9 Performance of Network Rail
70. Network Rail told us that it had "a high
level of confidence that CP5 can be delivered successfully".[240]
Group Strategy Director, Paul Plummer, told us that he believed
the greater collaboration between Network Rail, train operators
and Governmentthrough the establishment of regional allianceswould
improve performance for passengers.[241]
First Group stated that it supported Network Rail's plans for
CP5, but cautioned that the risks in the delivery of the "enormous"
programme had increased.[242]
71. The failure of Network Rail to complete Christmas
2014 engineering works on time led to the cancelling of all trains
into and out of King's Cross on Saturday 27 Decemberthe
first day passengers were able to travel on the East Coast Main
Line after the two-day shutdown on Christmas Day and Boxing Day.
Engineering works also overran at Paddington, resulting in a second
major London terminal being closed, in this case for part of the
day. The disruption continued into Sunday 28 December; and the
impact on passengers was extensive. The decision was taken after
the closure of King's Cross for a limited service of East Coast
and Great Northern services to start and finish at Finsbury Park
in place of the scheduled service. The large number of passengers
directed Finsbury Parka much smaller stationand
a miscommunication between Network Rail and the operator of Finsbury
Park resulted in severe overcrowding, and the station had to be
closed on police advice. The situation was reported as "chaos"
and ORR Chief Executive, Richard Price stated that "elderly
people were being left outside in the drizzle and the cold"
as "hundreds of people" were queuing outside the station.[243]
Overcrowding was also reported on the East Coast services that
did run to and from Finsbury Park, with passengers standing for
long journeys. At Paddington passengers reported a lack of information
about how long services would be suspended; and severe overcrowding
and delays when services did resume. The ORR is reviewing whether
the events of 27 and 28 December constituted a breach of Network
Rail's licence: in 2008 overrunning engineering works from the
previous Christmas and New Year were found to have breached the
licence and resulted in a £14 million fine for Network Rail.[244]
72. Network Rail's Christmas 2014 engineering programme
was ambitious: a £200 million programme involving 11,000
staff at 2,000 sites.[245]
Mark Carne, Network Rail Chief Executive, described it as Network
Rail's largest ever programme of engineering works".[246]
Four major London stations had major engineering works, with closures
at London Bridge and Euston in addition to King's Cross and Paddington.[247]
In a statement on 29 December Mr Carne announced an industry-wide
review of "the timing of our major works programmes and the
passenger contingency arrangements for such works".[248]
Mr Carne noted that while the "conventional wisdom"
was to carry out engineering works over Christmas, when passengers
numbers were around half of those for a normal weekday, it was
right to review whether this was still the best approach. He added:
There are different kinds of people travelling
at Christmas, with different demands and needs. They have suitcases
and children, and there are elderly people visiting friends and
familiesdifferent kinds of passengers that we need to look
after at those times.[249]
Mr Carne suggested that spreading the work out throughout
the year would cost less: engineers had been paid "at least
two or three times" the normal rate to work over Christmas.
It may also carry less risk, as the compression of engineering
works into a short time at Christmas had stretched Network Rail's
resources. Mr Carne added, however, that spreading the work out
in this way would mean additional planned disruption for passengers.[250]
73. Network Rail has also been responsible for a
number of previous over-running engineering works, most notably
on the Great Eastern Main Line where on ten occasions in six years
Network Rail has caused significant delays and disruption to passengers
by failing to complete its weekend engineering works to schedule.[251]
This month passengers at London Bridge have experienced
severe delays and disruption during the engineering works on the
Thameslink project.[252]
Mark Carne stressed in evidence to us that delays caused by overrunning
engineering works had halved since 2007, despite Network Rail
carrying out double the amount of work compared to five years
ago.[253] At Christmas,
99% of the engineering projects had finished on schedule. He added
that this showed that there had been "significant improvements",
despite there being "more to do".[254]
74. In written evidence Passenger Focus noted that
disruption to passengers was an inevitable downside of investment
in the railway, and stated that communicating well with passengers
during disruption was "key to maintaining levels of satisfaction
during the building works".[255] The
National Rail Passenger Survey had shown that the management of
delays was the biggest single source of passenger dissatisfaction.[256]
75. The Office of Rail Regulation reported on Network
Rail's performance for the first two quarters of year 1 of CP5
in November 2014. The regulator found that:
a) Network
Rail was delivering less work in maintenance and renewals than
it planned to dobut was already £40 million above
budget on maintenance.
b) Performance
on delivery of its enhancement portfolio has worsened.
c) Punctuality
was 0.7% below the target rate.
d) The
data used to "plan and manage" its enhancements work
did not meet "the required standards in some areas".[257]
76. In written evidence the RMT/TUC warned of that
its members had reported an "on-going skills crisis"
on the railway, due to the number of older staff (which made up
a large proportion of Network Rail's workforce) taking retirement.[258]
Network Rail plans to reduce the maintenance headcount by 1050
in CP5, 8% of the total workforce.[259]
77. On 7 July the ORR reported on Network Rail's
performance for Control Period 4, which ran from 2009 to 2014.[260]
The ORR identified the delivery of "a major rail enhancement
programme, largely on time and budget" as one of the period's
"significant successes".[261]
In contrast, Network Rail's performance failed to meet its targets
for punctuality for long-distance, and for London and South East
passenger services. As a result, in Control Period 4 we heard
that "7,000 trains were late that should not have been".[262]
The ORR stated that "passengers would expect there to be
some consequences" for the failure to meet punctuality targets,
and Network Rail has been fined £53.1 million, its highest-ever
fine.[263] It has been
reported that a proportion of Network Rail's fine will be used
to improve WiFi services on the rail network. Passenger Focus
argued that "for passengers, there probably could not be
a worse example of the moneygoroundfining
Network Rail for it to go back into Government".[264]
78. The failure of Network Rail at Christmas,
which left thousands of passengers stranded, was unacceptable.
We welcome Mark Carne's unreserved apology to the travelling public,
and the publication of Dr Francis Paonessa's report into the disruption.
Network Rail's original statement that the failure at King's Cross
was "really regrettable and unfortunate but it is a small
part of a massive amount of engineering investment taking place
over Christmas" offered little consolation to passengers
stranded in the cold. Indeed, the fact that King's Cross was only
one of a number of overrunning engineering works and signalling
problems that plagued the rail network over the festive period
offers further evidence of systemic weaknesses in Network Rail's
capacity to plan and execute engineering works. Given the ambitious
investment programme that Network Rail will receive £38 billion
to deliver by 2019, this is a matter of great concern. If Network
Rail is to maintain and improve the rail network in CP5 it will
require managing multiple, complex engineering projects simultaneously.
Network Rail must demonstrate how it will learn from the mistakes
it has made in its engineering works and maintain a decent service
to passengers while enhancement work is carried out.
79. When things do go wrong, Network Rail must
have adequate contingency plans. It should not abdicate its responsibility
to passengers, particularly vulnerable ones such as the elderly
or families with young children. We welcome Network Rail's proposed
review of contingency measures and the timing of engineering works.
In addition Network Rail must work with Passenger Focus and the
train operating companies to improve the communication with passengers
when engineering works fail.
80. While it is essential for Network Rail to
deliver value for money for the taxpayer, efficiency savings cannot
put the safety and reliability of the rail network at risk. The
ORR should consider whether the disruption over Christmas and
the New Year suggests that Network Rail is unable to deliver the
enhancements programme planned for CP5, alongside a safety-focused,
high-performing railway each and every day. In the light of the
change of status of Network Rail the ORR must reconsider whether
fining a public sector body remains an acceptable means for the
regulator to exert control.
Reclassification of Network Rail
81. On 1 September 2014 Network Rail was reclassified
as a Government body (it had previously been a statutory corporation
created as a not-for-dividend private company limited by guarantee).
This move was necessary to comply with pan-European accounting
standard ESA10. Mark Carne told us in June 2014 that reclassification
"should not make any necessary difference because it does
not in itself drive particular changes in the way that the company
works with the Government".[265] The
exception, Mr Carne told us, was the way Network Rail raises money:
In the past when we needed to raise money we
went to the markets and raised money, with a Government guarantee
to support the low interest rates that we were able to attract
to raise that money. In the future it is very unlikely that we
will do that. The Treasury will raise the money that we need.
Why would they not? They have said, "No, we will raise the
money that you need for investment in the railway."[266]
The reclassification moves Network Rail's debt onto
the books of the Government. Witnesses expressed some caution
about the rising costs of servicing Network Rail's debtwhich
stood at £31 billion in 2014, and is forecast to rise to
£49.6 billion by the end of CP5.[267]
The interest payments will £1.4 billion in 2014/15 and are
forecast to rise to £2.3 billion by 2018/19.[268]
82. Paul Plummer, Group Strategy Director at Network
Rail, said that it was "inevitable" that there would
be more "challenge" in the relationship between the
operator and the Government, post-classification.[269]
There would also, he told us, be clearer accountability, with
the Chief Executive of Network Rail taking on the role of Accounting
Officer to Parliament. Mr Plummer noted, however, that while Network
Rail had been criticised for a lack of accountability in the past,
the company did "feel incredibly accountable to an awful
lot of people".[270]
The Framework Agreement which sets out the governance of Network
Rail from September 2014 gives the Secretary of State the power
to appoint a Membership Selection Panel which will act independently
and recommend Members for selection for the Network Rail Board.[271]
The Secretary of State also has the right to approve or reject
the Panel's recommendations.[272]
He set out his view of how his relationship with Network Rail
should operate:
I do not think that it should be my job overtly
to direct Network Rail. I want it basically to carry on with its
relationship with the ORR. [
] I do not think that it should
be the job of the Secretary of Stateor that it would be
wise for the Secretary of Statealways to be trying to over-guess
what the chief executive and Network Rail are doing.[273]
83. The test of the new relationship between Network
Rail and the Minister will be how the Minister responds to poor
performance by Network Rail, given the Government's stated commitment
not to micro-manage the railways. It is not clear whether the
Secretary of State will use the powers set out in the framework
agreement. The reclassification of Network Rail strengthens
the case for greater accountability and transparency in the way
we have recommended in paragraph 27.
84. The Government should set out in its response
how it plans the future financing of Network Rail and how it expects
the financing of rail investment to be restructured. Spending
more on debt interest than on asset maintenance is a looming political
problem
240 Network Rail (IRW0040) Back
241
Q43 Back
242
FirstGroup (IRW0010) para 14 Back
243
Oral evidence taken on 14 January 2015, HC (2014-15) 920, Q 96 Back
244
Office of Rail Regulation, Report of ORR's investigation into engineering overruns,
February 2008 Back
245
Network Rail, Army of 11,000 railway engineers to work on record-breaking Christmas investment programme to deliver a bigger, better railway,
10 December 2014, accessed 15 January 2015 Back
246
Oral evidence taken on 14 January 2015, HC (2014-15) 920, Q 15 Back
247
Network Rail, Army of 11,000 railway engineers to work on record-breaking Christmas investment programme to deliver a bigger, better railway,
10 December 2014, accessed 15 January 2015 Back
248
Network Rail, Media statement from Network Rail: Monday 29 December,
accessed 15 January 2015 Back
249
Oral evidence taken on 14 January 2015, HC (2014-15) 920, Q 16 Back
250
Oral evidence taken on 14 January 2015, HC (2014-15) 920, Q 21 Back
251
"Commuters' anger at yet more major rail delays on Norwich to London line",
Eastern Daily Press, 26 August 2014, Back
252
"London Bridge overcrowding: commuters face third day of delays",
London Evening Standard, 8 January 2015 Back
253
Oral evidence taken on 14 January 2015, HC (2014-15) 920, Q 15 Back
254
Oral evidence taken on 14 January 2015, HC (2014-15) 920, Q 15 Back
255
Passenger Focus (IRW0028) para 2.2.3 Back
256
Passenger Focus (IRW0028) para 3.4 Back
257
Office of Rail Regulation, Network Rail Monitor 2014/15: Quarters 1 & 2 of Year 1 of CP5 (1 April to 11 October 2014)
(20 November 2014) p 3, 4, 10, 25 Back
258
Written evidence from the RMT/TUC, IRW 45 Back
259
Written evidence from the RMT/TUC, IRW 45 Back
260
Office of Rail Regulation, Regulator reports on Network Rail's performance between 2009 and 2014,
7 July 2014, accessed 15 January 2015 Back
261
Office of Rail Regulation, Regulator reports on Network Rail's performance between 2009 and 2014,
7 July 2014, accessed 15 January 2015 Back
262
Q163 Back
263
Q163 Back
264
Q169 Back
265
Evidence taken on 9 June 2014, HC (2013-14) 255, Q 3 Back
266
Evidence taken on 9 June 2014, HC (2013-14) 255, Q 5 Back
267
Office of Rail Regulation, Periodic Review 2013: Final determination of Network Rail's outputs and funding for 2014-19,
October 2014, p 30 Back
268
IRW 71 Back
269
Q50 Back
270
Q52 Back
271
Department for Transport, Network Rail Framework Agreement,
September 2014, p 10 Back
272
Department for Transport, Network Rail Framework Agreement,
September 2014, p 10 Back
273
Q473 Back
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