UK infrastructure manager and operator Network Rail has reported to have spent a record £14bn on improving the British railway system in the past financial year, despite registering a fall in profits.
The company, which spends around £128m every week on improvements for passengers, said that the profit drop of 90%, from £483m to £48m, was mainly due to costs associated with ageing infrastructure and to income increasing at slower rates than borrowing costs.
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According to Network Rail’s annual report, investments have been made throughout 2017 to improve the frequency and reliability of trains and to create ‘better travelling experiences’. The report also revealed plans to provide an additional 170,000 services into major cities per day, with an extra 6,400 train services by 2019.
The report noted: “To maintain this momentum in the investment programme, Network Rail plans to continue additional funding through the sale of non-core assets and continues to look for additional funding from third parties and internally by delivering further cost efficiencies.”
The operator’s debt increased from £46.3bn in 2016-17 to £51.2bn in 2017-18, after it borrowed £6.7bn from the Department for Transport to pay back existing bonds and make further investments in the railway.
Sir Peter Hendy CBE, chair of Network Rail, said the organisation is now much more customer-focused, adding: “We have become more cost-competitive, making over £85m of savings through our continuous improvement initiatives in the past year alone.”
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By GlobalDataNetwork Rail revealed its plan for the next five years, which includes a strong focus on the railway’s safety, reliability, efficiency, growth and employees.
Within this framework, the company will aim to reduce the number of delayed trains by 15%, while key projects for the coming year include Crossrail, Thameslink and London Bridge, the Ordsall Chord, the Edinburgh-Glasgow Improvement Programme, the Great Western Electrification Programme, and the Waterloo and South West upgrade.
The report showed that Network Rail struggled to deliver its efficiency targets due to several factors, including changes to improve workforce safety, the collapse of construction group Carillion and a decrease in opportunities to carry out works.
As a consequence, the infrastructure owner is targeting cost reductions and fundraising and is planning to dispose of its non-core assets.
Network Rail CFO Jeremy Westlake said: “The reason for this [decision] being to help bridge the funding gap for the Railway Upgrade Plan, assisted by additional government funding and generating additional efficiencies.
“Network Rail has continued to progress this disposal of certain property assets over the year. The anticipated sale of our commercial estate is critical to achieving our plans in 2018-19 and we anticipate that this will take place in the second half of the year.”
