Network Rail fined £14m for overruns

The Office of Rail Regulation (ORR) has fined Network Rail £14m following engineering overruns over Christmas and the New Year.

The regulator said the action was to reflect the impact it had already had on passengers and rail freight users and the need for the company to take urgent action to improve its approach.

It also ordered Network Rail to remedy systemic weaknesses in its planning and management of engineering projects and in its communication with train operators about progress with such projects.

This follows ORR’s conclusion that the problems experienced over the New Year were part of a continuing breach by the company of its licence.

In addition, ORR also ordered Network Rail to provide a clear plan of how it intends to complete the upgrade of the West Coast Main Line, currently due to be completed by December 2008.

This action follows publication today of ORR’s report on its investigation into Network Rail’s management of engineering projects including the overruns at Rugby, Liverpool Street Station and Shields Junction.

Bill Emery, ORR Chief Executive said: ‘What happened over the New Year was totally unacceptable for passengers and freight customers, and to train operating companies. The weakness in Network Rail’s management of these projects had a serious impact on all of them and on the reputation of the railway.’

‘It is quite clear from our thorough investigation that Network Rail is failing to manage major engineering work as consistently well as it should. This is due particularly to weaknesses in the company’s planning, risk assessment and site management of projects as well as to failures of communication within the company and with train operators. We have published a draft Order directing them to address these failings and thus reduce the risk of similar events in the future.’

“The regulator said the action was to reflect the impact it had already had on passengers and rail freight users and the need for the company to take urgent action to improve its approach.

‘It is right that we should also impose a fine to mark the seriousness of this breach of Network Rail’s licence and to send a clear message to the company’s Board and senior management that it needs to address the weaknesses we have identified as a matter of urgency. Given the scale of the investment programme on the rail network, improved project planning and management will bring real benefits to Network Rail’s customers in terms of improved capacity, performance and value for money.’

‘In addition, the company has accepted that it does not currently have a robust plan, agreed with operators, to deliver the upgrade work to the West Coast Main Line needed for the December 2008 service improvements. We have therefore ordered it to produce quickly a plan on how it will do this.’

The industry’s biggest union called the fine ‘pointless’ and ‘counterproductive.’

The record fine, imposed by the Office for Rail Regulation for engineering overruns over Christmas and the New Year, will have no impact on the fundamental problems of fragmentation and reliance on private contractors, RMT said.

RMT general secretary Bob Crow said: ‘At the very best this is simply robbing Peter to pay Paul, but taking funds away from Network Rail when it is has already seen its spending targets cut by 30 per cent in the last five years can only make the situation worse.’

‘Recycling public money like this will not alter the stark fact that Network Rail remains dependent on a maze of profit-hungry contractors and subcontractors.

‘The private sector has leeched well over £10 billion from the railways since privatisation, yet for the contractors it will be 'big business as usual'.

Crow said: ‘The central problem remains that Network Rail needs to take proper control of its assets, and that must mean bringing its renewals contracts back in-house, as it already has with most maintenance work.’