9.We questioned the Department about the benefits of electrification to passengers and taxpayers, and how the decision to defer electrification along some parts of the route would impact passenger services. The Department told us that the benefits promised to passengers by December 2018, namely; increased capacity, journey time savings, and more seats, would be entirely or largely unaffected by the decision to defer electrification of some sections by using trains that can operate both under electric and diesel power. However, some benefits, such as reduced operating costs and lower air pollution, would only be achieved if the line is electrified. The impact of the deferrals along some route sections is therefore “marginally higher costs for the exchequer” and “marginally higher emissions”. The Department sought to draw a distinction between electrification of these sections, and electrification of the stretch of track between Maidenhead and Bristol, which it feels will deliver significant passenger benefits. Some £130 million has been spent on infrastructure work to deliver electrification on the four deferred sections, although Network Rail maintain that these costs will largely be recovered should electrification go ahead.
10.The National Audit Office found that changes to the scope of the modernisation programme have resulted in its benefit-cost ratio falling from 2.4:1 to 1.6:1. We asked whether the modernisation programme would have gone ahead had it been known at the start that the benefit-cost ratio was 1.6:1. The Department told us that there had still been a strong strategic case for proceeding including meeting expected growth on the route, improving connectivity and the need to replace a very ageing fleet of trains. The Department is currently refreshing the business case, to take account of recent changes to the programme.
11.Network Rail told us that there had been many shortfalls in the design, planning and cost-estimating of the project and admitted that it had not fully understood the scale, complexity and difficulty involved until the end of 2015. Network Rail noted that “if you start a big project really badly, it is really hard to get it back under control” and stated that it was still working very hard on improving planning and that it would have the integrated critical path analysis showing the dependencies between all the different parts of the programme in January 2017. Network Rail told us that it had started construction works when it did before it had the necessary permits and consents in order to meet the deadlines it had agreed with the Department for Transport.
12.Network Rail needed to obtain more than 1,800 separate “consents” to carry out the works needed to electrify the Great Western Main Line. These “consents” include permission from English Heritage to carry out work on listed bridges and agreement that roads could be closed. The electrification project could potentially be delayed if any one of these consents is not achieved in time, and failure to obtain them all in time has led to higher costs. Network Rail told us that there was still a risk that the project could be delayed further if it failed to get the “consents” it needs in time. Instead of this piecemeal approach Network Rail could have applied for permission to carry out works on large sections of the route (or even for all the electrification works) under the Transport and Works Act. Network Rail accepted that this would have been a far better approach but could not explain why this had not been followed.
13.The Department told us that the elements of the modernisation programme, particularly electrification and the interaction with investment decisions on new trains, were considered together but that no single business case was put forward. The Department accepted that the infrastructure and new trains were seen as two linked projects, rather than “one programme which needed to be managed as a whole.” This was particularly unacceptable, since the contract for the new trains put the Department at risk of having to pay £400,000 to the company supplying the trains for every day the infrastructure was delayed. An integrated business case for the programme was produced in March 2015, but this was clearly too late to manage the cost pressures and risk to schedule delays the programme faced. In addition, the Department wrongly thought that an 18-month buffer between completion of electrification and introduction of new trains was sufficient. The Department acknowledged that this buffer was “not enough” and it did not think of how the dependencies could be managed and risks to be reduced.
14.The Department told us that a factor behind the lack of proper planning in the early stages of the programme had been the accountability arrangements. The Department specified its high-level requirements, and scrutiny of Network Rail’s plans had been passed over to the Office of Rail and Road. The Department accepted this tripartite structure had been too complex and “much weaker and less reliable than [it] thought”. The result was that the Department failed to challenge Network Rail and get the assurance it needed over Network Rail’s ability to deliver the works to support the introduction of new trains in time and within budget.
15.The Department recognises that there was a need for it to engage as a “very effective client and sponsor of major change programmes”, and that it was unacceptable for it to act “at one very large remove”, as it had for much of this programme. It agreed that its failure to obtain proper assurances over the deliverability of this programme, particularly before signing the contracts for new trains in 2012, was illustrative of broader problems in the Department at the time. However, it believed that it had made significant progress since then, putting in place “a very clear structure of accountability”, developing programme management and commercial expertise and expanded its approach to assurance.
16.While there has been an improvement in the management of the programme since 2015, the Department has still not produced an integrated critical path combining the electrification, the trains and franchising elements. It recognised that it needed this to effectively manage risks to the timetable for improving services. Making such improvements to services generally requires infrastructure work carried out by Network Rail, delivery of new trains and changes to services made by the franchisee. The Department told us that it would have a clear view of the programme and its associated risks when it completes its integrated critical path in March 2017.
24 Network Rail () paragraph 3
25 para 7
30 , para 3.8,
35 , paragraph 4.11
1 March 2017