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Last Updated: Friday, 17 October, 2003, 21:39 GMT 22:39 UK
Rail cash 'must be cost-effective'
Network Rail must improve punctuality
The government has reacted cautiously to calls for an extra 8bn to fix the UK's railways, saying any fresh public money must be spent efficiently.

"Everybody wants to see a decent and effective railway, and they want to see it done at a cost that is affordable," Transport Secretary Alistair Darling told the BBC.

"But what I can't justify on behalf of people who put us into government is spending money where we don't get value for money."

He was responding to rail regulator Tom Winsor's draft review of the network's finances which concluded a further 8bn was needed over five years for urgent track upgrades.

Mr Darling told BBC News "decades of under-investment... compounded by a botched privatisation" had left the tracks below standard.

But he added: "Before we ask anyone to put their hands into their pockets, we have to be satisfied that every pound we spend on the railways actually brings a pound's worth of benefit, and that has not been the case in the past."

The proposed increase would take the total budget for refurbishment between 2004 and 2009 to 22.7bn.

This still falls short of the 24.5bn requested by Network Rail, the company responsible for maintaining track and stations.

Budgetary constraints

The tight budget means Network Rail will have to cut costs, either by making improvements more efficient, or by postponing some refurbishment projects.

Network Rail had originally estimated track upgrades and other maintenance work would cost 35bn over the next five years.

Mr Winsor also emphasised the need for greater efficiency.

When the government carries out its spending review next year, it will have to find more money for the railways
Tom Symonds, BBC transport correspondent

He said in return for the funding increase, Network Rail would have to "increase the amount and quality of maintenance and renewal work that it undertakes, delivering genuine improvements in the overall condition of the network".

"That, in turn, will mean a more punctual and reliable railway.

Mr Winsor told BBC News he was trying to achieve a "competent and well managed" network that would improve its "capacity, condition and serviceability" while giving taxpayers, fare-paying passengers and freight customers value for money.

Aside from public funding, Network Rail's main source of revenue is the track access charges it levies from train operating companies.

However, as the train companies are indemnified against increases in charges during the lifetime of their franchise, the taxpayer will have to supply any extra funding.

The government is expected to decide whether to approve the funding increase after Mr Winsor's final report is published in December.

Tory MP Tim Collins told BBC News it should not be approved until rail costs were "under control".

Efficiency challenge

Given the enormous subsidies which go into public transport already (mainly taken from the private motorist), how can it be fair to demand more?
Andrew H, England

Network Rail said achieving Mr Winsor's proposed efficiency gains would be "challenging."

"We will be looking over the forthcoming weeks to see where any more efficiency savings could be achieved," the company said.

Passenger groups welcomed the regulator's decision, but said they would resist efforts to cut costs by reducing service levels.

"We would strongly fight any increase in fares and cutting services seems like a strange idea when you are improving the track on which trains run," said Anthony Smith, national director of the Rail Passengers' Council.

Derailed train at King's Cross

The task of upgrading the rail network has acquired added urgency since the Hatfield crash in October 2000, blamed on a broken rail.

But progress has been slowed by budgetary constraints and higher than expected maintenance costs, leading to increased congestion and delays.

Network Rail took over the task of managing the railway from Railtrack, which the government put into administration two years ago.

Unlike Railtrack, which paid a proportion of its profits to shareholders through dividends, Network Rail profits are ploughed back into maintaining the railway.

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