and to adjust this figure to reflect the fact that control period one was a six-year period, whereas control period two covers only five years.

  On this basis, the £14.9 billion, the amount allocated in control period two (described in the Regulator's evidence as "approximately £15 billion"), represents an increase of approximately 50 per cent compared with the amount allocated in control period one.

  The amount of £13.3 billion referred to by Mr Grayling is approximately the total amount (£13.4 billion) to be paid by way of track access charges and grant by the franchised passenger operators and the SRA respectively in control period two.

  The difference between the allocation of funding (also called allowed expenditure) and the amount paid is summarised in the attached diagram entitled "Periodic Review Methodology".

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