Network Rail

Network Rail publishes efficiency improvement programme of £13 billion over the next ten years
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date 30 June 2003
source Network Rail
type Press release

National

Network Rail today unveiled its efficiency improvement programme, a detailed plan to achieve overall efficiencies equivalent to 20% of costs by 2006/7.

This programme forms the centre-piece of Network Rail’s revised business plan which demonstrates how, through these efficiencies, expenditure will tumble from a high of £6.1 billion in 2006 to £4.3 billion in 2012 whilst consistently delivering high volumes of new infrastructure in the ground.

The programme’s highlights include:-
· £1.3 billion annual cost savings by 2006/7, equivalent to 20% of costs
· Total headcount reduction of 2,000 within 3 years
· £266 million efficiency savings from maintenance budget
· £804 million cost savings from renewals expenditure
· £246 million reduction in operating costs
· 10% additional efficiency improvements targeted for 2007-2010
· 2% per annum cost reductions to be sought thereafter
· Cumulative savings of £12.9 billion over the business plan period

Iain Coucher, Deputy Chief Executive, said: “We are absolutely determined to drive down costs. The efficiency improvement programme sets out detailed plans to deliver annual efficiencies of £1.3 billion by 2006/7, whilst ensuring quality, performance and renewals volumes are maintained. Our key objective remains unchanged – to deliver safe, reliable and efficient rail infrastructure.”

Mr Coucher continued: “When we published our three year business plan in March, we explicitly stated that “we recognise that these [projected] levels of cost are unacceptable and unaffordable in the longer term”.

“Today we publish our first response to the challenges of addressing the backlog of underinvestment, whilst modernising the organisation. We believe that the programme of radical and rapid reconstruction of the company is the quickest way to achieve cost and performance improvements.

“We are facing up to the tough choices that the rail industry needs to make. Inevitably, our plans anticipate reductions in headcount and we expect these to total around 2,000 people over the next three years. “In addition, we are not satisfied with the projected rate of improvements in punctuality. Our performance enhancement unit has been tasked with accelerating punctuality improvements ahead of the business plan targets and these will be submitted to the Regulator, later in the year.”

Key initiatives, identified in the revised business plan, which will assist this process include;
· Standard organisation template established for the first time in the railway’s history
· New Maintenance Programme to take greater control over maintenance
· Reading maintenance contract taken in-house, Wessex and East Midlands to follow
· New Measurement Train to automate inspection, improve asset knowledge and drive down maintenance costs
· Investment in ‘high’ speed grinders and high output ballast cleaners, first S&C grinders to be introduced into UK
· Performance enhancement unit to accelerate punctuality improvements ahead of the business plan targets

The revised business plan includes ten-year expenditure projections shown in Figure 1 below. This shows the overall level of expenditure reaching a peak in 2006/07 and declining gradually as efficiency improves. Beyond the next ten years there would be further significant cost reductions as the required renewal volumes diminish.

Details about the company and the entire revised business plan and efficiency improvement programme can be found on the Network Rail web site: www.networkrail.co.uk

For media enquiries please contact the Network Rail press office on 020 7557 8292 / 3

Contact information

Media Relations (National)
020 3356 8700
mediarelations@networkrail.co.uk

Railhub Archive ::: 2003-06-30 NET-001