The Government has backtracked over a threat to put £1.8bn from a sale of Network Rail assets towards cutting the deficit. However, the infrastructure operator could still be forced to cut maintenance work and drop planned upgrade works because of a funding shortfall.
As Transport Network reported earlier this month, the Network Rail board was told in September that ‘HMT were now requiring the proceeds of the asset disposals programme to count to deficit reduction thus handicapping NR’s use of the cash to fund rail enhancement schemes’.
However, a spokesperson for the Department for Transport told Transport Network: ‘Network Rail is continuing to sell assets to generate more funding for the Railway Upgrade Plan. These proceeds will not be used to pay off the deficit.’
It remains unclear how much progress the rail infrastructure operator has made in raising the £1.8bn that the 2015 Hendy review identified should be secured by the sale of ‘non-core assets’ to fill the majority of a £2.5bn black hole in funding towards works in Control Period 5, which runs until 2019.
The problem with the article is that no one has been told what the Treasury’s cash demands would have been without the “Treasury backs down” point. So you have no base case or initial point of reference. In my experience, NR is being treated precisely like BR – it has a property portfolio and that is sold off to meet the National Debt. Every year, the Treasury will appear during the public expenditure round with a demand that X is to be raised from property sales; after negotiation, a – usually – somewhat smaller (but – usually – still wholly unrealistic) number is agreed. Since we don’t know what the initial demand was, we don’t know whether or how far the Treasury backed down, nor do we know – and cannot tell – whether this was just the usual exchange of negotiating standpoints. Tigers eat meat, the Pope is Catholic etc…
http://www.constructionenquirer.com/2017/10/12/network-rail-secures-48bn-for-2019-to-2024/
“The Government has given Network Rail the funding to spend around £47.9 bn on the railway across control period 6, despite ongoing concerns about major project overspends.
Government will directly fund £34.7bn”,
“more maintenance and a huge uplift in renewals”
Transport secretary Chris Grayling confirmed there will also be a new funding process for major upgrades and enhancements which will provide more rigour in investment decisions.
Today’s announcement includes funding for the early stages of developing new rail schemes.
But, in a departure from the previous approach, the government will allocate funds separately for major upgrades following a new process to ensure they are deliverable and secure the best value for money for the tax payer.
This new process will be set out in more detail later this year.
“We will submit our detailed plans to the regulator in the next few months that will help to finalise the railways funding for the five years to 2024 and continue to drive our company’s transformation to better equip it for the demands ahead.”
The cold clasp of central government closes around the rail system once more. Give it another 10 years and we’ll have BR 2.0 in existence.
…. bring it on !!! (BR 2.0).
No, the original British Railways was left remarkably untouched by its paymasters, though there were limits. But if there is a choice between letting private shareholders decide how much investment to put in (a la Railtrack or Amtrak), or government, then maybe government deciding is the least worst option.
There is, of course, a difference between deciding “how much” and stipulating exactly how much cheese to put in the sandwiches…