1. Initial Strategic Business Plan July 2006

2. Content Background Timeline Cutting costs The base-case
Enhancement projects
Summary

3. Background Control periods:
every five years the ORR sets out Network Rail’s funding requirements
presently in CP3, April 2004 to March 2009
The process for the next control period,CP4 (April 2009 to March 2014), started in September 2005
CP4 process concludes in October 2008
Iterative process involving Network Rail, ORR, Transport Scotland & DfT
Five year funding settlement implemented on 1 April 2009

4. Timeline The ORR published its initial
assessment of Network Rail’s income
requirements for
Assessment was based on an
assumption of a small amount of
growth to ensure a consistent
starting point or baseline
Dec 05
July 06
Feb 07
June 07
Oct 07
Feb 08
April 08
July 08
Oct 08
Network Rail publishes its initial
assessment of its expenditure
requirement for CP4
DfT publishes its Rail Strategy, High
Level Output Statement (HLOS) and
Statement of Funds Available (SOFA)
Similar documents published by
Transport Scotland
These set out the size and shape of
network the DFT/TS wishes to fund,
and the money it has available
ORR feedback on Network Rail’s
initial assessment
Network Rail publishes its
assessment of the funding
required to deliver the network
the DFT/TS has indicated it requires
ORR publishes its assessment
of Network Rail’s analysis of its
income and expenditure
requirements
Network Rail publishes a revised
assessment of its income and
expenditure requirements
To enable Network Rail to begin to
plan effectively for the first year of
CP4, ORR publishes a statement on
Network Rail’s income for the first
year of the control period
ORR publishes its draft
conclusions
ORR publishes its
final conclusions
CP4 GOES LIVE – 1 APRIL 2009

5. Two scenarios Baseline Base-case
provides an understanding of the efficient minimum cost to run the railway in its present state with little provision for development and growth
Base-case
builds on the baseline plan but also includes how Network Rail would respond to predicted passenger and freight growth

6. Cutting costs: the base-case
Reduction of £4.2bn from the cost of running the rail network in CP4 v CP3
£25bn in CP3 to £20.8bn in CP4
Over the two control periods, over 40% of cost will have been taken out of the business

7. Cutting costs: the base-case
Operations (non-controllable)
Operations (controllable)
Maintenance
£25bn
Renewals
£20.8bn
£23.2bn
£millions (in 05/06 prices)

8. The base-case: growing the railway
30% increase in passenger-miles and freight tonnes forecast over the next 10 years
The base-case looks at the options for developing the railway and responding to this growth
A series of projects are highlighted as those most likely to meet this demand

9. The base-case £28.7bn £20.8bn CP4: base-case 30,000 25,000 7,941
Renewals
Maintenance
Operations (controllable)
Operations (non-controllable)
Enhancements
30,000
£28.7bn
25,000
7,941
£20.8bn
20,000
2,036
£millions (in 05/06 prices)
3,711
15,000
4,587
10,000
5,000
10,442
CP4: base-case

10. Enhancement projects
Some examples of the likely enhancement projects within the base-case include:
Project CP4 cost Total NR cost
Thameslink programme £3.2bn £3.5bn
Waterloo redevelopment £385m £400m
Birmingham New Street £77m £142m
Southampton to West Coast
freight upgrade £60m £60m
North London Line capacity
enhancements £100m £200m
Airdrie-Bathgate line re-instatement
between Edinburgh and Glasgow £75m £300m
Edinburgh & Glasgow airport
rail-links £380m £770m

11. Summary This is a two-year + process, with a long way to go
Iterative process involving the entire industry & Government
Significant reduction in costs predicted
Growth has to be addressed by investment in developing Britain’s rail network