Schemes "paused" and Hendy put in as chairman in Network Rail shake-up

Operator admits CP5 ambitions were a stretch too far as Transport Secretary announces measures to get Network Rail’s £38bn upgrade programme back on track.

Work over the May bank holiday was successfully delivered

Transport Secretary Patrick McLoughlin has announced an extensive shake up at Network Rail designed to enable the company to have better control over its £38bn upgrade programme. In a statement to Parliament he said that performance of the organisation was costing more and taking longer than it should and announced the replacement of chairman Richard Parry-Jones with current Transport Commissioner for London Sir Peter Hendy CBE.

He said that none of the company’s executive directors would receive a bonus for the past year and ended the role of public members in the Network Rail’s governance, of which there are 30-50 members appointed for three year terms.

One of Hendy’s first tasks will be to develop proposals by the Autumn as to how the rail upgrade programme will be carried out. At the same time a report from  economist and regulatory expert Dame Colette Bowe will be published on lessons learned, which will also make recommendations for better investment planning in the future. A new special director of Network Rail has also been appointed in former Eurostar chairman and DfT board member Richard Brown who will report directly to Patrick McLoughlin.

"Based on historic improvements from a low base, we were overly optimistic about the capacity of our company and our supplier base to step up several gears in order to achieve the plan."

Mark Carne, chief executive, Network Rail

McLoughlin’s announcement was made as Network Rail published its annual results which admitted that the targets set during the current control period, CP5 were “stretching”. Chief executive Mark Carne, who joined the company in early 2014, said that the organisation had been overly optimistic about its ability to deliver. “During my first year in the job I have looked closely at every aspect of our business and it has become clear that Network Rail signed up to highly ambitious five-year targets set by the regulator. Based on historic improvements from a low base, we were overly optimistic about the capacity of our company and our supplier base to step up several gears in order to achieve the plan."

Carne said that programme costs for major items such as electrification and capital projects were always set to be revisited as the projects became more defined. “Unfortunately when these reviews have occurred, the more detailed project costs have been higher than assumed at the earliest stages of definition.  As a result, the total enhancement programme cost now exceeds the available five-year budget.”

However the Transport Secretary confirmed that no further investment would be available. “Network Rail’s spending should stay within its funding allowance,” he said explaining that electrification of the Great Western Line was a top priority but that electrification of the Midland mainline and the Leeds Manchester routes would be paused

“Network Rail’s spending should stay within its funding allowance,”

Patrick McLoughlin, Transport Secretary

Mark Carne meanwhile welcomed the appointment of Sir Peter Hendy and said that they would work together with his team to develop proposals for re-planning the programme over the next few months. Since joining last year, Carne has brought in a largely new leadership team which has focused particularly on devolving the company into eight regional businesses. This structure empowers route managing directors to quickly respond to the needs of their local passengers and train companies whilst enabling the company to benchmark performance and drive innovation and best practice much more transparently. 

In an interview with Infrastructure Intelligence  Rail Minister Claire Perry warned that delivery was a key focus of the new government and a review of the current delivery performance was likely.

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