Network Rail CP5 - Wants £1.4 Billion Back from ORR

[LNW-GW Joint]

Network Rail has responded to the ORR draft determination of its CP5 funding (2014-19): http://www.networkrail.co.uk/public...period-5/response-to-the-draft-determination/
Basically NR has refused to accept the determination and wants "at least £1.4 billion" added back by ORR to deliver what it is being asked to do in CP5.
The reasons are many and various, but seem pretty fundamental:

page 14 (gives page numbers where more detail can be found)
– The scale and pace of change proposed is unrealistic and the Draft Determination is not a balanced package 15
– The regulatory regime is more intrusive and complex than is regarded as appropriate in other sectors 20
– The approach to monitoring and measuring our business performance is complicated and includes hurdles based on subjective measures 25
– The investment framework should support a broad range of opportunities including efficiency, safety and R&D 29
– The capacity and performance framework is inconsistent and potentially inflexible 36
– The assumed cost of financing is too low 44
– The projections of property income are unrealistic 47
– The proposed level of expenditure on information technology is inadequate 50
– The expectations on track and signalling unit costs and efficiencies are unrealistic 53
– The assumptions on other renewals are also unrealistic, and the consequences from the framework for buildings needs to be clarified 61
– The proposed efficiency for the management of inflation is unprecedented and unrealistic 65
– The enhancement framework needs to be sufficiently flexible to manage the portfolio efficiently 70

This does not look like a set of minor quibbles which can be fine-tuned out.
More like a "line in the sand", essentially saying if you want all the CP5 work to happen, you have to pay up for it.

I should think this debate will last until just before CP5 starts next April.
The detail in the linked document doesn't go down to individual projects, but basically NR thinks that ORR has picked an unrealistic line on efficiencies to be delivered, while not recognising the cost increase pressures.
I noticed in a quick read there are dark hints that the MML, East West and Northern Hub projects are going to cost more than expected.
Happy bedtime reading.

 

[WatcherZero]

Part of the process of negotiation.

ORR will now come back and say how about we give you an extra fiver and NR will yell 'Sold!'

In all seriousness NR will be trying to get the most they can from ORR and ORR will be trying to get as good a deal as possible with NR. You dont get much traction in a negotiation if you come in and say its a fair cop we agree with your position but can we have a little more, you have to make it sound like they are being unreasonable and expecting miracles.

They cant shop around for a different provider to spark a price war but ultimately ORR can impose a settlement so its a case of who has the biggest set of dangly ones in the talks.

 

[D365]

I think this is going to be diverted as a lump salary for the new Big Cheese :P

 

[Xenophon PCDGS]

Do I sense the Treasury somewhere in the dark background of this debate ?

 

[LNW-GW Joint]

Do I sense the Treasury somewhere in the dark background of this debate ?

The HLOS gives the ceiling for railway spend 2014-19 at £20 billion (£16.8bn for England and Wales and £3.3bn for Scotland).
This covers the grant to Network Rail, and assumes a level of net premiums from the passenger franchises coming into the coffers.
No doubt these figures were agreed with the Treasury last year.

If Network Rail wants more money than is available, something will have to give.
ORR can't just say "Oh go on then, have another £1.4bn".
Either the franchises deliver more premiums (meaning eg less generous rolling stock provision), or NR jettisons some work (eg Electric Spine, or signalling migration).
They've got six months to get to a sensible solution.

 

[Xenophon PCDGS]

The HLOS gives the ceiling for railway spend 2014-19 at £20 billion (£16.8bn for England and Wales and £3.3bn for Scotland).

This covers the grant to Network Rail, and assumes a level of net premiums from the passenger franchises coming into the coffers. No doubt these figures were agreed with the Treasury last year.

In a further Treasury push to achieve even more reductions of Government ministerial department spending, would it come as a surprise if that figure of £16.8bn for England were to be reduced, despite a past agreement being made ?

 

[ChiefPlanner]

As others have said - it is all for "negotiation" - as more work is done on project development , then the spend can be agreed. Remember , projects can come out the right side - (Reading being a good example which is well on the right side of estimates)

I think you can call it "constructive debate" ....

 

[tbtc]

Remember , projects can come out the right side - (Reading being a good example which is well on the right side of estimates)

I hope those in the HS2 debate read this

 

[Old Hill Bank]

I do hope that re-instatment of Birmingham Snow Hill Platform Four survives any cull, the ability to provide similtanious up arrivals and departures from the Kidderminster direction would be a major boost.

 

[The Planner]

Would imagine that being an interesting signalling design problem as I would suspect the signalling overlap would extend into the tunnel stopping that sort of move.

 

[Old Hill Bank]

It's called line speed and trap points.

 

[Tomnick]

Trap points can't, as far as I'm aware, be used to mitigate against a SPAD at a signal which passenger trains approach. Would there be space to derail a train from the 'middle' platforms without fouling the adjacent line anyway? A reduced overlap, with delayed yellow at the signal in rear, might be sufficient.

 

[The Planner]

Looking at the signalling diagram this appears to the the case. There are trap points at both ends with some short 50m overlaps at the protecting signals, so there will be some approach control Id assume. Will also account for the 15mph linespeed through the station.