Supplementary note to questions 807 and
808 (PRF 53A)
PASSENGER RAIL FRANCHISING AND THE FUTURE
OF RAILWAY INFRASTRUCTURE
The Rail Regulator undertook to provide a note
to the Sub-Committee on a question raised by Mr Grayling. This
is referred to in paragraphs 807 and 808 of the transcript.
Mr Grayling asked "May I get a point of
clarification from you on the sums of money you allocated to Railtrack
in your most recent allocation of funding to them? Would it be
correct to say that in period one the figure for spending on renewals,
maintenance and operational expenses was £12.9 billion and
that you were only offering an increase from £12.9 billion
to £13.3 billion in your most recent calculation for the
next five years?"
It is correct to say that, on the basis set
out in Railtrack's Report and Accounts, the total amount spent
by Railtrack in control period one on renewals, maintenance and
operational expenses was approximately £12.9 billion.
It is not correct to say that the amount allocated
for these items in the most recent funding settlement was £13.3
billion. The amount was £14.9 billion. Moreover, to obtain
a fair comparison between the two periods it is necessary to compare
the amount allocated (as opposed to the amount spent), and to
adjust this figure to reflect the fact that control period one
was a six-year period, whereas control period two covers only
On this basis, the £14.9 billion, the amount
allocated in control period two (described in the Regulator's
evidence as "approximately £15 billion"), represents
an increase of approximately 50 per cent compared with the amount
allocated in control period one.
The amount of £13.3 billion referred to
by Mr Grayling is approximately the total amount (£13.4 billion)
to be paid by way of track access charges and grant by the franchised
passenger operators and the SRA respectively in control period
The difference between the allocation of funding
(also called allowed expenditure) and the amount paid is summarised
in the attached diagram entitled "Periodic Review Methodology".