Press Release - Network Rail - Making a Fresh Start
14 May 2004
Sir John Bourn, head of the National Audit Office, today
published a report on Network Rail which sets out a number of
challenges which need to be addressed to improve the management of
the rail network. Although Network Rail is making progress, its
governance is complex and the support of all parties involved in
the UK rail industry is needed. The challenges identified are:
(i) Whether the existing framework for
incentivising value for money could usefully be complemented by
longer term financial objectives.
(ii) How the totality of the rail industry can best work
together to push overall rail costs down. These are coming under
control, although expenditure is forecast to remain 30 per cent
higher than before the 2000 Hatfield derailment by the end of the
current regulatory settlement in 2008/09. Network Rail alone cannot
bring down costs in the industry.
(iii) Whether Network Rail’s accountability to the SRA is
adequate, in particular:
- how the SRA can manage effectively Network Rail’s equity risk,
with the Regulator, given the few direct levers it has;
- how effectively the SRA can manage its exposure to credit risk
arising out of its support for Network Rail’s long term debt
finance; and
- how the SRA can effectively provide the industry with a
strategic lead. One of the Regulator’s duties is to facilitate the
furtherance by the SRA of its strategies (when this is not in
conflict with other duties) and the SRA can contract with Network
Rail for new projects. In other circumstances the SRA is wholly
reliant on Network Rail’s own commitment to the strategic
objectives.
Sir John Bourn said today:
"The improvements to planning and cost control are to be
welcomed. The outlook is certainly better than it was in 2001. But
there are still serious challenges in Network Rail’s own structure
and in the rail industry in general which the Government must
overcome if we are to see a reliable and affordable rail network in
the future."
Notes for Editors
- Press notices and reports are available from the date of
publication on the NAO website,
which is now at www.nao.org.uk. Hard copies can be
obtained from The Stationery Office
on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 39/04
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