Deadline for multi-billion CP5 rail funding package appeal looms

Network Rail has until Friday 7 February to decide whether or not it will appeal against the Office of Rail Regulation's (ORR) draft determination for its Control Period 5 (CP5) spending between 2014 and 2019.

The ORR draft determination published in June last year awarded Network Rail £37.869bn for CP5, over £2bn more than for Control Period 4 (CP4) which ends in April. However, The operator was subsequently criticised by the regulator for a £1.2bn underspend on maintenance and renewals in the first four years of CP4.

However, last September Network Rail complained that the ORR's draft determination is £2.4bn short of the costings for work outlined in its original strategic business plan for the CP5 period published in January 2013. It asked the regulator to restore £1.4bn to the budget claiming among other things:

  • The assumed cost of financing in the draft determination was too low       
  • cuts to its planned IT and technological innovation budgets would damage a drive to be more efficient
  • “unrealistic” expectations of property income
  •  25% extra savings demanded in delivery of the renewals budget overlooked the higher costs of work on the most highly trafficked train paths

At the time David Higgins, then-chief executive, said: “The regulator’s determination provides the opportunity for Network Rail and the industry to build on the progress and success of the last decade, but whilst there are many aspects of the draft which we welcome, taken as a whole we believe it is unbalanced and, therefore, unrealistic".

Despite these claims the ORR's final determination published last October raised the figure for CP5 by just £400M to £38,293bn. Network Rail has been assessing these figures and the terms of the determination since to decide whether or not to appeal. 

Industry experts point out that spending plans for rail are the highest for generations and expect the draft determination to stand. “If we can’t do the work for all that money then none of us should be in this business,” was a typical comment.

Network Rail's new chief executive Mark Carne joins from oil giant Shell formally in April. Following Sir David Higgins' departure to HS2 in January, Network Rail has also lost major projects director Simon Kirby and infrastructure finance boss David McLoughlin, departures which might also limit its arguing power.

Latest figures from Network Rail estimate that maintenance spending in CP5 will be £4,669M (down from £5,407M in CP4), on operations £2027M (CP4 2240M), core renewals £12,081M (CP4 £11,511M) and enhancements £12,390M (CP4 £11,276M).

If you would like to contact Jackie Whitelaw about this, or any other story, please email