1.The Department for Transport and Network Rail took too long to start planning how the new railway would operate, and to decide to introduce the new services in phases rather than a single big bang. In October 2017, just over a year before the Thameslink programme was due to complete, the Department for Transport (the Department) decided to delay the full completion of the programme from December 2018 to December 2019, and to introduce the new services more gradually up to that point. This decision reduces the risks of passenger disruption, but it also means that passengers in some locations will not receive the full benefits of the programme for up to a year later than planned. The Department and Network Rail only started to focus on planning how they would bring these services into use from late 2016. The Department accepted that it could have started planning how the new services would be introduced earlier. It asserted that it may not have been possible to do so much farther in advance, but did not provide a detailed explanation as to why.
Recommendation: The Department and Network Rail should establish clear arrangements at the outset of future programmes to plan how services will be introduced and run. These arrangements should be on an equal footing with other aspects of programme management and planning, putting passengers at the heart of the programme.
2.The complexity of the Thameslink programme required a new approach to collaboration within the rail industry. The Department intends to establish closer working relationships and incentives between Network Rail and train operators in future, but has not yet finalised how it will do so. When we last examined the Thameslink programme as a whole in 2013, we recommended that the Department should focus on integrating planning and aligning decision-making across the different elements of complex programmes from the very start. In late 2016, the Department and Network Rail established the Industry Readiness Board as a forum for the wider rail industry to contribute to, and finalise, the plans for bringing new services into place. The Thameslink programme would have benefited from this arrangement being in place from the outset. In November 2017, the Department published ‘Connecting people: a strategic vision for rail’, which describes how it aims to establish closer working relationships between Network Rail and private sector train operators in future, and ensure incentives are aligned across delivery bodies. We are concerned that the potentially wide range of models for how this will work in practice could result in a lack of clarity about who is accountable and responsible for passenger rail services.
Recommendation: The Department should, by June 2018, write to the Committee to provide details about how it intends to create better working relationships between Network Rail and operators, in order to provide high quality services to passengers.
3.The Department and Network Rail had a poor understanding of the performance of the rail network, and did not monitor the impact that increasing services and failing infrastructure would have on either passenger disruption or the planned benefits of the Thameslink programme. Network Rail told us that since the start of the programme, growth in the number of passengers in the South East has been far higher than it and the Department anticipated, requiring more services to accommodate them. The congestion on the network means that delays caused by its underlying condition, such as track and signal failures, cause further delays as the knock on effect of disruption spreads. This has caused a decline in the performance of the railway. Network Rail did not fully understand the effect that this congestion would have on Thameslink until 2016 when it began to focus on how to introduce the new services. Network Rail identified that it needed an additional £900 million to improve the condition of the railway to a level which can reliably support the planned 24 trains an hour service through central London. The Department and Network Rail have only made £300 million of additional funding available up to the end of the current 2014–19 rail spending period. Network Rail and the Department told us that they have agreed a substantial increase in funding for infrastructure maintenance and renewal, as part of the £48 billion of funding for the next 2019–2024 railway spending period. We are concerned about how this money may be spent, given Network Rail’s poor understanding of the performance and condition of the rail network.
Recommendation: The Department should, by June 2018, write to the Committee to explain how it will ensure that Network Rail’s plans for spending £48 billion on the network between 2019 and 2024 are based on a clear understanding of the condition of the network, and where work will be needed to support future major programmes.
4.Network Rail’s estimate of the costs of the programme lacked the sophisticated understanding that it needs to manage its wider portfolio of projects effectively. In 2015, the Department and Network Rail increased the budget for the programme’s infrastructure works by £474 million (9.4%), as a result of forecast cost increases predominantly associated with the redevelopment of London Bridge Station. Whilst a 9.4% increase compares favourably to other rail projects that we have seen, it demonstrates that there are weaknesses in Network Rail’s approach to estimating the costs of projects. Network Rail was reclassified as a public sector body in September 2014, and since then has no longer been able to borrow money to meet cost increases on its projects. Now that it is directly funded by the Department, Network Rail faces new challenges to keep project costs under control. Network Rail has had to abandon projects to remain within its available funding, such as the Foxton level crossing, meaning that it has not delivered to the expectations of some local communities. The Department and Network Rail told us that they are taking steps to improve their approach to estimating the cost of programmes, and to ensure that they only commit to projects once they are confident that they can deliver them within the funding available.
Recommendation: The Department and Network Rail should write to the Committee by March 2018, outlining what new arrangements they have put in place to better estimate and oversee the costs of projects, and how these have improved the way that they work.
5.The Thameslink programme has produced some valuable lessons, including what challenges arise when managing complex railway station projects, which will be critical for the success of future programmes. Network Rail told us that the condition of London Bridge Station was more complex than it had expected, which caused the majority of the cost increase on the programme. The redevelopment of Euston Station for High Speed Two could be even more complex. The lessons that Network Rail has learned about planning and estimating costs during the redevelopment of London Bridge will be valuable in meeting this challenge. Network Rail told us that it has adopted advances in risk modelling to better understand how risks in one part of the Thameslink programme may affect other parts during its delivery. More advanced technology for surveying construction sites has also been developed, which was not available when the redevelopment of London Bridge was being planned.
Recommendation: The Department and Network Rail should, by June 2018, establish formal processes through which learning from the Thameslink programme can be applied to future major programmes, including High Speed Two.
21 February 2018