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Sir Peter Hendy's report calls Network Rail costing 'unrealistic' as £2.5bn funding hole revealed

Network Rail has been forced to find an additional £2.5bn of funding to pay for the Control Period 5 enhancement programme after a report from its chairman found the original costing to have been “unrealistic and undeliverable”.

The much-anticipated report by Sir Peter Hendy has revealed that the cost of the transformation project is set to balloon from £38.5bn to £41bn.

Sir Peter also said that one of the priority CP5 schemes – the electrification of the Great Western Main Line – is set to be delayed by more than a year.

The funding gap will be plugged by the sale of £1.8bn of Network Rail’s non-core and lower-value assets, as well as the raising of the operator’s government loan ceiling by £700m.

A Department for Transport spokesman could not confirm when the extra borrowing would come from, saying only that it had “been made available as part of the Spending Review.”

Meanwhile, the Great Western Main Line from London to Swansea, which was originally scheduled to be completed in 2018, will now not be finished until after 2019.

Sir Peter admitted in the report that Network Rail’s original plan had been “unrealistic and undeliverable”, with “inadequate planning” and “poor cost estimating” leading to budget overruns.

The report said that while there had been problems with the delivery of CP5 projects, the majority would still be completed before the end of the investment period in 2019.

However, the electrification of the Great Western Main Line will now be pushed into CP6, with no clear date given for its completion.

A number of other projects, such as Sheffield’s Supertram pilot scheme, could also be put back, but the extent of these delays will only be revealed in updated “enhancement delivery plans” due to be released next month.

Sir Peter said: “Some projects will cost more and take longer than originally expected but we will see the job through to deliver better journeys for passengers. 

“This new Railway Upgrade Plan is a more robust and deliverable plan but it is not without its own risks and challenges, which Network Rail will work tirelessly to address.”

The Hendy report was one of two released yesterday looking into Network Rail, with the government publishing Dame Colette Bowe’s review of the planning of CP5.

Dame Colette said the government needed to take a closer role in the planning and reviewing processes of Network Rail’s infrastructure project delivery.

She also called for a “fundamental review” of the country’s chief rail watchdog the Office of Rail and Road.

Commenting on the two reports, transport secretary Patrick McLoughlin said: “Firstly, I want to be absolutely clear that no infrastructure schemes have been cancelled.

“Sir Peter and I are both absolutely resolute in our drive to fix the problems in the planning process for rail enhancements.

“Britain’s railways are truly on the road to recovery, despite years of underinvestment by successive governments.”

He added: “I have accepted all of Dame Colette Bowe’s recommendations.

“My department, together with Network Rail and the Office of Rail and Road, are taking urgent steps to develop and implement a number of actions following her recommendations.

“These will ensure that an improved approach to planning and delivering rail infrastructure enhancements is put in place.”

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