Network Rail
This note describes what Network Rail is, how it works, how it is funded, what it does and how it is regulated. It also sets out various proposals to reform Network Rail, including those put forward by the Hendy and Bowe reviews in 2015 and the Shaw Report, published alongside Budget 2016.
Network Rail is responsible for the operation, maintenance and improvement of railway infrastructure (i.e. the track, signals, bridges and stations) in England, Scotland and Wales. Its primary customers are the train and freight operating companies who run train services over the network. It was set up in 2002 as a company limited by guarantee, run on commercial lines but without shareholders, reinvesting profits in the railway. On 1 September 2014 the company became an arm’s-length body of the Department for Transport.
The company has been under pressure for several years due to engineering overruns and concerns over its governance structure and accountability. In 2014 NR was reclassified as a central government body in the public sector; the main effects of this are that NR’s debt (estimated to reach £50 billion by 2019) has moved onto the Government’s balance sheet and the Government is able to exert more direct control over pay and strategy.
Following delays and cost overruns in its major enhancements programme in 2015 the Government ordered a number of reviews into how NR is run and how it should change in the future. Two of these – Hendy and Bowe – reported in late 2015 and focused on how the enhancements programme could be put back on track, how much it would cost to do so and how similar problems would be avoided in future.
The Shaw Report on NR, published in March 2016 recommended that NR’s regulation be overhauled, that the company restructure and devolve its operations to better fit the political geography of the country and introduce more private finance into the network. The report’s main recommendation for achieving this is to let out concessions or time-limited contracts to the private sector to operate individual routes. This would also have the benefit of moving costs off the Government’s balance sheet. The Government has indicated it will respond fully to the report later in the year.
Information on other railway matters can be found on the Railways Topical Page of the Parliament website.