Government announces funding and expectations for CP7

The Government has revealed the amount of funding it will spend on Network Rail in Control Period 7, which runs from April 2024 to March 2029. The announcement on 1 December coincided with publication of the High-Level Output Statement (HLOS) which outlines government aspirations for Network Rail.

Total Network Rail expenditure for CP7 is set by the Statement of Funds Available (SOFA) at £44 billion, with £27.5bn coming from a Network Grant. The money provides for operations, maintenance and renewal of the rail network, but not enhancements. Areas not covered in the SOFA include payments to British Transport Police, Corporation Tax, Great British Railways Transition Team costs, interest payments related to loans or debts, or cash collateral obligations. 

In the HLOS, the Government says it ‘strongly supports’ the recovery of the railway but adds that it considers ‘there remains an urgent need for continued modernisation and significant efficiency improvements to bear down on the cost of the railway.’

Improving safety – with level crossings specifically mentioned – is one of the Government’s key objectives, as is supporting track worker safety, with workforce modernisation called for wherever possible to support this.

Greater efficiencies of NR are demanded, with the Government noting that NR has achieved success in Control Period 6.

Other expectations cover areas including the development of rail freight, improve resilience to climate change and extreme weather, decarbonisation, environmental protection, research and development, supporting the supply chain, and financial management.

The Railway Industry Association cautiously welcomed publication of the SOFA and HLOS, suggesting they could include allowances for real-terms increases in spending on operations, maintenance and renewals.

RIA Chief Executive Darren Caplan said: ‘RIA welcomes this commitment from the UK Government, which - in difficult economic times - appears to mean Network Rail can continue maintaining and renewing the railway in CP7 with similar funding levels to today’s. Rail suppliers will clearly play a significant role in working with Network Rail to ensure the programme of work is delivered in the five years from April 2024.

‘With passenger numbers reaching as high as 99% of pre-Covid levels, as they did on Friday 18 November, it is clear the national railway will need this investment to meet both current and future demand.

‘Nevertheless, at a time of significant inflation it is unlikely the funding settlement will cover all the investment needed. This makes it all the more essential to recognise the role the supply sector can play. We therefore welcome the commitment in the HLOS for Network Rail to work collaboratively with the supply chain, a consistent ask of RIA and our members in recent years.

‘To ensure suppliers can help build world-class rail as cost-effectively as possible, it is essential that along with appropriate levels of funding they are given the certainty and visibility of the work pipeline that they need. This helps rail businesses plan for the people, skills and equipment they need to deliver and get best value for taxpayers.

‘We now await Network Rail’s regional business plans, and the work of the Office of Rail and Road, to establish which work will go ahead, in which parts of the country. It will be particularly important to collaborate to avoid ‘boom and bust’ between and within Control Periods. RIA will work with its members, the Government and Network Rail, to understand the implications of this funding settlement and work together on delivering the CP7 workload as efficiently and effectively as possible.’
•    Full analysis will appear in the January edition of Modern Railways.