Initial Strategic Business Plan July 2006

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

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

Timeline The ORR published its initial assessment of Network Rail’s income requirements for 2009-14 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

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

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

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

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

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

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

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