R A I LT R AC K - The Railways Archive

What the plans deliver
The major deliverable from these plans is the capacity to accommodate a 30% growth in passenger kilometres and a 200%
growth in freight volumes over ten years.
The effect of our plans will be to produce a range of other improvements to the capacity and capability of the network.
In addition to the targets we have set for improvements to delays per train movement of 7.5% and 5% respectively for the
next two years (1999/2000 and 2000/01) our renewal plans involve further annual reductions averaging 2.5% over the next
Control Period.By 2005/06,the cumulative reductions in delays per train movement attributable to Railtrack will have reached
nearly 60% against 1995/96 levels. We are also currently evaluating the cost implications of an alternative option of achieving
5% annual performance improvements post 2001 which we shall be discussing with the Franchising Director.
Following commitments made to the Rail Regulator, we have started to implement a track-quality improvement
programme which, by April 2001,should deliver the highest levels of track quality ever recorded.
Our plans will also produce improvements in journey times, improved station facilities on a range of dimensions,and
an increased freight loading gauge for a proportion of the network,to enable large containers to be carried.
The funding challenge – financing the rail renaissance
This £27bn programme is the largest upgrade of infrastructure since the railways were first built. Delivery of a programme
of this scale involves a massive challenge which can only be met through an effective partnership between the public and
private sectors.
Railtrack is already committed to funding much of this investment through its own borrowing.Our previous programme
of £17bn will already lead to us being one of Britain’s biggest borrowers with an expected debt of around £4bn by 2003/04.
The additional financing required to fund this investment can only be sustained if Railtrack and other interested parties have
the right financial framework which provides an appropriate return on investment – both debt and equity.
The Rail Regulator is currently reviewing our financial framework as part of his periodic review of access charges. In
December, he published his initial conclusions on the financial framework, following the broad approach adopted for other
utilities,such as water. But as a low-risk/low-return‘contractor’and with a regulatory asset base defined in terms of the original,
heavily discounted, flotation value , our future revenues would be reduced and our funding capacity would be significantly
curtailed.
Our current rate of renewal spend (£1.4bn annually) is double the level three years ago and by 2001 we shall have
spent £1.25bn more than the Rail Regulator allowed on renewals when the current level of access charges was set in 1994
– although he has so far been unwilling to allow a return on this additional spend.The tight financial framework outlined in
the Rail Regulator’s December document will not enable the proposed programme to be delivered.
However, the Regulator indicated a way out of this dilemma.This was for us to grow our business through commercial
partnerships with customers and Government, taking additional risk but securing additional rewards.That is what we have
sought to do through this NMS.
With accelerated or new investment being one of the Government’s published criteria for franchise renegotiation, we
anticipate working with train operators to assist them in this process.
Delivery of these plans provides a challenge to Railtrack, the Rail Regulator, the Strategic Rail Authority and to the
Government to develop the right financial framework and balance of risk between the public and private sectors. Rail
investment has the potential to produce benefits which go much wider than the industry and ultimately affect the quality of
life in this country. For this reason,it requires a true public–private partnership.
The Rail Regulator
indicated a way out
of this dilemma... to
grow our business
through commercial
partnerships with
customers and
Government
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