Network Rail to delay track renewal in £5bn savings drive

Network Rail will today unveil plans to cut about £5bn from its spending over the next five years, mainly by deferring track renewal work.

The cutbacks will bring the operator's planned expenditure broadly into line with the levels proposed by the rail regulator Tom Winsor for the 2004-2009 period.

Network Rail will seek to reassure train operators and passengers that the reductions in renewal expenditure will not affect levels of service or punctuality.

The infrastructure company will say that it should still be able to hit its target of getting 90 per cent of trains to run on time by 2009 compared with a figure of 79 per cent last year. The target for this year is 82 per cent. However, a spokesman cautioned that if Network Rail was forced to cut expenditure by more than the £5bn, then passengers were likely to see a "significant impact" on services.

In June, Network Rail announced plans to spend £29.6bn on the operation, maintenance and renewal of the rail system over the five-year period. The regulator, who is in the process of deciding on a new set of price controls, replied in July that expenditure should be nearer to £22.5bn - although this included a £1bn reduction in spending on the modernisation of the West Coast Main Line.

Network Rail's latest proposals, which do not factor in any cutback in spending on the west coast, bring it to within £1bn of the figures produced by Mr Winsor.

The cutback will be achieved by carrying out about 15 per cent less renewal work than originally planned and deferring this expenditure for two years. Other savings will be made by employing fewer people and working more efficiently by arranging extended track possessions.

However, in the short term, maintenance expenditure will rise because Network Rail will have to spend more in order to keep its existing track and stations in safe working order.

Mr Winsor is due to announce his draft conclusions in the middle of next month and his final decision in early December. Although the Rail Regulator and the Strategic Rail Authority, which ultimately controls Network Rail, are now broadly agreed on how much needs spending over the next five years, they are still split over the thorny issue of the West Coast Main Line modernisation, which has ballooned from an initial estimate of £2.7bn to more than £10bn.

Richard Bowker, the chairman of the SRA, wants the upgrade - which will allow trains to run at 125 mph - to be completed on time, but Mr Winsor has suggested it could be delayed for a year, saving an estimated £1bn.