I don't know enough about the specifics but -
You know what you do / where you live / what the jobs market there is like, and what your financial / family circumstances are, I don't, so I don't know how big a deal it would be if the fixed term job doesn't turn in to something permanent.
Yes, some fixed term jobs become permanent. With many organisations if you're on a fixed term contract then you're treated as an 'internal' candidate for other jobs within the organisation, some organisations formally or informally prefer internal candidates, even if they don't, then the experience / knowledge you get can be an advantage.
In general, taking a permanent job is usually wiser than taking a fixed term contract - although if the fixed term job is a lot better in some way - be that pay, level of responsibility (so a potential career move that will look good on the CV if and when the job ends) or a lot more convenient (e.g. the permanent job would involve moving house) then there may be times when a fixed term job could be better in the long run.
The other strand to it is that any permanent job is only as permanent as the notice period. While Network Rail will have a redundancy policy, but with some organisations, 'last in = first out' is the general rule when redundancies are happening, and you're not entitled to redundancy pay or (with a few exceptions) 'unfair dismissal' protection until you have been in a job 2 years.
I'm not really in touch with it all, but others may be able to comment - what does the future hold for Network Rail? There are proposals to replace it with 'Great British Railways' as the train operating company contracts are effectively re-nationalised, the theory being that some of the roles in NR and train operators duplicate each other, so there's possibilities of redundancies / office locations for what Network Rail do now.
Again, without knowing the sort of role you're going for, it's hard to say if this could be an issue. If it's something to do with signalling or track, then I don't think train companies don't do that now, so I'd imagine all that will change is the name on the uniform / overalls / payslip. If it's the sort of thing that involves negotiating timetables with train operators, then it might be more at risk. (I say this from a position outside the railway industry, and hoping that others who are better informed than me might come along.)