The Government has backtracked over a threat to put £1.8bn from a sale of Network Rail assets towards cutting the deficit, Transport Network can reveal.
However, the infrastructure operator could still be forced to cut maintenance work and drop planned upgrade works because of a funding shortfall.
As Transport Network reported earlier this month, the Network Rail board was told in September that ‘HMT were now requiring the proceeds of the asset disposals programme to count to deficit reduction thus handicapping NR’s use of the cash to fund rail enhancement schemes'.
However, a spokesperson for the Department for Transport told Transport Network: ‘Network Rail is continuing to sell assets to generate more funding for the Railway Upgrade Plan. These proceeds will not be used to pay off the deficit.’
Rail expert Christian Wolmar
It remains unclear how much progress the rail infrastructure operator has made in raising the £1.8bn that the 2015 Hendy review identified should be secured by the sale of ‘non-core assets’ to fill the majority of a £2.5bn black hole in funding towards works in Control Period 5, which runs until 2019.
A Network Rail spokesperson said: ‘We have been working closely with colleagues across Government to assess the assets we had earmarked to sell following the Hendy Review. This process is ongoing.’
The company did not provide any information in response to a request from Transport Network on how much money it has so far raised or expects to raise and would not confirm whether it has actually sold any assets, as DfT stated it had.
Network Rail is already reported to be in significant financial difficultly. Last week it emerged that contractor Carillion is planning job cuts and redundancies as a result of spending cuts.
Rail expert Christian Wolmar told Transport Network that he understood that Network Rail had achieved very little by way of asset sales and that a failure to realise the £1.8bn could result in cuts to both maintenance upgrade works.
He said: ‘It’s very clear that there is a crisis looming over this. What would happen is that they would have to make some cuts in maintenance, which would not put passengers’ lives at risk but would undoubtedly lead to temporary speed restrictions – and that is the benchmark if they are really under financial crisis – resulting in extra delays.
‘The other thing is that if, as expected, a lot of projects are overrunning it’s going to result in projects being kicked into touch, which we have already seen to some extent. We will see a cutback undoubtedly, in what’s going to go into Control Period 6. They are going to have to carry things over and therefore there will be very few new schemes.’
He said: ‘They are hit in different ways but they are both [maintenance and upgrade work] going to suffer. We will see that happening, I think quite soon.’
Labour's shadow transport secretary, Andy McDonald, told Transport Network: 'These [Carrillion] cuts are a result of the Tories’ wasteful mismanagement of our railways. With punctuality at a 10-year low and safety already compromised by staffing cuts, the Conservatives should be aiming to make our rail network safer and more reliable.'