CP6 Funding

[peggy7123a]

Does anyone know when the funding for CP6 is going to be agreed? or if it has already been agreed what the funding is?
Many thanks to anyone who takes time to give input on this, have a good day.

 

[daikilo]

This from the ORR may help.
http://www.orr.gov.uk/__data/assets...18-initial-consultation-document-may-2016.pdf

 

[LNW-GW Joint]

Proposals for CP6 from the governments (DfT and SG) are due around now.
There is then an 18-month iteration of NR's costs and plans against the wish-lists and money available.
The final decision is taken by ORR, and will be around the end of 2018, just before the start of CP6 in April 2019.

Welcome to the forum by the way.

 

[peggy7123a]

Many Thanks to the two people who responded to my first post, gratefully received! Much obliged, Ian.

 

[coppercapped]

Just caught up with this thread!

I would point out that there is a fundamental difference in the assumptions for the CP6 agreement to those underlying earlier Control Period agreements.

The HLOS/SoFA construct is a requirement of the 2005 Railways Act which removed the authority of the Rail Regulator to set the infrastructure operator's income by introducing an overarching Treasury cap - the Statement of Funds Available. The premise of the Railways Act was that the infrastructure operator - by now Network Rail - was a company in the private sector.

With the re-classification in 2014 of NR's debt to be considered as being part of the National Debt the HLOS/SoFA procedure is no longer relevant as NR is now classified as a nationalised industry. The ORR's job of constraining a monopoly supplier in the private sector no longer exists - the deal will now simply between the Treasury and the DfT. However the charade has to be gone through until such time as the 2005 Act is either amended or repealed so the ORR will rubber-stamp it.

Experience last time showed that cost estimations for large infrastructure projects included in the CP5 assumptions were wide of the mark. NR has been much better at predicting its on-going costs - and indeed reducing them - than those for enhancements which were at early stages of development when the DfT published its HLOS with the result that the costs were not well understood. So this time round the CP6 agreement will include only the on-going costs of operation, maintenance and replacement and, possibly, the costs of those enhancements planned for CP5 which have been delayed to CP6. In England and Wales at least the agreement will be on a route-by-route basis and will no longer be an agreement for NR as a whole.

NR will now apply for funding for enhancements - new stations, flyovers, electrifications and so on - outside the CP6 process when the projects have been more completely designed and costed. As a result the headline figures for CP6 will not be directly comparable to earlier Control Periods.

 

[HH]

The other key difference this time round is the involvement of RDG, e.g. Schedule 4 and Schedule 8 re-benchmarking is being led by that august body...

 

[Olaf]

Latest state of play:

HLOS - CP6 Statement of Requirements
https://www.gov.uk/government/uploa...30674/high-level-output-specification-web.pdf
- 2017-07-20

provides an initial Statement of Funds Available (SoFA), which will be subject to finalisation by 13 October 2017

The Government does not intend for Network Rail to obtain any further loan during CP6 from either Government or other sources. Government has noted the obligations Network Rail has to its bondholders during the Control Period and will ensure that adequate funding is provided to meet these obligations,

A number of other non-rail specific sources of public funding exist, and the railway industry may wish to apply for these in order to support its Control Period 6 activities.

The industry should also seek to maximise possible third party funding contributions, including from land use planning, where it is consistent with the Government’s National Planning Policy Framework.

The forecasts appear low based on previous growth expectations, but perhaps they are expecting a wider tailing-off in growth.

 

[hwl]

The forecasts appear low based on previous growth expectations, but perhaps they are expecting a wider tailing-off in growth.

Agreed but the latest indications are that growth has trailed off in places but this mostly has obvious explanation e.g. GTR: works and industrial relations, GW works

If they said they were expecting growth they would have to fund more! Hence predict low growth spend less and leave the mess for the next government.

 

[ScotGG]

Agreed but the latest indications are that growth has trailed off in places but this mostly has obvious explanation e.g. GTR: works and industrial relations, GW works

If they said they were expecting growth they would have to fund more! Hence predict low growth spend less and leave the mess for the next government.

Same with Southeastern. Growth hasn't been steller but then Charing Cross, Cannon Street and London Bridge have been closed for extended periods of time in recent years (and another week-long closure of CX and LBG coming up). The Woolwich line hasn't really been open all weekend along its whole length for a couple of years now due to Crossrail. SWT will see similar with Waterloo.

When it all settles down growth will take them by surprise again no doubt. Population growth of 100k+ each year will do that.

 

[TheDavibob]

Same with Southeastern. Growth hasn't been steller but then Charing Cross, Cannon Street and London Bridge have been closed for extended periods of time in recent years (and another week-long closure of CX and LBG coming up). The Woolwich line hasn't really been open all weekend along its whole length for a couple of years now due to Crossrail. SWT will see similar with Waterloo.

When it all settles down growth will take them by surprise again no doubt. Population growth of 100k+ each year will do that.

We saw it with New Street - development finished, station usage shot up by many millions. And that didn't even involve any track works or new trains.

 

[hwl]

Same with Southeastern. Growth hasn't been steller but then Charing Cross, Cannon Street and London Bridge have been closed for extended periods of time in recent years (and another week-long closure of CX and LBG coming up). The Woolwich line hasn't really been open all weekend along its whole length for a couple of years now due to Crossrail. SWT will see similar with Waterloo.

When it all settles down growth will take them by surprise again no doubt. Population growth of 100k+ each year will do that.

Agreed apart from SE who still managing to grow reasonably despite the works, just wait for the surprise growth afterwards!

 

[HH]

Agreed apart from SE who still managing to grow reasonably despite the works, just wait for the surprise growth afterwards!

And wait. And wait. And wait.

Firstly, slowdown is across the board. Secondly, DfT has buggered up SE with Thameslink - they will have a worse service come 2019.

 

[snowball]

There's a thread on CP6 funding in the Infrastucture forum, which is probably the best place for the discussion. It has been going since March:

http://www.railforums.co.uk/showthread.php?t=143671

 

[Olaf]

Agreed but the latest indications are that growth has trailed off in places but this mostly has obvious explanation e.g. GTR: works and industrial relations, GW works

The biggest fall in patronage was on the SWML IIRC, and in longer distance travel rather than the inner suburban.

If they said they were expecting growth they would have to fund more! Hence predict low growth spend less and leave the mess for the next government.

A very silly suggestion.

 

[Olaf]

And wait. And wait. And wait.

Firstly, slowdown is across the board. Secondly, DfT has buggered up SE with Thameslink - they will have a worse service come 2019.

From the quarterly report (2016-17 Q4):

- Marked the lowest year-on-year growth in national passenger journeys since 2009-10 (0.8%).
- Passenger journeys on services in the London and South East sector fell by 0.5%, whilst Long Distance (3.8%) and Regional (3.9%) sectors1 continued to grow.
- Season ticket journeys fell by 2.9% as their market share dipped under 40% for the first time since the series began in the mid-80s. In contrast, advance ticket journeys increased by 9.7% and their market share rose to 3.9%.
- Journeys on the two largest operators’ services, Govia Thameslink Railway and South West Trains fell by 1.9% and 3.2% respectively.

...
- All of the wholly London and South East operators with the exception of c2c, Chiltern and London Overground saw a quarter on quarter decrease in their passenger journeys. This resulted in a 1.9% decline in passenger journeys in this sector. Govia Thameslink Railway recorded the largest decrease of 6.6% but still accrued the highest volume of passenger journeys in 2016-17 Q4, reaching a total of 80 million passenger journeys this quarter.

So not an even decline across the board.

 

[HH]

So not an even decline across the board.

All show a decline in that growth is lower than it has been. In some cases that denotes negative growth. Decline does not equal negative...

 

[Olaf]

All show a decline in that growth is lower than it has been. In some cases that denotes negative growth. Decline does not equal negative...

?

Decline is a decrease, and thus represented as a negative value in arithmetic.

There is clearly a decline in the numbers as travelled on the Wessex route, and it is not across the board - as in all routes - with others still showing growth. There were declines on Southern, but the SWML patronage has been declining over a long period.

 

[HH]

?

Decline is a decrease, and thus represented as a negative value in arithmetic.

There is clearly a decline in the numbers as travelled on the Wessex route, and it is not across the board - as in all routes - with others still showing growth. There were declines on Southern, but the SWML patronage has been declining over a long period.

I'll try to explain. If you used to have 5% growth but now have 2% growth, that is still growth (so is not negative), but it has declined.

There is definitely such a decline and it is pretty much across the board - LSE growth has dropped dramatically and Long Distance is looking unhealthy as well. That's 90% of the money.

 

[Class 170101]

The rate of growth has slowed.

 

[The Ham]

I'll try to explain. If you used to have 5% growth but now have 2% growth, that is still growth (so is not negative), but it has declined.

There is definitely such a decline and it is pretty much across the board - LSE growth has dropped dramatically and Long Distance is looking unhealthy as well. That's 90% of the money.

...and watch it pick up again once things like the class 80x's start to increase capacity on long distance services and the introduction of the new(old) units on SWT as that franchise goes forward.

There's been limited "new" coming forward during the time since the ICWC got messed up so it's not surprising that some areas haven't been doing as well as they had been as those areas Could be running out of capacity.

 

[Alfie1014]

The whole HLOS this time around is very thin, expectations were that enhancements would be reigned back in but the growth predictions are very cautious, as they will have been under-pinned by The Treasury's forecasts for Central London and other cities employment they don's suggest a very healthly time for the overall economy in the short to medium term.

London growth at only 4.9% (for the three peak hours) between 2018/9 and 2023/4 compared to the 22.1% forecast for 2013/4 to 2018/9. Undoubtedly the latter was knocked off course by Brexit and has been reflected in the figures for the last year as mentioned by others.

The detail throws up some interesting nuggets too, with zero growth forecast for services into Fenchurch Street, (with even a slight drop in the high peak hour!), compared to an 11.85% increase in growth on non-Crossrail services into Liverpool Street. Goob job then trying to make the business case for the contracted extra units on c2c when growth is forecast to be zero! Odd especailly as there's undoubtedly some competition between the two routes to Southend at least! The Liverpool Street increase is predicted to be the highest in absolute terms of all London routes, though services into Kings Cross (non Thameslink) have the largest percentage increase at 21.7%. In some respects some of the figures look more like what capacity increase has been contracted by franchisees rather than forecasts, which surely is the answer not the question and a bizarre adoption of the policy of and provide then predict!

There's no doubt that both Crossrail and Thameslink skew the absolutes and that delays to delvering the full services on both routes until CP6 may be muddying the waters for simple comparisons however.

The non London forecast is similarly modest at 2.7% compared with 16.0% for the five years going forward back in 2012.

All the above must throw up many questions for the TOCs and owning groups not least if their own forecasts are now out of line with the DfTs and the Treasury. No wonder there are apparently queues for reviews of franchise terms at Gt Minster House?