The Strategic Rail Authority (and, subsequently, the Department for Transport) and Network Rail have successfully turned around the programme to modernise the West Coast Main Line. To date, Network Rail has delivered the new strategy for the line on time, achieving benefits for passengers, including shorter journey times and improved punctuality. Network Rail is likely to overspend its budget for the programme by £300 million and will bear this cost.
By 2001, neither the rail infrastructure renewal and upgrade nor the new trains were on course for delivery as set out in the 1998 agreement between Railtrack and Virgin Rail Group, to provide for 140 mph train running from mid-2002. The estimated final cost of the programme had increased sixfold to £14.5 billion (in 2002), contributing to Railtrack being put into Railway Administration.
In January 2002, the Secretary of State asked the Strategic Rail Authority (SRA) to intervene and find a way forward. By March 2002, although £2.5 billion had been spent, including £350 million on developing new technology later dropped from the scheme, the programme was only a sixth complete.
In 2003 the SRA developed an industry-accepted strategy for the programme to deliver 125 mph running along the route from 2004-05, with later capacity increases, at a planned cost of £8.3 billion. Key lessons from turning around the programme have been the importance of engaging stakeholders, using proven technology, tightly controlling scope and having the expertise to effectively manage and monitor delivery by a large number of contractors.
As forecast in April 2006, the programme is likely to cost £8.6 billion, with Network Rail achieving 70 per cent of the £940 million efficiency savings the Rail Regulator assumed it could achieve, but overspending by £300 million (10 per cent) on the Regulator’s £3 billion programme funding allowance for 2004-09. This overspending is balanced by underspending on the West Coast regional renewals funding allowance.
In addition to the programme cost of £8.6 billion, the SRA and the Department for Transport paid £590 million more in subsidy to Virgin West Coast in 2002-06 than envisaged in its franchise agreement, to sustain train operations.
Carrying out the upgrade to a tight timescale, in order to achieve early passenger benefits, put pressure on costs, but Network Rail has improved its cost control. Problems in implementing new signalling and train control technologies increased costs by over £35 million and 8 per cent of the time the track was booked for engineering work was unused in 2005-06. But, between 2003-06, programme track renewal unit costs fell from 60 per cent to 14 per cent above the network average.
So far, the programme has delivered its planned benefits to passengers. The fastest journey between Manchester and London has been reduced by 36 minutes and from London to Glasgow by 42 minutes. Punctuality and passenger satisfaction are much improved and the number of passenger journeys on Virgin West Coast increased by 20 per cent in 2005-06, which was 4 per cent more than expected in the business case. The programme’s remaining key projects will increase capacity for passengers and freight, but the industry consensus is that the line will not be able to sustain current growth levels beyond 2015-2020. There also remains uncertainty about the expected lifespan of some of the equipment on the upgraded line.