RIA Briefing on the ORR Final Determination
31 October 2023 The ORR has today published its Final Determination for Network Rail. This sets out the conclusions of its Periodic Review and confirms what Network Rail must deliver in Control Period 7 (CP7), 2024-2029, for how much funding. There are several publications setting out the ORR proposals. From an initial analysis, we have summarised some of the key decisions that may affect suppliers. We will continue to review the implications. Please get in touch with RIA Policy Director Robert Cook at Robert.Cook@riagb.org.uk if you have specific questions you would like us to help you answer. ORR’s press notice and summary of the key points is available here. What targets must Network Rail meet? • ORR has set ‘success measures’ for Network Rail in CP7 and ‘baseline trajectories’ for each, which quantify the performance levels that they expect Network Rail to deliver. • ORR expect train performance levels not to drop below current or CP6-exit levels and no deterioration of year-on-year performance during CP7. • Chapter 2 of the ‘consolidated list of decisions’ document lists the key measures and trajectories that ORR expects. Inflation and total funding for CP7 • The UK and Scottish Governments fixed the funding for CP7 in their ‘Statements of Funding Available’, in cash terms. Whilst at the time these allowed for a small real terms funding increase for Network Rail, the ORR has said that inflation is now higher than forecast at the time of ORR’s draft determination, and this has reduced the value of the CP7 spend in real terms. • ORR has estimated funding is now 1% lower than CP6 in real terms. For CP7 England & Wales OSMR spend (excluding traction electricity costs) is proposed to be £38.5 billion (CP6 costs were approximately £38.9 billion). 1.4 Network Rail’s strategic business plan (SBP) for Scotland OSMR expenditure is approximately 1% lower than CP6 in real terms. Scotland proposes expenditure of £4.55 billion net of traction electricity costs; (equivalent CP6 costs were approximately £4.60 billion). • See tables 3.1 – 3.3 below for a full breakdown of spend split by asset class, region and financial year for both renewals and maintenance. Efficiency targets • ORR has set an England and Wales efficiency target of £3.2bn in CP7, which they describe as stretching but realistic. • ORR has set a Scotland target for £0.41bn efficiencies, described as realistic but particularly stretching. Renewals and maintenance • The constrained available funding for CP7 means that Network Rail will still be spending less on renewals and more on maintenance in comparison to CP6.