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Statement of Funds Available Published

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Mordac

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https://www.gov.uk/government/speec...ing-statement-of-funds-available-2019-to-2024

Rail infrastructure funding: statement of funds available 2019 to 2024
Around £47.9 billion to be spent on the railway across control period 6.


I am today (12 October 2017) publishing my final Statement of funds available (SoFA) for the railway in England and Wales for control period 6, which covers the years 2019 to 2024. This follows my publication of a High level output specification and initial SoFA on 20 July.

The high level output specification made clear that the government is determined that the railway becomes more focused on issues that matter most to passengers – such as punctuality and reliability. It therefore focused on the operation, maintenance and renewal of the railway – areas which are crucial to delivering a more reliable railway. At the time of its publication, the government deferred publication of a final SoFA, following more work to establish Network Rail’s costs and the scope for efficiency savings across control period 6.

This work has now concluded. On the basis of further work by Network Rail, of continued scrutiny by the Office of Rail and Road (ORR) – including through its independent reporter, Nichols – and through work by my department and HM Treasury to challenge costings, government is now in a position to set out its funding envelope for control period 6.

At this stage we expect around £47.9 billion to be spent on the railway across control period 6. Of this, we expect up to £34.7 billion to be provided directly via government grant, with the remainder coming from a combination of track access charges and income from other sources, such as Network Rail’s property portfolio. These amounts will be refined during the regulatory process, which will produce by summer 2018 detailed draft amounts for the 2019 to 2024 period for consultation. Budgets will be set at route level, as part of the devolution of more accountability and authority to Network Rail routes, driving change in the organisation. The regulatory process will conclude with a final determination in October 2018.

During this process I expect the regulator to provide a strong efficiency challenge to maximise value for money, and the ORR has substantially changed its regulatory approach to help achieve this.

We have some of the most intensively used railways in Europe, and this investment focuses on the essential work needed to ensure their safety and reliability, including funding to support a significant increase in renewals activity compared to the current period, and increased maintenance spend to allow Network Rail to meet the challenges of a busier network. This investment recognises the critical importance of these activities in preserving the day to day operation of the railway.

I believe that a renewed focus on core railway activities will help return train performance to the levels that passengers expect and deserve. Overall, this significant funding demonstrates government’s continued commitment to investing in the railway for the benefit of passengers, communities, the supply chain and the wider economy.

Government has already made clear that it expects new enhancements to the rail network to be developed outside of the regulatory system. However, the SoFA published today includes funding to continue to take forward the enhancements that were deferred from control period 5. In line with the new process for enhancements these schemes will continue to be subject to ongoing consideration to ensure they deliver the best results for both rail users and taxpayers. In addition to this, I am making funding available for the early-stage development of new enhancement schemes. I will announce further details on a new process for taking forward enhancements later in the year. We need to ensure investment best addresses the needs of passengers and freight, and that funding commitments appropriately reflect the stage of development of those enhancements.

Furthermore, the SoFA also includes funding for continued investment in improvements to both the accessibility of the railway and the rail freight network. Our commitment to funding accessibility improvements in the railway further emphasises our drive to ensure that the railway is accessible to all. The government has recognised the crucial role that rail freight plays in supporting the economy and the environment and our continued investment in the freight network recognises this.

Given the need to spend public money wisely and to incentivise the industry to do so, I believe the funding envelope published today is stretching yet achievable. I will continue to push Network Rail to improve its effectiveness and efficiency. In particular I support an ambitious approach to route devolution, so that Network Rail is more focused on its customers. I will also modernise the government’s oversight and assurance arrangements for Network Rail to properly reflect its public sector status. I have taken steps to ensure that this money is spent more effectively and that the problems with cost and delivery which occurred during control period 5 are not repeated. I will also continue to drive improvement across the wider industry, including the franchising system. I will update this House further on my plans for wider rail strategy in the near future. I am arranging for copies of the SoFA to be placed in the libraries of the House.

Statement itself here: https://www.gov.uk/government/uploa...005-statement-of-funds-available-2017-web.pdf

I bolded something i thought particularly important.
 
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The Planner

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CP5 was about £38bn IIRC? Not sure if that was the network grant, if so then CP6 has been reduced.
 

BantamMenace

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For those of us not within the industry what does this actually mean?

Is it just a budget that Network Rail has to spend over the next 5 years?

Who is responsible for determining how this will be spent (e.g. Electrifications, Platform extensions, Station/Junction remodelling, etc.) and when will announcements on these specifics be?

Is there any underlying, non-public, shopping list behind this budget that will be drip-fed to the public over the coming years?
 

Old Hill Bank

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For those of us not within the industry what does this actually mean?

Is it just a budget that Network Rail has to spend over the next 5 years?

Who is responsible for determining how this will be spent (e.g. Electrifications, Platform extensions, Station/Junction remodelling, etc.) and when will announcements on these specifics be?

Is there any underlying, non-public, shopping list behind this budget that will be drip-fed to the public over the coming years?

Most of the money is for maintenance and like for like renewals forget any major enhancements in that number and if The Planner is correct and it is a reduced number to CP5 it may not be good news.
 

Chris125

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https://www.globalrailnews.com/2017...pledges-47-9-billion-funding-to-network-rail/

I think this explains how enhancements will be funded.

Defining the actual work to be undertaken now passes to the regulator, the office of Rail and Road (ORR), working with Network Rail.

Plans are that, for the first time, funding of maintenance and renewals will be split from enhancements. The former, which will keep the railway running, will be financed by an agreed set figure.

Enhancements, on the other hand, will be funded on a case-by-case basis. This will force Network Rail to plan and cost each one properly, something it has been criticised for failing to do for some recent high-profile projects, but it will also give the organisation time to do that planning in a structured way, without the constraints of a formal control-period funding process.

When an enhancement project is fully planned and costed, it will be ‘offered’ to the ORR for funding approval. At this stage, budgets will be agreed and set, coming out of he total amount defined by the SOFA. Network Rail has a pretty good record of sticking to planned costs for those types of projects.
 

YorkshireBear

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CP5 was about £38bn IIRC? Not sure if that was the network grant, if so then CP6 has been reduced.

I believe the £38 billion included everything and so therefore this figure might be higher....

Didn't the £38bn also include enhancements whereas this only includes deferred enhancements so could it be viewed as an increase. I am just trying to find out the original statement of funds for CP5.
 

Olaf

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The final figure for the direct grant agreed in October 2013 between the ORR, Network Rail and DfT for CP5 was GBP 38.3 Billion (2013 figures).

The equivalent in 2017 figures would be somewhere between GBP 40 and 42 Billion.
 
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DarloRich

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CP5 was about £38bn IIRC? Not sure if that was the network grant, if so then CP6 has been reduced.
up overall but dependent on reaching a "stretch" target on funding via ( for eg) the sale of more of the property portfolio. Direct grant is £34.7bn
 

Olaf

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up overall but dependent on reaching a "stretch" target on funding via ( for eg) the sale of more of the property portfolio. Direct grant is £34.7bn

Yes. Network Rail has so far not achieved any recovery of the GBP 1.6 Billion it was required to find as part of the interim settlement.

However, the scope of the provisional GBP 34.7 Billion is not going to be the same as in CP5.
 

Olaf

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That cut is approximately inline with the 15% average spending reduction that was imposed on other departments.
 

CdBrux

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Isn't this just "operations, renewals and maintenance" plus some deferred CP5 enhancement projects that pass a value test (with other enhancements to be developed and funded outside CP process) vs CP5 which was "operations, renewals and maintenance" AND enhancements, of which the enhancements were around 12 or 14bn?.
Which of the CP6 numbers is comparable to the CP5 of 38bn, is it the total 47.9bn or the government grant of 34.7?
 

Mordac

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This is a good article summarising the differences:
https://www.railnews.co.uk/news/2017/10/13-network-rails-public-funding-limits.html

Network Rail’s public funding limits revealed

THE transport secretary Chris Grayling has published the delayed Statement of Funds Available for Network Rail’s next five-year control period, which begins in April 2019.

The headline figure of £47.9 billion is higher than some sources had been predicting. It includes a contribution of up to £34.7 billion by direct grant, with the balance coming from NR’s various revenues, including track access charges and property rents.

The Rail Delivery Group said the document was a ‘vote of confidence’, while Mark Carne of Network Rail said continued high investment was essential. Passenger watchdog Transport Focus warned that the industry should now keep its ‘basic promises’, while Labour’s Andy McDonald has criticised what he described as a ‘chaotic approach’ to rail investment.

In his written statement to Parliament, Mr Grayling said: “The government is determined that the railway becomes more focused on issues that matter most to passengers – such as punctuality and reliability. It therefore focused on the operation, maintenance and renewal of the railway,”

The total figure is higher than some industry observers had been expecting, because they feared that there would be less for NR from 2019 than in 2014, when the budget for the current control period – CP5 – was £38.4 billion.

The CP5 figure included £12 billion for network enhancements, particularly electrification, much of which has since fallen by the wayside as the true costs became clearer.

This time round there is no figure for enhancements as such, but Mr Grayling told the Commons that some of them are included in the headline budget, at least in principle. He did not name any of these schemes.

Network Rail chief executive Mark Carne said: “Continued high levels of investment in our railway is essential to create the jobs, housing and economic boost our country needs to prosper. Today's announcement shows the Government's endorsement of this approach.”

The Rail Delivery Group described the announcement as a ‘vote of confidence’ . Chief executive Paul Plummer said: “This decision recognises the importance of our railway to the economy and to the communities and customers it serves and it represents an important vote of confidence in the industry’s ability to deliver while providing greater certainty for jobs and investment in the supply chain.”

Companies supplying the railway with products and services employ at least 120,000 people, and Darren Caplan of the Railway Industry Association said: “The commitment to increased funding announced is recognition of the need to counter the increasing backlog of renewals work. This settlement will help Network Rail and its supply chain to maintain the rail system.”

Rail watchdog Transport Focus, meanwhile, called on the industry to honour its ‘basic promises’. Chief executive Anthony Smith said: “We’re pleased to see that government is listening to what passengers want – better day-to-day reliability – and making that the main focus. Passengers tell us they want more reliable trains, a better chance of getting a seat or at least standing in comfort, and less delays.

“The proof will be when passengers start to see more reliable services and better value for money. Passengers now pump around £9 billion a year into the industry. In return they should expect the basic promises made by the industry to be kept.”

Some politicians were critical. Labour’s shadow transport secretary Andy McDonald said: “Today’s statement of funds available for the rail industry highlights the government’s chaotic approach to rail investment: its promises, pauses and cancellations are all catastrophically undermining the industry.

“Pledges about record levels of funding will ring hollow both for passengers denied much needed upgrades and a rail supply chain haemorrhaging jobs and skills.”

The detailed figures must now be crunched by the Office of Rail and Road so that a Final Determination can be published by the ORR in October 2018.



ANALYSIS

Almost £48bn, but this SOFA is short on details

Sim Harris


THERE has been a broad welcome for this SOFA from the industry, accompanied by sighs of relief.

The complicated saga of electrification, or more accurately lack of electrification, had put the wind up quite a few people, accompanied by fears – mostly unvoiced in public – that the Treasury might reduce Network Rail’s credit limit from 2019.

Electrification was a major plank of the last High Level Output Specification and its companion SOFA in 2012, but dawning realities over costs caused repeated casualties.

Schemes carried off hurt during CP5 have included the Great Western routes to Bristol Temple Meads, Oxford, Newbury, Henley-on-Thames and Marlow, and also the promised extension of electrification from Cardiff Central to Swansea (don’t even think of mentioning the Valley Lines).

The Midland Main Line scheme, which should have connected London and Sheffield with hoped-for ‘infill’ links onwards from there to Leeds and Doncaster, has been cut back to Bedford, Kettering and Corby, while there will be no wires either between Oxenholme and Windermere. A further loss has been the ‘electric spine’ which was intended to stretch from Southampton to the Midlands and North via Oxford and East West Rail.

Transpennine is looking a little uncertain (will it need bi mode trains to bridge the gaps?), although Preston to Blackpool North is going ahead at last this winter.

The big question now is whether any of the CP5 casualties can be revived in 2019-2024. Although there was nothing specific, Mr Grayling allowed the clouds to part sufficiently to reveal one or two glimpses of blue sky.

One of these was: “The SoFA published today includes funding to continue to take forward the enhancements that were deferred from control period 5. In line with the new process for enhancements these schemes will continue to be subject to ongoing consideration …”

A further gleam of sunlight followed: “In addition to this, I am making funding available for the early-stage development of new enhancement schemes. I will announce further details on a new process for taking forward enhancements later in the year. We need to ensure investment best addresses the needs of passengers and freight, and that funding commitments appropriately reflect the stage of development of those enhancements.”

So some of the aborted CP5 schemes could be revived in CP6. We don’t (naturally) know which ones. Indeed, Mr G. is also considering further schemes but again these are cloaked in anonymity.

We may also speculate that very little in the way of new work will be authorised until every scrap of possible private sector funding has been scrutinised and held up to the light first.

Glimpses of blue sky perhaps, but it may be a little soon to put the umbrellas away just yet.
 

HowardGWR

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Rail watchdog Transport Focus, meanwhile, called on the industry to honour its ‘basic promises’. Chief executive Anthony Smith said: “We’re pleased to see that government is listening to what passengers want – better day-to-day reliability – and making that the main focus. Passengers tell us they want more reliable trains, a better chance of getting a seat or at least standing in comfort, and less delays.

Mr Smith should try using correct English; 'less delay' but 'fewer delays'. There is an important difference.
 

IanXC

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*bangs head against brick wall*

Transport Focus really are clueless aren't they? Of course we can make more and more services operate on time on the same infrastructure, no need for capacity increasing schemes that he clearly paints as being extravagant irrelevancies.
 

HowardGWR

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Perhaps it's not so bad. I assume that the capital part will include all the 'deferred' schemes and only omit the 'cancelled' ones (e.g. MML, Lake district and Swansea). I do have qualms over recalculation of BCRs for parts of schemes that originally had BCRs for entire routes (e.g. the two Bristol join up bits to Parkway and Thingley Junction). If the entire routes were worth doing, so they are now. That goes for the cancelled ones too of course, as it happens. MML had a very high BCR for its entirety before someone put these stupid notions into Grayling's head.
 

Chris M

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well if the B does not change and the C does so the answer will change!
I think the point was that if you calculated the BCR of electrifying London to Swansea as positive, cancel the Cardiff to Swansea section, and then recalculate the BCR for electrifying between Cardiff and Swansea using the new costs that's not the same as recalculating the BCR of electrifying London to Swansea with the new costs. The BCR of the former approach will be much lower than the latter because the costs will be the same but the benefits significantly less.
 

Olaf

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Which of the CP6 numbers is comparable to the CP5 of 38bn, is it the total 47.9bn or the government grant of 34.7?

We will not know until about this time in 2018, and direct comparisons will be difficult - as evidenced by a number of incorrect assumptions made in the media.

Factors to be considered:
  • Finalised scope of areas to be covered by this fund,
  • Funds already announced and/or committed which will be counted as part of this total,
  • Industry cost changes between now and October 2019,
  • Impact of changes to interest rates on costs of funding,
  • The final figure for the CP5 cost over-spend/under-delivery - last estimate was that this might come out at about GBP 2.6 Billion,
  • Resolution of the interim settlement,
  • Details of what will be done about NR debt,
  • Impact of changes to "structure of delivery" between now and CP6.
 
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rebmcr

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I think the point was that if you calculated the BCR of electrifying London to Swansea as positive, cancel the Cardiff to Swansea section, and then recalculate the BCR for electrifying between Cardiff and Swansea using the new costs that's not the same as recalculating the BCR of electrifying London to Swansea with the new costs. The BCR of the former approach will be much lower than the latter because the costs will be the same but the benefits significantly less.

It would be nice to mandate a counterpart recalculation for the non-cancelled part, to see whether that would have ever stood on its own either.
 

cogload

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It is a bit smoke and mirrors. Although the headline figure looks larger, the direct grant has fallen and the stretch money relies on a lot of external factors. The state of the economy, the ORR annihilating the freight industry in the next TAC review etc.

There is also the element (noted above by Olaf) of the funding of CP5 schemes. These will be presumably be coming out of the headline rate and as such represent a further real terms cut. Money is being spent twice, once in the previous CP and once in this CP.
 

Class 170101

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There may well be extra subsidy for TOCs if Access Charges are higher than in the winning bids to reflect the difference.
 

InTheEastMids

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I do have qualms over recalculation of BCRs for parts of schemes that originally had BCRs for entire routes (e.g. the two Bristol join up bits to Parkway and Thingley Junction). If the entire routes were worth doing, so they are now.

I don't necessarily agree - if you're using bi-modes and can therefore do much more piecemeal/creeping/phased/discontinuous electrification (choose your own adjective!), then does it make sense to calculate BCRs in a way that reflects that new reality. Considering the MML, with traditional electrification, you had to get the wires to Nottingham and Sheffield or not at all, at the same time as convert all trains to 100% running. Assuming the MML does get bi-modes, you can look at the marginal case for each new bit of wiring, at the risk of the whole scheme being never completed.

I'll be honest - I don't think many people share this nuanced view of how bimodes are a bit of a gamechanger for electrification (whether overhead/diesel or overhead/battery)
 

Olaf

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I don't necessarily agree - if you're using bi-modes and can therefore do much more piecemeal/creeping/phased/discontinuous electrification (choose your own adjective!), then does it make sense to calculate BCRs in a way that reflects that new reality. Considering the MML, with traditional electrification, you had to get the wires to Nottingham and Sheffield or not at all, at the same time as convert all trains to 100% running. Assuming the MML does get bi-modes, you can look at the marginal case for each new bit of wiring, at the risk of the whole scheme being never completed.

That is correct - the deployment of bi-modes on a route facilitate a step-wise technical implementation of Electrification on that route, but the problem is, after procuring new vehicles that can operate the route, the cost/benefits of increment Electrification become very high such that there will be few cases where it will be justifiable, that is until the vehicles are either due to retire, are cascaded, or the work forms a beneficial part of a broader project.
 

rebmcr

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I don't necessarily agree - if you're using bi-modes and can therefore do much more piecemeal/creeping/phased/discontinuous electrification (choose your own adjective!), then does it make sense to calculate BCRs in a way that reflects that new reality.

Said BCR should also be affected on the other side of the equation — the areas that do get electrified no longer carry the benefit of abandoning diesel maintenance facilities on depots, nor the marginal fuel/weight savings.
 
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