Future Network Rail Investment

MarkRedon · 13 Sep 2017

A news item in the Telegraph gives some examples of schemes that Network Rail would prefer to be financed in whole or in part by companies or by councils:
http://www.telegraph.co.uk/business/2017/09/09/call-private-rail-funding-keep-upgrades-track/

Network Rail is poised to demand help to pay for an initial dozen schemes. The taxpayer-owned company said earlier this year that it wanted to invite more private sector involvement. It has identified projects it believes should be part or wholly funded by private companies or councils, which would benefit from the works.

Examples on a list seen by The Sunday Telegraph include the potential upgrade to the Cumbrian line to help with the building of the NuGen Sellafield power station. Network Rail believes the companies linked to the power station should back the project given the support it will provide the construction effort.

Also on the list are projects that Network Rail believes could be built, financed and operated without it being involved in any way. These *include the proposed western rail link to Heathrow Airport and an upgrade to the Brighton main line in the Selhurst/East Croydon area. Funding from Coventry City Council is also suggested *towards station improvements there.

Not included in that list, but apparently already well advanced along similar lines, are the proposals to fund the East West rail scheme.

I incline towards the pragmatic. If, by almost any means, new and effective rail infrastructure can be built bring it on. There are obvious concerns about what happens should private finance run out during the construction of a scheme and about ongoing operating subsidy requirements. Less obviously, private investors will seek guarantees that reduce their risk, which then give rise to potential or actual cost to public finances. These are questions for risk assessment and management, in which there is much existing experience. For the little that it is worth, I would wish that to come under the auspices of Network Rail.

As to concerns about greater risks of questionable design and construction or later operating practice: Network Rail and/or the Office of Road and Rail will necessarily be involved in the integration of new infrastructure into the existing railway system. I think we can trust them to be careful.

RailUK Forums

CdBrux · 13 Sep 2017

Saw this article by the mayor of Cambridgeshire & Peterborough which is of some relevance here:

James Palmer is the Mayor of Cambridgeshire and Peterborough.

As we prepare to leave the European Union, one of the key issues facing this country is the way in which we go about delivering improvements to our strategic transport infrastructure. The status quo isnt good enough and if were to compete on the world stage we need to challenge the current unsatisfactory and slow delivery process.

Personally, as a former council leader and now as Mayor of Cambridgeshire and Peterborough, nothing frustrates me more than the constant delays and lengthy timescales involved in delivering key pieces of transport infrastructure that everyone agrees are essential. I appreciate that the situation is not unique to Cambridgeshire and Peterborough and that up and down the country there are similar tales of plans to deliver key transport projects which are tangled up in a web of bureaucracy and inertia and which breeds mounting frustration from the public. Its for this reason that we need nothing short of a revolution in the way in which we go about delivering improvements to transport infrastructure.

I would argue that now, more than ever, its important to address this issue and to break the cycle of negative thinking that so often leads to regions of the UK being starved of the transport infrastructure they need. Our impending exit from the European Union heightens the need to equip ourselves for the challenges ahead and provide the framework within which we can be nimble and dynamic on the world stage. At the same time, the housing crisis in our country demands that we act. For if we are to deliver housing on the scale we need we must upgrade the infrastructure first.

However, as it stands, with the current low expectations associated with the ability of public bodies to deliver transport infrastructure, I have concerns about the ability of Cambridgeshire and Peterborough to meet the challenge unless were prepared to do things differently.

Take the example of the proposals for Cambridge South railway station. Rarely, if ever has there been such a cut and dry case for a new railway station. The proposed site is at the heart of the biomedical campus, with much of the land owned by Astra Zeneca. The businesses based on the campus, such as Astra Zeneca, are international in their reach and are at the cutting edge of the life sciences sector. Astra Zeneca alone employs over 2,000 people on the campus and that number is scheduled to increase tenfold once its new research facility opens. With the roads around the campus being already congested, the need for a new train station is urgent and in time will become acute.

Astra Zeneca who own the site of the proposed station are keen to do everything they can to move the project forward. However, according to Network Rail, its likely that the station wont open for another five years, that is, in 2022. The main reason for the very lengthy timescale is the incredibly complex and cumbersome Governance for Railway Investment Process (GRIP) that Network Rail must follow before the station opens. Last month I attended a meeting at the US Embassy to push for increased trade links between Silicon Valley and Cambridge and I had some difficulty in explaining the reasoning for the long timescales associated with the project.

Another example of the extraordinary timescales involved with delivering rail infrastructure is in Soham where there are plans, not to build a new station, but simply to reopen an existing station. These plans have already languished in one Network Rail GRIP stage for eighteen months costing over £1 million.

Unfortunately, such inertia isnt confined to rail. The A47 is a crucial road linking East Anglia to the A1 and the rest of the country. Though in parts a dual carriageway, the section of the road between Wisbech and Peterborough is a pinch point undermining the productivity of the regions economy. Last month Highways England announced their proposed improvements to the A47. One of which is an enlargement to a key roundabout near Wisbech which is unlikely to be completed before summer 2021. The planning inspectorate proposes to spend over a year assessing this small project.So clearly, there is a huge need to do things differently and to question the current process.

As the new Mayor, I hope that the new Combined Authorities will play a key role in addressing these challenges. A Combined Authority commissioned study into dualling the section of the A47 between Peterborough and Wisbech has already begun and is scheduled to report to me by next spring. I am also exploring the possibility of using land value caps to part fund significant pieces of infrastructure.

The National Infrastructure Commission also has a key role to play and, as Chair, Lord Adonis has brought much urgency to his brief. East-West rail is one of the Commissions top priorities and its worth noting that much of the new line will actually be built by the East West Rail Alliance, a consortium which is separate from Network Rail.

A key issue that needs to be considered more often is organisations other than Network Rail leading on the relevant studies and managing the GRIP process when it comes to delivering rail projects. Network Rail does not have exclusivity when it comes to managing the process and, if relevant councils or combined authorities believe that they can move things along more quickly, they should be prepared to take the lead. This is something that Im keen we explore here in Cambridgeshire and Peterborough.

There are many ways in which greater urgency and efficiency can be injected into the delivery of transport infrastructure projects to cut the timescales. Not all of which rely upon changes promoted by the centre. There is significant scope for local leaders, councils, combined authorities, and businesses to ask more questions, demand more, and intervene where necessary. Delivery of local infrastructure projects should be planned in terms of months, not years. Planning authorities cannot be allowed to luxuriate in planning processes lasting for years and years while local people suffer congestion, inconvenience ,and frustration.

WesternS · 13 Sep 2017

The excerpt is interesting, but would it be better in the (still active) Cambridge South thread ? From reading that thread, the specific issues around that particular issue do not seem to be solely located at the proposed station site itself. If it's such a no-brainer, I'd like to know what caused Cambridge South to fail in the New Stations 2 process.

On points made, for a current councillor (East Cambs) as well as new Mayor, Mr Palmer seems to have over-looked statutory procedures and their legally-binding timescales, which give his other constituents their rights (irrespective of one's view on how they may use them). The last thing any project developer wants is a legal challenge on the grounds that the various processes have not been followed.

From talking with those who deal with Network Rail in developing new stations/infrastructure, the GRIP stage-gate process does seem cumbersome and demanding significant costs at various stages without any confidence of further progress/funding. It would surprise me however if any local authority contained the competence to lead on railway design/development processes without significant short term recruitment or expenditure on consultants. And the GRIP process is no doubt not solely of NR's devising, but has DfT and Treasury requirements - something I'd suggest both the press and electorate are keen to see there to safe-guard tax-payers money.

It would strike me that there is a market for private sector investment in rail - the French LGV extensions (Tours-Bordeaux and Nimes-Montpellier by-pass) and Barcelona Metro Line 9 demonstrate that appetite. The issues are, as always in transport projects, traffic/revenue risk (forecasts etc), planning risk, construction risk (greenfields do better than upgrades), and operating risk (integration and safety), along with the associated guarantees that may be sought/offered. NR would influence all of these aspects in some way. Mr Palmer's point about exclusivity is a well-made one here, and one I think any consortia being asked to commit £500m/£1bn is likely and entitled to ask. After all, Balfour Beatty, Carillion and Galliford Try have all had/or have issues around their projects in this private finance field of late...... So far a £684m provision seems to have cost 6 Carillion senior execs their jobs.

With respect to EWR, it will be interesting to see how this is all packaged. I would think that NR's ownership of the relevant track-bed will be transferred to a special purpose company and this entity is financed (equity and debt) through some form of tender process (similar to Thames Tideway and how Transport Infrastructure Ireland/NRA did their motorway schemes ?). Whether the ownership of the asset-owner has both a public and private component will be interesting, although I could see a reversion to the Govt (not NR) being preferred. The delivery of the scheme itself (i.e. construction etc) and the operations of the same could be part and parcel of that tender, but I would suggest that this aspect will be separate and either as a design-build or design-build-operate (DBO). In Ireland a lot has been done through DBO, but DB is equally viable - indeed, this is how HS2 seems to be delivered. How the O&M is done, whether by a TOC, the operating entity owned by the SPC itself (using rented trains) or whomever actually owns/operates the trains is a question for another day. NR/ORR/ATOC (or whomever integrates the timetables on the shared tracks into Oxford and Cambridge) will have to be involved at some point for that purpose but surely the detail of that is a long way away and one that has been solved years ago by the Railway Clearing House (and modern day successors) ?

Chris125 · 15 Sep 2017

MarkRedon said:
A news item in the Telegraph gives some examples of schemes that Network Rail would prefer to be financed in whole or in part by companies or by councils:
http://www.telegraph.co.uk/business/2017/09/09/call-private-rail-funding-keep-upgrades-track/

Might that list be this one tweeted by Richard Clinnick?

HSTEd · 15 Sep 2017

Trying to make NuGen pay for line upgrades to support Moorside [if it is ever built that is] is most likely just to force them to utilise other methods to move construction materials to the site.

InTheEastMids · 15 Sep 2017

HSTEd said:
Trying to make NuGen pay for line upgrades to support Moorside [if it is ever built that is] is most likely just to force them to utilise other methods to move construction materials to the site.

Indeed, I'm pretty sure that any rail link business is well down towards the bottom of the to-do list at Moorside. Toshiba's bankrupt, Engie aren't interested and are exiting the project, one mooted saviour (KEPCO) would want to build a different reactor design. Meanwhile, the offshore wind industry is driving a coach and horses through the business case.

The Planner · 15 Sep 2017

Depends if the powers that give them permission to build it mandate they have to use rail. Only way HS2 got over a lot of petitions with Camden and Hillingdon was a promise to so that.

HSTEd · 15 Sep 2017

InTheEastMids said:
Indeed, I'm pretty sure that any rail link business is well down towards the bottom of the to-do list at Moorside. Toshiba's bankrupt, Engie aren't interested and are exiting the project, one mooted saviour (KEPCO) would want to build a different reactor design. Meanwhile, the offshore wind industry is driving a coach and horses through the business case.

Well that depends on if your goal is near zero carbon emissions or not... but that is rather off topic. [All offshore wind does is turn baseload generating requirement into peaking generating requirement, and it can only supply about 30% of your power at best before drastic storage requirements blow your price through the roof]

And nuclear would be crushing offshore wind either way if the Treasury just wrote a cheque for the plant cost.

edwin_m · 15 Sep 2017

The Planner said:
Depends if the powers that give them permission to build it mandate they have to use rail. Only way HS2 got over a lot of petitions with Camden and Hillingdon was a promise to so that.

Rather than requiring them to use rail they might require them not to use road. I imagine coastal shipping could be a strong competitor for much of the material needed at Moorside.

HSTEd · 15 Sep 2017

Doesn't Sellafield already have a dock capable of recieving seagoing ships because of the spent fuel transits to and from the site from abroad?

Olaf · 15 Sep 2017

squizzler said:
Oh do please tell, the suspense is killing me. You are apparently in the know so please spill the beans...

Announcements will be made in due cours, but there is plenty to digest in the meantime.

squizzler said:
Anyhow that is rather the point of the Hansford Review isn't it - to liberate NR from the feast and famine nature of government driven capital investment?

No, not really.

squizzler · 16 Sep 2017

Olaf said:
Announcements will be made in due cours, but there is plenty to digest in the meantime.

Oh, you tease

Olaf · 17 Sep 2017

Another tease:

Digital railway: new supply chain relationships
http://www.railtechnologymagazine.com/Comment/digital-railway-new-supply-chain-relationships
- 2017-09-14

...
The Digital Railway Programme facilitated the development of a series of Strategic Outline Business Cases (SOBCs) earlier this year, which analysed the case for deploying packages of digital technology to address specific pinch points on the network. These evaluated interventions in five routes: Western, Wessex, South East, Anglia and LNE.

The SOBCs were developed and overseen by discrete Route Steering Boards that comprised senior route executives along with industry stakeholders. They are currently being reviewed by the DfT and will help determine the priorities for modernisation in CP6 and CP7.

Last autumn, the chancellor announced £450m funding to trial digital signalling and we anticipate confirmation of how and where this will be utilised before the end of the year. This is likely to include a small number of projects that will provide discrete benefits and also enable wider-scale future transformation.
...

This comes from the push to use enhanced control capabilities to improve capacity and reliability.

squizzler · 19 Sep 2017

Olaf said:
Another tease:

Digital railway: new supply chain relationships
http://www.railtechnologymagazine.com/Comment/digital-railway-new-supply-chain-relationships
- 2017-09-14

This comes from the push to use enhanced control capabilities to improve capacity and reliability.

Good call. With the Resonate "Luminate" traffic management system already in the bag, they are not messing about. Network Rail are already crafting a new reality based on the collaborative working methodology so well articulated in the Hansford Review. A reality which, by working with commercial firms to privately fund a pipeline of improvements, has the potential to compliment (and thereby decrease reliance on) the established Control Period model of planning and funding.

As for the bad times, it must be remembered the Hendy review happened two years ago. Whilst the scale and momentum of large projects mean there are still skeletons being unearthed in the electrification programme, this rail fan gets the impression that Network Rail have got through that cycle of grief and are looking forward not back.

LDECRexile · 19 Sep 2017

HSTEd said:
Doesn't Sellafield already have a dock capable of recieving seagoing ships because of the spent fuel transits to and from the site from abroad?

No dock at Sellafield itself, it uses the dock at Barrow-in-Furness for international nuclear movements.

Olaf · 20 Sep 2017

squizzler said:
As for the bad times, it must be remembered the Hendy review happened two years ago. Whilst the scale and momentum of large projects mean there are still skeletons being unearthed in the electrification programme, this rail fan gets the impression that Network Rail have got through that cycle of grief and are looking forward not back.

They have certainly made progress at top rank levels but there are still stubborn problems around execution and planning in the lower ranks.

Olaf · 18 Oct 2017

It is even worse than imagined; the latest efficiency report states:

Cost of NR not meeting targets on efficiency improvements has reached GBP 3.9 Billion,
Projected non-delivery of enhancements by end of CP5 has gone from GBP 1.9 Billion, to GBP 3.9 Billion (both figures are NR's estimates),
NR is now down to GBP 300 Million in finance head-room - that looks serious for an organisation of its size and liabilities - looks like there is a risk of NR not making it to the end of CP5.

There is not going to be much left over from the initial determination.

Olaf · 18 Oct 2017

Having gone through the report, it looks likely that unless additional funds are made available - as either a cash credit or increased borrowing limit - or there is a successful sale of assets, there will be a need to defer additional work scheduled for CP5. It will become more likely if there is a bad winter or another major project overspends, but just looking at its performance seems to indicate that additional deferrals/cancellations in CP5 are unavoidable.

The Planner · 18 Oct 2017

Which will surely end up as more cancellations as you can only deliver so much in CP6.

LNW-GW Joint · 18 Oct 2017

The Planner said:
Which will surely end up as more cancellations as you can only deliver so much in CP6.

The £47 billion DfT has offered for CP6 in the SoFA is a vast sum, and doesn't include new projects.
You wonder where all that money is going (was £38 billion for CP5).
Funding the overruns from CP5 is part of it, but that assumes they get to the end of CP5 in one piece.

Rational Plan · 18 Oct 2017

A massive increase in renewals and maintenance according to reports. Ambitious new timetables are rather dependent on no speed restrictions or signal failures. All large new projects will undergo new appraisal process from central government. This is what reabsorbtion looks like, the Treasuray takes over spending decisions.

Olaf · 18 Oct 2017

LNW-GW Joint said:
The £47 billion DfT has offered for CP6 in the SoFA is a vast sum, and doesn't include new projects.
You wonder where all that money is going (was £38 billion for CP5).
Funding the overruns from CP5 is part of it, but that assumes they get to the end of CP5 in one piece.

However, that is the headline figure; The GBP 34.7 Million covers the OMR aspect, and the rest is not guaranteed.

Olaf · 18 Oct 2017

The Planner said:
Which will surely end up as more cancellations as you can only deliver so much in CP6.

Yes; that GBP 3.9 backlog is based on projections and current figures. It is very possible that it will pass the GBP 4 Billion mark before the end of teh contrl period. It also represents more than 10% of the initial CP6 OMR allocation.

Olaf · 20 Oct 2017

Looking at this in more detail:

Direct Grant:

For CP6, the final determination has been set at GBP 34.7 Billion (2017-10-12, 2017 figures), [2]
For CP5, the final figure for the direct grant that was agreed in October 2013 between the ORR, Network Rail and DfT was GBP 38.3 Billion (2013 figures), [3]
Network Rail's efficiency has declined by 4.4% in the first three of CP5 (2017 figures), and is projected to be 3.9% less efficient by the end of CP5, [4]

As a crude indicative number, the equivalent of the CP5 Direct Grant in 2019 figures allowing for inflation (2% estimate used for future periods but purchase power of grant will follow changes in the rail industry costs) and the projected decrease in NR efficiency by the end of CP5 would be about GBP 42.8 Billion (cf. GBP 38.3 Billion). [5]

The finalised Direct Grant for CP6 therefore currently represents a cut of roughly 18.9%, or about GBP 8.1 Billion (2019 figures) in purchase power of the Direct Grant.

The above CP6 Direct Grant is anticipated to include some enhancement work, but the scope will be determined in the PR18 review.

It is intended principally to address OMR costs, but not all of it will necessarily go to Network Rail with part going to TOCs and potentially third-parties. [2]

The GBP 47.9 Billion figure is an anticipation of total rail industry expenditure across CP6 and will include the above Direct Grant, track access charges and income from other sources, both internal to Network Rail and from third-parties (including private sector though this is not specifically stated). [1]

The figure will not cover financing of debt, other financial instruments, and various other payments, however because Network Rail will not be permitted to increase debt,[1] this figure would be inclusive of the source of funds previously obtained via borrowing to some degree.

To illustrate the scale of borrowing in CP5 (post the interim settlement) Network Rail has indicated that it will require GBP (30.875 - 0.3) Billion of the new borrowing facility in CP5 as part of it's activities. In 2016-2017 it made use of GBP 6.1 Billion of that facility which was in line with forecasts.

Therefore a similar figure (of about GBP 6 Billion), allowing for cost inflation, and netting of what would be repayments on the above, would form part of the projected total expenditure of GBP 47.9 Billion figure each year - if there is not a similar new borrowing facility made available in CP6. Until now Network Rail has been allowed to accumulate debt to finance it's activities, but if this is not allowed any more then that expenditure funding will come from the GBP 47.9 Billion.

The GBP 47.9 Billion figure for expenditure will not all be incurred by Network Rail alone but will be inclusive of expenditure by TOCs and other parties. [1]

The figure is also likely expected to be inclusive of funds already announced for specific projects such as Digital Railway, HS2/NPR Integration, etc that fall within Network Rail's remit within CP6.

On top of that, it would be reasonable to assume that the GBP 47.9 Billion figure would be expected to be debited for:

GBP 2.6 Billion over-spend/under-delivery on CP5 enhancements (2016 estimate) either in full or in part depending on what projects are carried forward into CP6 under PR18,
GBP 3.9 Billion over-spend/under-delivery on CP5 renewals[4] either in full or in part depending on what work is carried forward into CP6 under PR18,
GBP 1.6 Billion closure of interim settlement (less GBP 300 Million cash funding by DfT for 2017-2018 - perhaps) to whatever extent it is not covered by the agreed disposal of assets (only GBP 24 Million of disposals so far reported) by end of CP5.

So, from a GBP 47.9 Billion projection of total anticipated expenditure across all of the rail industry, the above, if deductions are taken in full, might leave about GBP 5 Billion[6] (representing a reduction to about GBP 1 Billion per annum) for enhancements of the national rail network in CP6.

The above is unlikely to be the final picture at the start of CP6, but variances from it will be dependent upon interpretation of official statements, assumptions made, upon Network Rail delivery in the remainder of CP5 and upon what deferred CP5 works get the go-ahead for funding in CP6.

coppercapped · 20 Oct 2017

Thank you for that analysis. That's a lot to think about...

Olaf · 20 Oct 2017

Proceeds from asset disposal added back into the pot:

Network Rail sells national logistics centre in Coventry for £35m
https://www.railstaff.uk/2017/10/20/network-rail-sells-national-logistics-centre-coventry-35m/
- 2017-10-20

Network Rail has sold its National Logistics Centre for £35 million – five years after spending £25 million to open it.

The site, in Ryton, Coventry, is now owned by the West Midlands Pension Fund who will lease it back to Network Rail for 15 years.

Network Rail said that the sale follows an external analysis which suggested introducing a new inventory and order system, meaning the site will eventually no longer be needed.

Funds generated from the sale will be reinvested into the railway to contribute to delivering the Railway Upgrade Plan.
...

HowardGWR · 20 Oct 2017

In amongst all that financial jiggery pokery, if they don't finish off London to Bristol, both ways, that'll be nice line in Mr Corbyn's election address to the West of England. It'll of course be added to the one about the MML and Swansea projects being cancelled that he'll be making to the South Wales, South Yorkshire, Derby and Notts areas.
Thanks to Olaf. I'll be interested to see if next week's MR finds RF coming up with the same conclusions. Perhaps he will plagiarise you if he reads this thread!

Olaf · 20 Oct 2017

HowardGWR said:
Thanks to Olaf. I'll be interested to see if next week's MR finds RF coming up with the same conclusions. Perhaps he will plagiarise you if he reads this thread!

The trade press will have better insight and direct contacts (their claimed "informed sources") from which they will no doubt arrive at conclusions that will be closer to the mark, but still another year to go before the final details for CP6 are published.

GRALISTAIR · 20 Oct 2017

Olaf said:
The trade press will have better insight and direct contacts (their claimed "informed sources") from which they will no doubt arrive at conclusions that will be closer to the mark, but still another year to go before the final details for CP6 are published.

Sir Roger Ford ?

WatcherZero · 20 Oct 2017

Olaf said:
Looking at this in more detail:

Direct Grant:

For CP6, the final determination has been set at GBP 34.7 Billion (2017-10-12, 2017 figures), [2]

For CP5, the final figure for the direct grant that was agreed in October 2013 between the ORR, Network Rail and DfT was GBP 38.3 Billion (2013 figures), [3]

Network Rail's efficiency has declined by 4.4% in the first three of CP5 (2017 figures), and is projected to be 3.9% less efficient by the end of CP5, [4]

As a crude indicative number, the equivalent of the CP5 Direct Grant in 2019 figures allowing for inflation (2% estimate used for future periods but purchase power of grant will follow changes in the rail industry costs) and the projected decrease in NR efficiency by the end of CP5 would be about GBP 42.8 Billion (cf. GBP 38.3 Billion). [5]

The finalised Direct Grant for CP6 therefore currently represents a cut of roughly 18.9%, or about GBP 8.1 Billion (2019 figures) in purchase power of the Direct Grant.

The above CP6 Direct Grant is anticipated to include some enhancement work, but the scope will be determined in the PR18 review.

It is intended principally to address OMR costs, but not all of it will necessarily go to Network Rail with part going to TOCs and potentially third-parties. [2]

The GBP 47.9 Billion figure is an anticipation of total rail industry expenditure across CP6 and will include the above Direct Grant, track access charges and income from other sources, both internal to Network Rail and from third-parties (including private sector though this is not specifically stated). [1]

The figure will not cover financing of debt, other financial instruments, and various other payments, however because Network Rail will not be permitted to increase debt,[1] this figure would be inclusive of the source of funds previously obtained via borrowing to some degree.

To illustrate the scale of borrowing in CP5 (post the interim settlement) Network Rail has indicated that it will require GBP (30.875 - 0.3) Billion of the new borrowing facility in CP5 as part of it's activities. In 2016-2017 it made use of GBP 6.1 Billion of that facility which was in line with forecasts.

Therefore a similar figure (of about GBP 6 Billion), allowing for cost inflation, and netting of what would be repayments on the above, would form part of the projected total expenditure of GBP 47.9 Billion figure each year - if there is not a similar new borrowing facility made available in CP6. Until now Network Rail has been allowed to accumulate debt to finance it's activities, but if this is not allowed any more then that expenditure funding will come from the GBP 47.9 Billion.

The GBP 47.9 Billion figure for expenditure will not all be incurred by Network Rail alone but will be inclusive of expenditure by TOCs and other parties. [1]

The figure is also likely expected to be inclusive of funds already announced for specific projects such as Digital Railway, HS2/NPR Integration, etc that fall within Network Rail's remit within CP6.

On top of that, it would be reasonable to assume that the GBP 47.9 Billion figure would be expected to be debited for:

GBP 2.6 Billion over-spend/under-delivery on CP5 enhancements (2016 estimate) either in full or in part depending on what projects are carried forward into CP6 under PR18,

GBP 3.9 Billion over-spend/under-delivery on CP5 renewals[4] either in full or in part depending on what work is carried forward into CP6 under PR18,

GBP 1.6 Billion closure of interim settlement (less GBP 300 Million cash funding by DfT for 2017-2018 - perhaps) to whatever extent it is not covered by the agreed disposal of assets (only GBP 24 Million of disposals so far reported) by end of CP5.

So, from a GBP 47.9 Billion projection of total anticipated expenditure across all of the rail industry, the above, if deductions are taken in full, might leave about GBP 5 Billion[6] (representing a reduction to about GBP 1 Billion per annum) for enhancements of the national rail network in CP6.

The above is unlikely to be the final picture at the start of CP6, but variances from it will be dependent upon interpretation of official statements, assumptions made, upon Network Rail delivery in the remainder of CP5 and upon what deferred CP5 works get the go-ahead for funding in CP6.

You didnt account for the £1.8bn underspend in CP5 (funds paud by government to NR but not spent) and the CP5 determination of £38bn was made up of £20bn network grant and the rest from fixed and variable track access fees (£4.3bn per annum) and borrowing (leverage of assets increase by 7%). To be spent £21bn on day to day expenses and renewals and £27.45bn on investment. The CP6 determination and network grant is therefore not a cut as you incorrectly assume but actually a £14bn increase before inflation.

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