The UK's Network Rail has been told to reduce operating, maintenance and renewal costs by 21 percent over the next five years, the Office of Rail Regulation (ORR) has announced.
The announcement represents a £3bn shortfall in the funding proposed for Network Rail and throws into doubt much needed improvements, including schemes to reduce overcrowding.
The ORR says Network Rail will need an income of £26.5bn to deliver improvements in rail services planned for the 2009 to 2014 period, which it believes is achievable but is £3bn less than Network Rail predicted.
The budget for capital investment in the rail network has been cut from Network Rail's hoped-for £9bn to £7.5bn.
The ORR says it is also consulting on changes to Network Rail's network license, aimed at clarifying the company's obligations and strengthening its accountability.
ORR Chief Executive Bill Emery says Network Rail's plans have been carefully reviewed and targets have been set which are challenging but achievable.
"We have carried out detailed studies that have produced strong evidence to show that the company can make significantly greater efficiency improvements than it has assumed in its plan," Emery says.
He says the ORR will monitor how Network Rail delivers on its obligations and required improvements.
"We look forward to reporting on its success. However, if it is failing or appears likely to fail, we will not hesitate to take action to require the company to address its shortcomings," Emery says.
By Nicola Boyes
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