A cross Industry five year plan released by Network Rail last week has estimated that rail companies could be saving up to £1.3 billion a year by 2019, meaning there will be a far smaller percentage of government subsidy needed.
The plan’s publication represents the first part of a five year long collaboration between the rail regulator and Network Rail.
There has been some criticism of the plan from the Office of Rail Regulation who believe that some of the savings Network Rail already claim to be making may not be valid.
Network Rail collaborated with train operators and suppliers to devise the plan which explains how costs can be reduced across the rail industry allowing the governments to reduce its annual spend on railways from the current figure which stood at £4.6 billion in 2009/10.
Amongst the changes that Network Rail has suggested are more collaborations between different service providers and offering more lengthy contracts to service providers.
According to the Network Rail report savings of 16% on rail maintenance should be made from when the plan starts in 2014.
However, the ORR called Network Rail’s assertion into question as they believe Network Rail have not made as large a percentage of savings as they claim and that the rail giant were unable to produce evidence that showed they had achieved the savings they had claimed.
Paul Plummer, Group Strategy Director for Network Rail commented that collaborating more closely with other industry players was an efficient way to make savings and would also give the government more choice about the funding decisions they made.
It is hoped that the government will decide by next summer which parts of the projected plan will go ahead and which parts of it they will fund and what percentage of funds will be made available for rail funding.
After this the ORR will make a decision as to the spend Network Rail need to make and how much funding will be needed. This decision will be made in 2013. Meanwhile Scotland’s government have made an announcement that they will have a new rail link built next year which will be funded solely by Network Rail and not as originally planned by private investors.
Originally the Borders Railway, which will run between Tweedbank and Edinburgh, was expected to be financed through private funding but two of the investors dropped out and Network Rail stepped in.
It is hoped that Network Rail’s involvement will provide a significant saving for the tax payer.