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Scottish route given greater powers as Network Rail eyes further devolution

Network Rail is set to undergo a major restructure as part of its drive to create eight devolved businesses within the company.

Under new plans, the body will give greater autonomy to eight separate routes in the UK as it strives to find cost efficiencies.

Network Rail’s Scottish arm will be the first of eight routes to be given greater power over its operations, with the remaining seven in England and Wales expected to follow suit.

The routes are: London North Eastern and the East Midlands; London North Western; Western; Wessex; South East; Anglia; Wales; and Scotland.

Details of the plans were revealed in a letter sent to Network Rail staff by chief executive Mark Carne (pictured).

In the letter, seen by Construction News, Mr Carne outlined his agenda to “further extend Network Rail’s devolution approach” by releasing more power to Scotland.

Last month Mr Carne said he would be pushing ahead with plans to divide the routes into eight separate businesses within Network Rail.

Speaking in front of the public accounts committee in Westminster, he said the devolved businesses would drive efficiencies “creating a spirit of enterprise and competition” in Network Rail and allow routes to “benchmark effectively against one another”.

As part of the restructure, Scotland’s route managing director Phil Verster will become part of Network Rail’s executive committee, answering to Mr Carne rather than managing director of network operations, Phil Hufton.

Mr Hufton will become the managing director of England and Wales, taking charge of the remaining seven routes.

Spencer non-executive director David McLoughlin said the decision to devolve more power to Scotland may be the first step in offering control over its capital projects as well.

Under the new Network Rail structure, there will be three divisions: the new route services directorate; the Digital Railway Group; and the Infrastructure Projects division, which makes decisions on upgrades and enhancements programmes.

Mr McLoughlin, who was previously finance and commercial director at Network Rail, said: “After we have seen the hiving off of Scotland it wouldn’t surprise me if that is the first step of the MD of Scotland taking his chunk of infrastructure projects with him.”

He said this could see a situation where the MDs of other routes in England and Wales could push for control of major projects and upgrade work in the various regions.

“How will the infrastructure projects fit into the new structure? That will be the next interesting letter,” Mr McLoughlin said.

Under Network Rail’s devolution plans, Mr Carne also announced he would be creating a Route Services Directorate.

Construction News understands the Route Services Directorate would provide a centralised body that will serve the routes directly, with the aim
of driving down costs and clarifying common standards across all of the routes.

Network Rail has come under increased pressure to make savings in recent months due to budget overruns in carrying out Control Period 5 enhancements.

Last month, Network Rail admitted that the Great Western Main Line was expected to cost nearly £1bn more than predicted just a year ago.

Mr Carne said the new system would “optimise the use of scarce resources” and utilise “the economies of scale” that could only be delivered on a national level.

The new directorate will be used to deliver the services that the route managing directors collectively decide are best provided from a single national team.

It is understood this will include the directorate deciding on common standards to be used across all routes in areas such as procurement and safety.

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