Britain's railways could be heading for crisis because the government wants to balance its books

Oscar Williams-Grut

The government is freezing parts of a £38.5 billion ($56.4 billion) upgrade plan on the nation's creaking railways as it looks to balance its books and meet spending commitments made during the election. 

Transport Secretary Patrick McLoughlin announced in Parliament yesterday that work electrifying the Midlands Mainline and the route between Manchester and Leeds will be "paused" while a report is draw up looking at how Network Rail, which runs Britain's railways, can upgrade its network while staying within its budget.

Electrification makes trains faster, meaning more journeys and more passengers being carried. The Mainline and Manchester to Leeds route were also key parts of George Osborne's plans for a "Northern Powerhouse".

But an accounting change means Network Rail came onto the government's balance sheet last September and the Tories are most likely trying to stop it becoming a black hole that sucks up cash.

77% of overhead line renewal projects are behind schedule, according to the Office of Rail and Road, while Network Rail's projects are £230 million ($362 million) over budget so far this year.

The Treasury has promised to run a government surplus — spending less than it collects in taxes — by 2017/18. To hit this target the government is desperately trying to cut costs and raise extra cash. Last year the government cut funding for Network Rail by £246 million ($380 million), while Chancellor George Osborne has also announced plans toraise £23 billion through public sell-offs.

Railways are creaking under the weight of a record number of passengers — 1.65 billion last year alone. Network Rail spent £3.4 billion ($5.25 billion) on servicing and upgrading the network last year — equivalent to over £100 million ($154.5 million) every week. 

Most of that — £2.9 billion ($4.48 billion) — went on replacing worn out assets, i.e. replacing old rails and fixing broken trains. Most of the network was built decades ago. 

Despite the investment flash points keep appearing, highlighting how close to breaking point Britain's railways are. Kings Cross and London Bridge stations faced terrible overcrowding at Christmas, something McLoughlin told Parliament yesterday was "unacceptable."

McLoughlin says: "The current Transport Commissioner in London Sir Peter Hendy is someone of huge experience, who helped keep London moving during the Olympics, he will be a huge asset to Network Rail in overseeing their delivery in coming years."

But Hendy faces a tough job — delivering improved performance on a railway system that is sucking up £100 million a week just to keep it ticking over, all while the government is shrinking the cash pile and passenger numbers are growing, is a tough, tough challenge.

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