House of Commons - Priorities for investment in the railways

Priorities for investment in the railways - Transport Committee Contents

5 Security of the current investment programme

42. Network Rail will be investing £35 billion on the railway network during Control Period 4, 2009 to 2014—"an investment programme that is bigger than any seen for a generation", it says.[72] Of this amount:

£11.7bn is to enhance the network, including projects to relieve crowding by lengthening platforms and to increase capacity to enable more and longer trains to run on busy lines;
£11.5bn is for renewals—replacing older parts of the network (including track, signalling and bridges) with new, and
£9.2bn is for day-to-day maintenance and the costs of operating and running the network.[73]

The Department for Transport will contribute £16 billion in the form of direct payments.[74] The remaining funding comes from other sources including the Scottish government, passenger train operators, freight operators, retail and property. Network Rail is also allowed to access further funding by borrowing.

43. Network Rail's investment priority for the 2009-2014 period, set by the Government, is to increase capacity on the network to accommodate a 22.5% increase in passenger demand. The Thameslink and Crossrail projects will greatly increase capacity in the capital.[75] A total of 1,300 extra carriages will also be provided to increase rail capacity across the country, adding 12% to the fleet (see paragraphs 49-50).[76] Other projects undertaken by Network Rail in the control period include the £1.5 billion redevelopment of Reading and Birmingham New Street stations, the development of a Strategic Freight Network, and electrification of the Great Western Main Line and the Manchester-Liverpool line.

The current investment programme

44. Most witnesses were positive about the scale of the funding committed between 2009 and 2014 but several expressed concern that the current financial situation could result in the deferral or cancellation of some CP4 projects, particularly those to increase capacity. The Association of Train Operating Companies told us it was "essential" that existing CP4 investment commitments were honoured to relieve current capacity constraints on the network, a view shared by many others.[77] Several witnesses noted the fact that passenger numbers were forecast to double over the next 30 years, and passenger growth had still increased over the past year despite the recession, albeit at a slower rate than previously.[78] National Express pointed out that it was "very inefficient and expensive to stop and start projects".[79] Several organisations argued that the timescales of rail investment were far longer than those of an economic cycle, and the recession should have ended by the time much of the investment came on stream.[80]

45. We questioned both the Office of Rail Regulation (ORR) and the Department for Transport about the security of the billions of pounds committed to the network until 2014. The ORR assured us that the CP4 settlement was a binding commitment by Government: "the Government has not got an automatic easy way through to requiring or removing the commitment it has made to finance the railway to meet the outputs it set out in 2007. […] To change it materially would require primary legislation unless there was agreement between the parties".[81]The Department told us that "substantial" changes to the CP4 settlement—particularly changes which would see a significant alteration to the level of funding provided by Government—could only be implemented via an "interim review process". The power to initiate such a review rested with the ORR; the Government said it was not aware of any plans for such a review. Smaller changes to planned enhancement projects that did not substantially affect the overall settlement could be made via Network Rail's "change control process", which would require a formal proposal from Network Rail, and agreement from sponsors and the ORR.[82]

46. Ministers' public pronouncements on this matter have been clear. The DfT Minister for National Networks, Chris Mole MP, told us the Government had no plans to change any of the funding for Crossrail or Thameslink, and he said any changes in the contractually committed Control Period 4 settlement were "extremely unlikely".[83] The Secretary of State also assured us that there were no changes in the status of any of the Government's commitments.[84] In the Pre-Budget Report in December 2009, the Chancellor affirmed his support for a series of key transport projects, including Crossrail, Thameslink and the electrification proposals.[85]

47. Given current levels of overcrowding on parts of the network along with passenger demand forecasts, it is vital that current and planned projects to increase capacity continue to the present timescale. We welcome the strong assurances from the Government and the Office of Rail Regulation that the Control Period 4 funding settlement for the next four years is secure. Cuts in transport investment are easy to make, but are costly in the long term, undermining future growth prospects and depriving future generations of a lasting legacy of good transport services. Investment in improving transport infrastructure should be based on the long-term needs of the economy and society, not directed by the need for immediate public expenditure savings.

48. We are aware, however, that those projects not directly funded within the CP4 settlement—such as Crossrail—are more vulnerable to funding pressures.

Rolling stock

49. The Government committed within the HLOS to invest in 1,300 extra carriages to increase rail capacity across the country, particularly in and around big cities.[86] In our Report on the Government's 2007 Rail White Paper, we said the 1,300 carriages were "much needed and very welcome", although we noted that due to the growth in rail patronage, the new stock was unlikely to relieve overcrowding significantly.[87] The Government's subsequent announcement, in July 2009, that it would electrify the Great Western Main Line and the Manchester-Liverpool line has led to a review of the 2007 rolling stock commitment. The electrification programme alters the requirements for train rolling stock over the next decade, as there is less need for diesel trains and a greater requirement for electric trains.

50. The Government initially said it would publish its revised rolling stock plan in the autumn of 2009 to take account of these changed circumstances, although this was later postponed. The Government now says it must complete commercial negotiations on Thameslink before it can update the plan. By early February 2010, the revised plan has still not been published.[88] Ministers have confirmed, however, that the Government remains committed to delivering 1,300 additional carriages by mid-2014 and about 230 of those carriages are already in service.[89] Several witnesses giving evidence to our inquiry were confused about the current state of affairs.[90] The Government was right to revise its rolling stock plans in light of its electrification announcement. We are concerned, however, by the postponements in issuing the plan and by the uncertainty and confusion caused by the delay within the industry. Rolling stock is required urgently in several parts of the country. We urge the Government to set out its revised rolling stock proposals as soon as possible to provide the industry with certainty about future capabilities and to improve the travelling experience of passengers on overcrowded parts of the network.