Network Rail Limited Annual Report and Accounts 2018 Strategic report Introduction by our chair, Sir Peter Hendy CBE

Railways are the economic arteries of our country and create economic growth, jobs and housing.

We are really seeing a transformation take place at Network settlement, as will the System Operator. They will thus have Rail. We are now a much more customer-focused organisation, greater ownership and greater responsibility. with devolved structures that allow local managing directors and their leadership teams to put their customers and Our plan for CP6 will also start the railway’s digital age with passengers at the heart of everything they do. We have digital train control and signalling that will enable even more become more cost competitive, making over £85m of savings services to run, more safely and at a lower cost. To realise through our continuous improvement initiatives in the past these benefits there must be a whole system change across year alone. And we are also becoming a more diverse the industry to support it, and Network Rail is ready to play organisation. Since 2014 we have increased the number of its part in this transformation. women working at Network Rail by 32% and we have been The rail network is a complex set of national systems that recognised as an inclusive employer. need to work seamlessly in order to deliver for our customers. Since Mark Carne CBE took over as chief executive in 2014, he Unfortunately the May 2018 timetable change has not yet has completely transformed the safety culture at Network Rail. delivered all the benefits that we had hoped for, and many Under his leadership not only have we seen workforce accidents passengers have had poor experiences on the GTR and reduce by 40%, but there has been a 38% reduction in train Northern networks since these changes came in. We know accident risk and a 16% increase in infrastructure reliability. that this level of disruption is not good enough, and we are truly sorry for the disruption that this has caused to people’s Despite challenges, Mark has led Network Rail as it has lives. In the long run, we will see more services with better, delivered the biggest upgrade programme since the newer, longer trains on these networks. In the meantime the Victorian era. He has addressed big issues like aligning whole industry is working tirelessly to stabilise services, and performance, creating scorecards that align with targets that provide more predictability for passengers. are set by our customers - the train operators - and which are increasingly consistent with their own, and formed the I end by sincerely thanking Mark, from me and on behalf of the System Operator function that is able to take a ‘whole Board, for his huge contribution to the organisation over the last system’ view of the railway. four years. He has worked hard to transform Network Rail into an organisation capable of delivering the railway that Britain Mark has also led the development of the best business plan needs. His legacy will be felt for many years to come and I look for a future control period that Network Rail has ever had, forward to continuing this great work with his successor, Andrew and which enabled us to secure a Statement of Funds Haines OBE, who will join us later this year. I also thank the Available (SoFA) of £53bn, the largest in the railway’s history. Board, the rest of the senior leadership team, and all our staff and contractors that work so hard to keep Britain’s railways, ever This transformation into a customer-focused, efficient fuller of passengers, freight and trains, moving every day. organisation is the reason I am confident that the next five years will tell a very different story to CP5. We will start the next control period (CP6) in 2019 as a transformed organisation ready to take on this ambitious strategy. Thanks to devolution it has been planned from the bottom up, looking at asset performance and condition, and performance and Sir Peter Hendy CBE, chair costs. For the first time each route will have its own regulatory 27 June 2018

1 Strategic report Network Rail LimitedAnnual Report and Accounts 2018 Over the last few years we have been busy delivering the been busy delivering have we years few the last Over of these Many times. since Victorian upgrade biggest railway and passengers, around coming to fruition now are projects year finally experiencing the benefits. This are the country, North Rail as part of the Great Chord the Ordsall finished we and Piccadilly congestion at Manchester reducing project, the north of England. We to run across trains more allowing Edinburgh-Glasgow of the the electrification completed longer and that will bring faster, Programme Improvement and cities. We towns to Scottish trains reliable more a creating London Bridge station, and reopened transformed passengers as part of the for station bigger and better to make continued have And we Thameslink Programme. North and Great Western on the huge Great progress great faster which will usher in programmes, electrification at the end new trains and wonderful capacity more journeys, new trains, new timetables, New services require of this year. thinking across of integrated and a high level drivers more change, the industry 2018 timetable In the May the railway. left passengers were and many itself well for did not account and GTR, at the particularly in Northern deeply frustrated, the industry Collectively, of performance. poor standards are than this and we better that it must do much knows changes to the the future to ensure together working smoothly. run more timetable Rail of just five to the Network different very now are We us the that gives ago. It is this transformation years laid out in we have confidence to set out the ambitious goals period (CP6), which year control the next five our plans for begins in April 2019. Business our Strategic submitted we year this In February to the Office of Britain better a for railway a better Plan for 2019-2024. These plans reflect years (ORR) for Rail and Road Rail. We to Network importance is of paramount that safety of our the reliability to increasing also committed have achieved building on the 16% improvement infrastructure, 2 Mark Carne CBE events have also highlighted that there is much more to do. to more much is there that also highlighted have events A message from our chief executive, executive, chief our from A message say that on all counts we can point to significant successes in the last year, more recent recent more year, lastthe in successes significant to point can we counts all on that say Our role is to provide Britain with a safe, reliable, efficient and growing railway. While I can I While railway. growing and efficient reliable, a safe, with Britain provide to is role Our We have continued our relentless commitment to safety, and to safety, commitment our relentless continued have We whether employees, day, every safe, home getting everyone crossing risk, level accident passengers or the public. Train and we levels low all at record risk are risk and workforce never We in Europe. network rail major the safest operate We the opposite. quite granted, for such achievements take of delivering ways to find better everyday strive saw the launch of our this year example, For improvements. with in collaboration campaign Lives Saves Small Talk is the first of its type on the This campaign Samaritans. public to support those the general encourages and railway them on the rail be in emotional crisis around who may of communities and countless hundreds It impacts network. been the UK and I have across Rail staff Network that this campaign response the positive by overwhelmed so far. has received while man died in June 2018 a young however, Sadly, in Scotland. Our deepest sympathies site at a station working A full and colleagues at this time. friends with his family, are happened has been this tragedy how into investigation this to harness the insights from determined are we initiated; employees, for stronger, culture our safety to help make passengers and the public. our Customers’ in for of ‘Delivering the publication Following to in order to transform Rail continues July 2016, Network pleased to publish were our customers. We for deliver better This invites this year. Business’ pipeline in March the ‘Open for We on the railway. projects and deliver parties to fund third challenge and innovation. opening our doors, welcoming are has been milestone this year Another major transformation boards. supervisory route of an additional five the formation of the way oversight independent provide These boards of passengers. together in the interests work train and track six of our eight geographical for been formed now have They during 2018. to be in place boards with the remaining routes, Network Rail Limited Annual Report and Accounts 2018 Chief executive’s review continued

in the last four years, revolutionising the way we measure Earlier this year I announced my departure from Network and deliver train punctuality. We will spend and deliver Rail and Andrew Haines OBE will take over from me as efficiently and there will be a major focus on Digital Railway chief executive in the autumn to take us into the next and securing third party funding so that the taxpayer is no control period and I wish Andrew every success. I feel longer solely relied on to maintain and upgrade our proud of what we have achieved and the transformation infrastructure. We will also continue to lead the way in that Network Rail has undergone. None of it would have making the rail industry more diverse and inclusive, been possible without the hard work and dedication I see attracting people who think differently to make Network Rail everyday from the railway family. I would like to extend an even better place to work. Great people and great teams my thanks to all of you. are what we want to be recognised for. Our CP6 plans have built on the foundations of reform that we have put in place over the last few years. Network Rail is

Strategic report now a federation of devolved businesses. Each route has developed their own plan and consulted with their own customers and stakeholders to shape it. They have been built ‘from the ground up’ by local engineers who understand their assets and they will be managed and delivered by local teams. This is a fundamental change, with those closest to passengers accountable for performance. CP6 will mark the tipping point in the evolution of our rail Mark Carne CBE, chief executive network, as Digital Railway starts to become a reality. This 27 June 2018 technology is already being utilised in parts of the network. In March the first mainline passenger train operating on digital railway technology took its inaugural journey through the Thameslink Core between St Pancras and Blackfriars.

National scorecards during CP5 2014 - 2018

Minimum Target Maximum

2017/18 54.6% 2016/17 37.0% 3.7%* Scorecard outturn 2015/16 34.7% 1.9%* 2014/15 22.0%

2017/18 Safety 2016/17 2015/16 2014/15

2017/18 2016/17 Financial performance 2015/16 2014/15

2017/18 2016/17 Investment 2015/16 2014/15

2017/18 2016/17 Asset management 2015/16 2014/15

2017/18 2016/17 Train performance 2015/16 2014/15 * Indicates where 2017/18 performance finished for the Locally driven 2016/17 year, but no performance customer measures 2015/16 related pay was awarded for that element. 2014/15

3 Strategic report Network Rail LimitedAnnual Report and Accounts 2018 – The ORR determines that we efficiently spend efficiently that we – The ORR determines The Board’s corporate governance report starts on starts report governance corporate The Board’s page 53. Financial Financial must deliver we and the outputs receive the income we is period. Our chief executive control during each five-year to officer and is personally accountable our accounting of the public stewardship Rail’s Network for Parliament it receives. funds for regulation to the ORR’s subject are – We Regulatory management and for performance our health and safety licence. with our network consistent of the network Our Board is accountable to others in a number of ways: to others is accountable Our Board • • and operate organised are we How work which means we in a matrix structure, operate We is made up This structure functions. across collaboratively and route functions businesses, central of nine route businesses manage support services. Eight of the route area in a defined geographical network and run the rail companies to operating train with local closely and work passengers. The ninth the best service possible for deliver and long with freight working nationally, operates route operators. distance functions central our critical As part of our matrix structure, the System businesses; these are support our nine route Services, Infrastructure Route Authority, Technical Operator, is a In addition to these, there Railway. and Digital Projects such as business activities that covers core small corporate assurance, corporate and legal policy, functional strategy, Rail Property, Network also have We and communications. Rail that manages division of Network which is a commercial assets. and property our estate that sure has been designed to make The matrix structure This a national framework. by supported are our routes our for way and competitive in a fair us to deliver allows the UK. customers across 4 About us About We also set out our strategy to deliver a better railway for a better Britain. a better for railway a better deliver to strategy our also out set We Network Rail’s Board of Directors provides the primary provides of Directors Board Rail’s Network of the directors, details For governance. internal 49 to 52. see pages including their biographies, of the nation. Here we look at what we do, how we are organised, governed and funded. funded. and governed organised, are we how do, we what at look we Here nation. the of We own and operate the railway infrastructure in England, Scotland and Wales on behalf behalf on Wales and Scotland England, in infrastructure railway the operate and own We The executive committee, comprising the chief executive, comprising the chief executive, committee, The executive the chief financial officer and other senior people, manages Rail. It meets on a running of Network the day-to-day and operational basis to consider both strategic regular and the objectives executing for and it is responsible matters leadership on providing the Board, by approved strategy and establishing, matters, and environmental health safety, and risk controls internal monitoring and coordinating the business. throughout management What we do What we railway most of Britain’s and operates Rail owns Network 30,000 bridges including 20,000 miles of track, infrastructure, crossings level and thousands of signals, tunnels, and viaducts 20 and operate timetabling also manage rail We and points. reliable a safe, provide is to Our role stations. of the largest the upgrading and growing while railway and efficient passengers and freight. serve to better network and managed governed are we How to the answerable company, sector Rail is a public Network Our Scotland. (DfT) and Transport Transport for Department to use our the companies that pay customers are direct services. and freight passenger to provide infrastructure we Government, comes from While the majority of our funding parties and generating our partnerships with third increasing are in the railway. to reinvest estate our commercial from funds safety Road (ORR) is the independent The Office of Rail and sure The ORR makes of the railway. and economic regulator meet the needs of our customers, passengers and freight we as being a good neighbour to the millions of users, as well near the railway. or work people who live operate we framework the governance showing A diagram on page 54. be found within can Network Rail Limited Annual Report and Accounts 2018 About us continued

Routes are integrated, customer focused, business units

London London Freight Anglia South Wales Wessex Western Scotland and North East North East Group Functions and East Western National Midlands Passenger Corporate Core Operators Chief Executive Office and Executive Committee, Finance (including Risk and Internal Audit, NCB), Undertakes core corporate and group activities including business strategy, functional Property, Corporate Communications, Legal policy making and assurance Corporate Services, and Human Resources

Industry wide coordination of those activities required to optimise the overall use of System Operator the network for the benefit of all users

Strategic report Technical Authority This is the Safety, Technical and Policies, standards, new technology, benchmarking, lateral learning, competency Engineering Directorate frameworks and health and well-being

Route Support

Route Services Directorate Supply Chain Operations, The provision of services, agreed by the routes to allow them to benefit from IT, Business Services, Contracts and economies of scale and the optimisation of critical resources Procurement and Network Rail Consulting

Group Digital Railway The industry-wide programme accelerated digital modernisation of the railway, plus associated route services

Develop, design and deliver enhancement and other large complex capital projects Infrastructure Projects for the routes

More information on the activities of the individual routes regulatory agreements then allow us to determine the during 2017/18 can be found on pages 14 – 32. Information amount we are allowed to charge train operators for use of on our Digital Railway programme can be found on page 33, our network. and our Property division on page 34. The ORR calculates our revenue based on: Our business model • Cost of service – The ORR considers the costs that an We are a public sector company that operates as a efficiently run business would incur to operate and regulated monopoly. Our income is a mix of grant and maintain our network. They vary and can include costs borrowing from the UK and Scottish Governments, charges relating to employees, office rental, information levied on train operators that use our network, and income, technology systems, and taxes. The regulator determines mainly from our commercial property estate. what it considers to be an efficient cost and this may be different to the actual costs we incur. The UK and Scottish Governments specify what they want • Expenditure on renewals and enhancements – The from Britain’s railway and how much they wish to regulator assesses the capital expenditure on renewals and contribute. Our independent regulator, the ORR, sets a enhancements to the rail network that we need to undertake framework that specifies the level of fixed income we are in the control period. This expenditure is added to the allowed to charge train and freight operators, as well as the regulatory asset base in the year in which it is incurred. prices for recovering the costs of wear and tear to our • Allowed return – The ORR calculates the allowed return infrastructure caused by the trains using it. on the regulatory asset base and includes this in its The framework also includes flexible funding mechanisms determination of charges to rail users. This therefore which allow the level of enhancements to the railway to be covers, among other things, the cost of financing our varied over time. The charges we are allowed to pass on to capital expenditure programme. train operators are determined so that they are fair and • Performance against incentives – Our regulatory allow us to maintain a safe and reliable network, and framework includes incentives that are designed to deliver good customer service. encourage specific actions. Failing to achieve certain minimum targets may lead to a reduction in our allowed How our revenue is determined revenue, or an increase if we exceed targets. Network Rail is funded by the Government in five-year blocks called control periods. This annual report covers the fourth It is proposed that there will be changes to the method of year of Control Period 5 (2014 to 2019). revenue determination for CP6. This will be explained in our 2019 annual report and further details on the proposals can be The ORR assesses the efficient level of expenditure that it found in the ORR’s draft determination published 12 June 2018. believes we need to run our business and deliver the regulated outputs. It determines how much revenue we Our transformation need, taking into account other income that we receive. Our Since we published ‘Delivering for our Customers’, our plan for transforming Network Rail, in 2016 there has been a

5 Strategic report Network Rail LimitedAnnual Report and Accounts 2018 innovative solutions and new ways of working on the railway. railway. on the of working and new ways solutions innovative for opportunities of potential published a list we This year Business our Open for as part of party involvement third to come. of much more start and this is just the work, key part of our been a has also cost efficient more Becoming to our employees empowering are and we transformation to eye taking a critical and cost-effective become more 5,500 of our trained already have We processes. current and in the techniques improvement people in continuous through £85m of savings made approximately we last year initiatives. improvement our continuous made have we time, but the progress change takes Real better planning smarter, working improvements; real shows railway. use of the efficient and making more 6 – Improving the accuracy of train running data to help problem solve. to help problem running data of train the accuracy – Improving – Improving operational processes so that service recovery from incidents is rapid. incidents from recovery so that service processes operational – Improving – We will reduce train accident risk by a further 10%. a further risk by accident train will reduce – We Better Better that incidents to reduce infrastructure of the railway’s the reliability assets – Improving disruption. cause is based. of assumptions on which the timetable the accuracy – Improving timetables Better Better operations Better information Passenger Passenger Safety and prevent trespass railway to reduce programmes to develop will continue – We Safety Public suicides. 13%. by crossings the risk to the public at level will reduce – We Safety Crossing Level our to improve will continue business, so we and healthy an injury-free want – We Safety Workforce on mental our work increase will also 54%. We by measure (LTIFR) Rate Lost Time Injury Frequency 2024. ill-health by in absence due to mental of a 30% reduction with a target health and resilience, Driving greater efficiency within our organisation is also a core part of our strategy. During the During the strategy. part of our also a core is organisation efficiency within our Driving greater by cost of passenger journeys and maintenance the operating reduced have we last 10 years £53bn (in 2017/18 prices) to spending approximately 2019 – 2024 proposes 40%. Our plan for will spend wisely and efficiently. which we and enhance the railway, renew maintain, operate, of running the that the cost per passenger kilometre forecasting are 2019 and 2024, we Between more working, smarter through terms, in real nine per cent a further by will reduce railway technology. better and railway use of the efficient During the last 12 months we have begun to reverse the previous six year trend of declining train of declining train trend six year the previous begun to reverse have we During the last 12 months years, the next five Our plan for that is acceptable. at a level still not yet are but we punctuality, delayed, that are in the number of trains a 15% reduction will achieve operators, with train working on: focusing • • • • Keeping people safe on the railway is at the heart of everything Network Rail does. We want everyone everyone want Rail does. We Network is at the heart of everything on the railway people safe Keeping and safety that improved believe we responsibility, as it being a moral As well day. every home safe, be our number one to continue will therefore Safety go hand in hand. business performance improved four areas: focus on period, with a specific the next control priority throughout • • • • Safe Reliable Efficient Aboutus continued is Rail Network operate. we the way change to fundamental within a businesses operating of devolved a federation now its own developed each route year, This national framework. period (2019- next control the Plan for Business Strategic Operator System and the routes the first time. The 2024) for which with the ORR, agreed and targets their plans will have devolved have it is that we important how reinforces will drive Routes level. decisions at a local businesses making better through jobs and housing economic growth, serve. they with the communities relationships the to drive continued have we the past 12 months Over it to make want Rail. We Network pace of change within thework on or deliver finance parties to fund, third easier for that reforms a number of implementing are so we railways, with come forward can so people tape, aim to cut red Our strategy period (CP6) year control the next five Plan for Business its Strategic and submitted Rail developed Network This year, on focuses period the next control business, our plan for passenger and customer-focused 2019 - 2024. As a running from responsibilities: key the following Network Rail Limited Annual Report and Accounts 2018 About us continued Moving into the next control period, we will continue to improve our railway through the delivery of enhancements. We have radically changed our approach to planning enhancements in recent years, to prevent projects from being overpromised before they are properly developed and costed. From 2019, enhancements will be considered on a case by case basis rather than in one five year budget. This pipeline approach will be supported by business cases to confirm the strategic fit, value for money, affordability and deliverability of proposals. Building new projects to increase capacity can be expensive and disruptive, particularly in built-up urban settings. So the next control period will mark a turning point for Britain’s railway, with the end of major analogue re-signalling – digital signalling is the future that this plan ushers in. Over the next Growing five years, we will be accelerating the transition to digitally-run railways so we can unlock the benefits before the network is gridlocked. Digital Railway is developing a plan that, within 10 years, could enhance the journeys of over 70% of all passengers. Strategic report

The delivery of this reforming, ambitious plan will only be possible if we can attract, develop and retain the brightest and the best. We want Network Rail to be a great place to work, and help to make people proud to work on Britain’s railways. We aim to be one of Britain’s best employers. We aspire to create an environment that will allow everybody to reach their full potential. To reach our potential we must call on the talents of everyone; diverse teams perform better. We are leading the way in moving the rail industry to become more diverse and inclusive. We have set ourselves the target of increasing the female workforce to 20% by 2020 and by 2024 we aim to double the proportion of women in our business. We also aim to be in the Great People top 25 graduate employers and to have gender-balanced recruitment of apprentices and graduates. Great Teams

Strategy/Direction (see pages 6 & 7) Risks & Controls (see pages 40 - 45) Outcomes (see pages 8 & 9) Business Strategy People Strategy People Risks Business Risks KPI’s

Failure to safeguard our Network Rail: workforce (employees and Safety: • Strives to be a place Great People contractors). Workforce safety – where people are GreatTeams LTIFR proud to work. Failure to prevent a major avoidable train accident which Workforce safety – • Aims to be one of results in multiple injury/fatality. close calls raised Britain’s best employers. Workforce safety – Failure to have suitable and close calls closed • Is committed to sufficient infrastructure, systems within 90 days Safe attracting, developing and controls in place to Top 10 milestones to and retaining dedicated safeguard passengers and reduce level crossing and committed people. public at the interface with risk • Is leading the way trains and the railway. in making the railway Network Rail not industry more diverse Failure to recover from a embedding and and inclusive. business interruption to Asset management: sustaining the pre-defined output levels and • Is keen to be a place right change within agreed recovery Composite Reliability Index where people feel safe, initiatives at the right timescales. looked after and are treated time, in the right Renewals (seven key with dignity and respect. way, to deliver the Unable to achieve TOC / FOC volumes) Reliable right benefits. performance targets as agreed • Is planning for and Train performance with stakeholders. developing leadership and Failing to attract, skills to meet the future retain and develop needs of the railway. Failure to: live within our Financial performance: the full potential of funding envelope; achieve net our pipeline of talent FPM – total efficiency • Works to create an receipts from asset sales to for key roles. generated gross excluding environment to enable support shortfall funding; and enhancements everyone to reach their deliver efficiency savings full potential. Failure to secure programme. FPM – gross employee and Trade enhancements only Efficient • Encourages great Union support for our Failure to deliver the renewals Cash compliance - income leadership and strives to forward change portfolio to time and cost. & expenditure be a place where there is agenda. mutual trust and respect between line managers Enhancements: and employees. Top 10 IP Renewals and Failure to deliver the Enhancement milestones • Prioritises mental health enhancement portfolio to All Delivery Plan and employee wellbeing, time and cost. Enhancement milestones Growing and supports and develops resilience in its people. Locally driven customer measures

7 Strategic report 0.364 18.1% 10 259,009 10 10 100% 90% 0.380 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 17.5% 256,000 +£300m +£335m +£225m Scorecard Maximum Scorecard Maximum Scorecard Scorecard Maximum Scorecard Maximum Scorecard Maximum Scorecard Scorecard Maximum Scorecard Scorecard Maximum Scorecard Significantly Exceeding Target Exceeding Significantly 70.7%

64.8% 87.9% 60.4% 38 61.5% 56.9% 29/36 4 0 0 8 0 8 53.4% 52.1% 85% 80% 80% 95% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 0.402 16.5% 48.3% Target Target Target Target Target Target Target 205,000 47.2% 37.1% Year End Actuals End Year 7 24.4% (125) 82.2% Network Rail LimitedAnnual Report and Accounts 2018 6 6 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 80% 60% 60% 90% 0.425 -£335 £60m 15.6% -£225m 154,000 Meeting or Exceeding Target Meeting or Exceeding

Scorecard Minimum Scorecard Minimum Scorecard Scorecard Minimum Scorecard Minimum Scorecard Minimum Scorecard Scorecard Minimum Scorecard Scorecard Minimum Scorecard 8 2.5% 2.5% 2.5% 2.5% 1.0% 1.5% 2.5% 5.0% 2.5% 2.5% 2.5% 2.5% 6.48% 7.23% 7.86% 4.74% 2.12% 3.74% 3.74% 3.74% 10.00% 10.00% 10.35% Weightings to Target

Adverse

How we performed in 2017/18 in performed we How Area Significantly Adverse to Target to Adverse Significantly

Cash Compliance – Income and Expenditure – Income Compliance Cash Passenger Train Accident Risk Reduction Risk Reduction Accident Train Passenger Measures Crossing Level to reduce 10 Milestones Top Risk Workforce safety – Close calls raised – Close calls safety Workforce closed within – Close calls safety Workforce (%) 90 days Workforce safety – Lost Time Injury – Lost Time Injury safety Workforce (LTIFR) Rate Frequency Safety Locally Driven Customer Measures Customer Driven Locally Train Performance Train Customer Measures Driven Locally Train Performance Train Asset Management Asset Management Index (CRI) Reliability Composite Top 10 IP Renewals and Enhancement and Enhancement 10 IP Renewals Top Milestones Investment Financial performance measure (FPM) – measure performance Financial Only (£m) Enhancements Gross Milestones (%) Plan Enhancement All Delivery Volumes) Key (Seven Renewals Financial Performance Financial (FPM) – measure performance Financial Gross (£m) efficiency generated Total Enhancements Excluding Anglia Route Performance Route LNE & EM LNW Scotland South East Wales Wessex Western FNPO Network Rail Limited Annual Report and Accounts 2018 Our performance continued Safety Investment Lost Time Injury Frequency Rate (LTIFR): Means time lost to injuries and Infrastructure Projects Renewals and Enhancement Milestones: Relates to fatalities among Network Rail staff and contractors employed by Network the top ten renewals and enhancements milestones of our Infrastructure Rail per 100,000 hours worked. A lower figure represents a better Projects (IP) work. performance against target. We have achieved seven of our top ten milestones, narrowly missing our We significantly exceeded our LTIFR reduction target of 0.402, ending the target of eight for this measure. year at 0.364. There were 580 lost time injuries over 2017/18, compared to All Delivery Plan Enhancement Milestones: Our investment projects are 693 in 2016/17. managed using the Governance for Railway Investment Projects (GRIP) Close Calls: Means the number of close calls reported for any occurrence approach, which has milestones at stages three and six of the eight-stage that has the potential to cause injury or damage – this can be an unsafe act project process. or an unsafe condition. A higher number represents a better performance. We achieved 29 out of 36 of our enhancement milestones, successfully 259,009 close calls were reported. This exceeded both the target of 205,000 meeting our target of 80%. and the scorecard maximum of 256,250. 82.2% of these calls were closed Asset Management within 90 days, narrowly missing the target of 85%. Composite Reliability Index: This is a measure of the short-term condition Train Accident Risk Reduction Measures: Measures our achievement of the and performance of our assets including track, signalling, points,

Strategic report key milestones and metrics to reduce train accident risk. This is reported at electrification, telecoms, buildings, structures and earthworks. route level as well as national, providing greater visibility and accountability We achieved an improvement in CRI of 18.1%, exceeding both our target of in delivering a safer railway. 16.5% and our scorecard maximum of 17.5%. In 2017/18 the target was to achieve 80% of planned volumes and Renewals (Seven Key Volumes): Our seven key volumes for renewals are plain milestones to reduce train accident risk. The year-end actual was 87.9% line track; switches and crossings; signalling equivalent units; underbridges; thus exceeding target. Performance against the volume components of this total earthworks; wire runs; and conductor rail. measure were strong; three milestone measures not completing resulted in the shortfall against the maximum of 100%. We ended the year at 100%, significantly exceeding our overall target of 95%. All key volumes performed strongly and exceeded targeted levels. Level Crossing Risk Reduction: A measure of benefits achieved through closures of level crossings, downgrade in status and crossing enhancements. Train Performance This is an aggregation of all train performance related measures on the We closed all 10 of our top 10 milestones to reduce level crossing risk in route scorecards, and consolidated into one measure to summarise train 2017/18. The scorecard target of 8/10 was exceeded. performance. Financial Performance We achieved 24.4%, demonstrating overall we are adverse to our train Total Efficiency Generated (excluding Enhancements): This measures our performance targets. financial stewardship of the day-to-day running of the rail network by comparing income, operational expenditure and renewals expenditure to Locally Driven Customer Measures the baseline set at the start of the year. The baseline is adjusted to reflect This is an aggregation of all locally driven customer measures on the route the capital works actually delivered in the year to create a like-for-like scorecards, and consolidated into one measure to summarise the nature of comparison. these measures. Our gross financial performance in 2017/18 was £125m adverse to target. We achieved 60.4%, demonstrating overall we are exceeding to our locally Primarily due to Schedule 8* underperformance, including the impact of driven customer measure performance targets. weather this year (notably the disruptive snow that Storm Emma brought at Route Performance the end of February) infrastructure failures across a number of routes, as Anglia: Scorecard performance was marginally adverse to 50% target, at well as a number of externalities impacting LNW (multiple fatalities, a 47.2%. Strongest performing areas were safety and investment. Weakest security event at Euston and a lineside fire). performing areas were financial and train performance. However there has been some positive Schedule 8 performance in South LNE: Scorecard performance was favourable to 50% target, at 56.9%. East where investment in performance improvement schemes has reaped Strongest performing areas were safety and asset management. Weakest benefits and LNE & EM have also managed to marginally outperform performing area was train performance. targets. LNW: Scorecard performance was adverse to 50% target, at 37.1%. Enhancements Only: This measures our financial performance in delivering Strongest performing area was safety. Weakest performing areas were enhancement programmes by comparing expenditure to the baseline set at financial performance and train performance. the start of the year. The baseline is adjusted to reflect the progress made in delivering programmes during the year to create a like-for-like comparison. Scotland: Scorecard performance was marginally favourable to 50% target, at 52.1%. Strongest performing areas were safety and locally driven Our gross financial performance in 2017/18 was £4m favourable to target. customer measures. Weakest performing area was train performance. Mainly arising from agreed changes in programme baselines (Rolling programme of electrification) and scope value engineering (Thameslink) South East: Scorecard performance was significantly favourable to 50% partly offset by cost escalations on EGIP and Northern Programmes. target, at 70.7%. All areas of the scorecard performed strongly. Cash Compliance: This is a measure of how well we have remained within Wales: Scorecard performance was favourable to 50% target, at 64.8%. our funding envelope in total. This is an aggregation of all variances against Many sections of the Scorecard performed strongly, including safety, our financial budgets within Capex, Opex and income. financial performance and asset management. Weakest performing area was train performance. Cash compliance was £38m, slightly ahead of target as a result of positive management actions. Wessex: Scorecard performance was favourable to 50% target, at 53.4%. Strongest performing areas were safety and asset management. Weakest performing areas were financial and train performance. Western: Scorecard performance was marginally adverse to 50% target, at 48.3%. Strongest performing areas were safety and locally driven customer measures. Weakest performing areas were financial and train performance. FNPO: Scorecard performance was favourable to 50% target, at 61.5%. Strongest performing areas were safety and investment. Weakest performing area was train performance.

*Schedule 8 (the performance regime) is the part of passenger, freight and charter operators’ track access contract with Network Rail that sets out arrangements for compensation paid to operators by Network Rail in the event of unplanned disruption to services.

9 Strategic report

Network Rail LimitedAnnual Report and Accounts 2018 assisted by additional government funding and generating and generating funding government additional by assisted to Rail has continued additional efficiencies. Network the assets over property this disposal of certain progress is estate commercial sale of our The anticipated year. anticipate our plans in 2018/19 and we to achieving critical place in the second half of the year. that this will take This has the business. across continues Devolution mind- and customer-driven a route-led to drive continued closely with our key more us to work set, allowing It performance. improved drive and further stakeholders and has opened us commercial, us to be more has allowed and competitive. cost-efficient up to becoming more finalised our CP6 Strategic 2018 we in February Finally, supports a clear and believe Business Plan; which we the next 5-6 years. the business through course for realistic summary Financial achieved the financial performance on will focus This review made a small profit we 2017/18. This year Rail in Network by of which penny of £48m (2016/17: £483m); every tax before Plan. Upgrade the Railway in delivering has been reinvested the CP5 is assumed in and declining profitability Low decrease with a further determination, settlement regulatory regulatory control year of the the final next year, anticipated regulator, by the fixed income, largely period. This is because costs and in line with borrowing does not increase of the as a result which increase charges, depreciation Plan. Upgrade the Railway cost of delivering accumulated depreciation costs before and operating Although revenue in line with each other, increased broadly increased from losses gains and and finance costs/other depreciation overall reduced programme of the CP5 investment delivery to £48m (2017: £483m). profitability 10

of 2017/18 delivery that we achieved in 2017/18 through 2018/19. through 2017/18 in achieved we that delivery Chief financial review officer’s required for a vibrant and growing rail network, we will need to maintain the pace of of pace the maintain need to will we network, rail growing and a vibrant for required the subsequent five years are well advanced. To continue to deliver the infrastructure infrastructure the deliver to continue To advanced. well years are five subsequent the Network Rail is about to enter the final year of its five-year funding period and plans for plans and period funding itsof five-year year final the enter to about is Rail Network The Office of Rail and Road (ORR) and Network Rail agreed Rail agreed Road (ORR) and Network The Office of Rail and period, which of the control at the start ambitious targets of charges. the determination been built into have against offset are often been made, but have Efficiencies workforce including changes to improve cost pressures; challenges in our supply chain such as the collapse safety, as out works opportunities to carry and fewer of Carillion busier. becomes the network the for funds and raise costs to reduce Rail needs Network key period. One of the year of our control final to in 2015 was of the Hendy Review recommendations this being to for assets. The reason dispose of our non-core Plan; Upgrade the Railway for gap help bridge the funding Together, the rail industry is investing to innovate and and to innovate industry is investing the rail Together, Rail is the UK. Network right across journeys improve for on improvements single week spending £128m every Plan. As a result, Upgrade our Railway passengers through major 170,000 seats into will be an extra 2019 there by train with 6,400 extra day, every the country cities across in a 30% increase carriages; services and 5,500 new train will run more trains will be quicker, Journeys capacity. on board. comfort will be greater and there frequently This growth provides challenge, not least in providing the the challenge, not least in providing provides This growth in a manner that needs, that Britain infrastructure growing user and the taxpayer. to both the rail value provides included Crossrail, have the year for projects Our key the Edinburgh North Rail Project, Thameslink, the Great Western Great Programme, Improvement Glasgow and South Waterloo the and Programme, Electrification the end of coming towards now are we upgrade; West coming trains frequent with more these mega-projects service. into year. challenge this further faced have Our efficiencies Network Rail Limited Annual Report and Accounts 2018 Chief financial officer’s review continued Profit movement Year on Year new electrification assets; additional costs arising from £m legislation and legal interpretation such as the 900 apprenticeship levy (£10m) and holiday pay rulings (£21m); 800 and by cost inflation (£75m). 700 321 344 600 Operating costs 500 £m 3,400 400 124 300 483 3,200 288 200 75 21 10 3,000 75 53 100 48 121 2,800 2016/17 PBT Revenue Operating Depreciation Net 2017/18 PBT 2,600 3,191 increase costs increase financing 2,400 2,836 Revenue 2,200

Strategic report Revenue rose in the year, as a company we achieved a 2,000 turnover of £6,580m. This represents an increase of £321m 2016/17 Pension Joint industry Inflation Headcount Holiday pay Apprenticeship 2017/18 Operating Revaluation costs increase levvy Operating (2016/17: £6,259m). costs before costs before depreciation depreciation Track access and grants rose in line with the rail regulator’s determination of charges, augmented by an additional Employee costs £21m recovered as a joint industry cost with regard to Staff costs increased by £259m largely as a result of an electricity for traction (EC4T). increase in pension costs (£121m), an increase in the average number of employees in the year (£53m), the recent rulings on holiday pay (£21m), and the £m Revenue movements since last year (£m) 6,800 apprenticeship levy (£10m). Average headcount for the year was 39,370. This is an 6,600 increase from 2016/17, when the headcount average for 19 52 the year totalled 38,529. This was due to recruitment in 354 6,400 Route Services to fill maintenance vacancies and reduce 6,580 overtime costs, and to support new electrification assets; 6,200 and in Infrastructure Projects to deliver record levels of 6,259 enhancements. 6,000 2016/17 Track Schedule Freight Other (incl 2017/18 Financing costs Access & 4 & 8 property) Grants Finance costs for the year were £2,233m. This is an increase from last year’s charge of £1,692m.

Schedule 4 & 8 costs increased as the performance £m benchmarks tightened in the year. Asset performance was 3,000 good, but performance in the year continued to be impacted by slower recovery times from incidents, a knock on effect of 2,250 275 a more congested network. In addition discrete events such 266 as the snow fall in February and March 2018 impacted the 1,500 results. As a result, compensation paid to train operators 2,233 1,692 increased by £52m. 750 Network Rail also generated an additional £19m of property and other revenue, an increase of around 6% with continued 2016/17 Accretion New debt 2017/18 growth in income from retail at stations, commercial lettings finance costs finance costs and increased open access income. Tax Freight revenue maintained at £53m ending a trend of Network Rail has significant brought forward tax losses, not year-on-year declines as a result of lower volumes recognised as a tax asset in the accounts. As it continues to transported. invest heavily in the rail network, it therefore pays relatively Operating costs small amounts of corporation tax. The tax credit for 2017/18 Net operating costs this year were £4,731m. This has is £27m. Our deferred tax liability has increased to £2.5bn increased by £468m from last year’s expenditure of (2016/17: £2.4bn). £4,263m. This increase in expenditure is in part driven by Investment in the rail network extra investment that has increased depreciation by £124m. The Railway Upgrade Plan continues to transform the rail Operating costs before depreciation rose by £355m from network. We have over 15,000 live projects, some of the £2,836m to £3,191m. largest and most complex in the world. These mega-projects This is driven by: non-cash increases in pension liabilities include Crossrail, Thameslink, Great Western Electrification (£121m); Joint Industry Cost increases including cumulo and the Edinburgh Glasgow Improvement Programme. (business) rates at £54m and EC4T £21m (recovered Network Rail is delivering nearly a quarter of the entire through track access charges); additional headcount (£53m) spend on infrastructure in the UK. primarily to enable the delivery of maintenance including

11 Strategic report Network Rail LimitedAnnual Report and Accounts 2018 efficient performance in the future, and also additional civils and also future, in the performance efficient is there targeted, than is worse performance costs. Although comparatives year’s previous on the improvement a marked East) have as Scotland and South (such routes and some on their portfolio. outperformance to deliver been able central made in efficiencies from costs benefitted Operating our push by a real and from devolution costs following a leaner that drive gains those marginal people to make continued in lean techniques Training organisation. from a series of benefits and provided the year throughout teams. local and of Electrification Programme on the Rolling Savings target. to better enhancements Thameslink enabled funding the frames of charges The CP5 determination CP5, and included very for with Government agreement These were assumptions. challenging cost reduction (40% delivery of historic by extrapolations influenced in the growth given which, 10 years in the previous reduction to halving the operating over the period, equated traffic by the industry wide mile) and influenced costs per train report. by the McNulty suggested efficiency potential Rail needed to reduce that Network explained we Last year of £2.3bn in the total a cumulative by funds costs and raise remain to order period in years of the control final two still on course to do are to the loan limit and we compliant year in the current £1.3bn of the total delivered have so. We efficiency and which consists of a combination of delivery £1.0bn the remaining will deliver We of activity. removal of asset sales and a combination through next year, and efficiencies. business improvement continued framework Financial is to operate a licence and have own that we network The rail what a represents that at a value included in the accounts underpins it. This valuation for pay would purchaser third-party framework. our financial to the accounts is set out in a note The basis of this valuation that are flows of the cash an assessment and comes from this for point the asset. The starting to arise from forecast to certain asset base (RAB). Subject is the regulatory valuation is expenditure capital the ORR, each year by established criteria The ORR canadded to the RAB and amortisation is deducted. do not that we the RAB in the event from deductions make not meeting required example outputs; for our required achieve the a licence condition, or where breaching performance, train adjustment. funding a retrospective ORR wishes to make is based on projected network of the rail As the valuation for the potential considered we have flows, cash of the financial in CP5; both in terms underperformance reflects outputs. This therefore and the required settlement of costs assumed in the CP5 the trajectory between the gap and our forecasts. determination by increased was network of the rail the valuation As a result, we £1,075m). This is because £675m (2016/17: decrease allowed. than the settlement per activity to spend more forecast Borrowing 2014, September body in Since becoming a public sector and no government from directly Rail borrows Network This applies to markets. longer issues debt on the capital and new investment for required both the borrowing of existing debt. refinancing 12 17/18 £4.1bn £2.4bn 16/17 £3.9bn £2.8bn £3.5bn £3.1bn 15/16 £3.4bn £2.9bn 14/15 13/14 £3.2bn £3.7bn £2.3bn £2.8bn 12/13 Capital expenditure Capital Enhancements £2.3bn £2.5bn 11/12 £1.7bn £2.2bn 10/11 Renewals £1.6bn £2.3bn 09/10 Enhancements that will increase the capacity of the network of the the capacity that will increase Enhancements of in terms year to £4.1bn. This is a record amounted have at £3.9bn. valued that was delivery beating last year’s delivery; this year. £2.4bn on renewals also invested have We renewal key Rail hit 100% of its seven Network In the year, plan & (2016/17: 94.6%), 81% of its delivery volumes of its milestones (2016/17: 73%) and seven enhancement milestones (2016/17: and enhancements renewals top ten eight out of 10). and Efficiencies Drive Measure Performance Financial to with regard indicator performance key Rail’s Network which measure efficiency is its financial performance the regulatory against our performance measures targets. our in year and against determination the cost of all the to reduce working Rail is constantly Network good progress to make continue We deliver. that we work vital further efficiencies and will also seek in our commercial technologies. Network of new leverage the efficiency through due Schedule 8 outflows through Rail has suffered to the railway in incursions onto issues, an increase performance which has meant year during the current weather and adverse savings in costs through this increase had to mitigate have we costs. of central principally in the reduction elsewhere, found £87m and by turnover for missed targets we In the year costs operating for targets bettered £55m. We by renewals £4m. by £20m and enhancements by train than targeted worse by impacted was Turnover a number of across failures infrastructure from performance the notably weather, severe by exacerbated routes, and March. in February snow disruptive higher by impacted was performance Renewals including the cost of targeted, costs than electrification Acquisition and Data the Supervisory Control implementing a scheme that improves System, Control Remote (SCADA) more and in turn drives capabilities, our asset stewardship In order to deliver this level of investment we rely on a strong on a strong rely we of investment this level to deliver In order commitment a long-standing Rail has Network supply chain. supply chain with its and collaboratively positively to engage charter. payment a fair including our major one of of Carillion, the collapse year During the working a major challenge. By suppliers, represented able to were we administrators with Carillion’s proactively be to continued subcontractors that Carillion’s sure make by Furthermore on our projects. delivered works paid for keep been able to have with our supply chain we working on track. broadly delivering was that Carillion those projects of high levels historically to deliver continued we In the year £6.8bn). (2016/17: at £6.6bn in the network investment Chief financial officer’s review continued review officer’s financial Chief £8bn £7bn £6bn £5bn £4bn £3bn £2bn £1bn £0bn Network Rail Limited Annual Report and Accounts 2018 Chief financial officer’s review continued The regulatory settlement provides strong security for future expected future liabilities to a present value, using ‘risk-free’ income and the Department for Transport (DfT) loan borrowing rate, and compares with current asset valuation. agreement provides a robust platform to refinance and borrow to invest in the rail network. Network Rail is in line to Network Rail’s accounting deficit at 31 March 2018 live within the funding envelope established at the time of remained at £2,311m (2017: £2,311m) as gains on assets agreeing the DfT loan facility. matched the decrease in discount rate from 2.5% to 2.4%. On a funding basis the schemes are not considered to be in a During the year ended 31 March 2018, Network Rail significantly different position than at last year end. Assets borrowed £6.7bn from the DfT. Part of this new debt was held by the schemes increased by £226m in the year and the used to pay back existing bonds, whilst the remainder was latest actuarial valuation indicates the schemes are more used to invest in the railway infrastructure. As a result net than 100% funded. debt rose from £46.3bn to £51.3bn. See page 118 for movement in net borrowing. Post balance sheet events Except as disclosed above, there have not been any

Strategic report Network Rail plans to borrow significantly over the final year significant post balance sheet events, whether adjusting or of the control period to finance the investment programme. non‑adjusting. We plan to draw down a further £6.4bn from the agreed DfT loan facility to finance and to refinance maturing debt. Summary Network Rail has continued to deliver another huge part of In addition to the DfT loan facility, Network Rail has plans to the Railway Upgrade Plan; delivering the highest level of sell certain assets, increase efficiencies, and find other ways enhancements to the rail network it has ever recorded. These to attract commercial partners in order to deliver more enhancements are designed to improve performance and capital investment that will help increase the capacity of the increase network capacity to assist in meeting the increasing rail network. demand for rail travel. To maintain this momentum in the investment programme, Network Rail plans to continue Looking forward to Control Period 6 (2019-2024) Network additional funding through the sale of non-core assets and Rail and the DfT have agreed that future funding will not continues to look for additional funding from third parties require additional borrowing from government, but will be and internally by delivering further cost efficiencies. made available by grants. In 2018/19 alongside the delivery of the Railway Upgrade Risk management: Interest rates and currency Plan and the final year of CP5, stands the challenge, shared Network Rail manages its interest and foreign exchange risk with our industry partners, of managing the implementation by using derivative financial instruments (hedges). All these of the new capacity we have developed. By 2019 there will arrangements were entered prior to Network Rail becoming be an extra 170,000 seats into major cities across the a public body and will over time reduce in significance, as we country every day, with 6,400 extra train services and 5,500 expect to have no requirement to enter into new hedging new train carriages; a 30% increase in capacity. Whilst this programmes in the future. presents rail industry-wide challenges to implement, once in The group measures its hedges for accounting purposes at place this will be transformational for our customers both their market value as required by International Financial now and into the future. Reporting Standards (IFRS). A market value is determined by Our CP6 plans are now finalised; a bottom-up plan, comparing the original value of the hedges against the highlighting how Network Rail will efficiently spend the current market rate. funds the government has committed. It is arguably our best We do not intend to trade these hedges, but use them to plan ever created. minimise our financial risks. As long as the hedges are All of which will assist the rail network to drive better economically effective (i.e. they offset changes in the cost connectivity, a precursor to economic growth and build a of existing and/or future loans), their value at any point in better railway for a better Britain. time should not be a key focus when assessing the group’s performance. By qualifying to use hedge accounting rules, we match gains or losses in the market value of hedges to fluctuations in the hedged item (i.e. the loans). The gains on debt and derivative valuations taken through the income statement were £234m (2016/17: loss of £21m). This gain largely represents the reduction of the fair value of interest rate derivatives liabilities through interest paid on swaps (the latter is included in finance costs). In addition, £29m (2016/17: loss of £116m) of gains in the value of interest rate swaps, used to control the cost of future borrowings was Jeremy Westlake, chief financial officer posted to the hedge reserve as statistically effective cash flow hedges. 27 June 2018 Pensions Network Rail is party to two shared-cost defined benefit pension schemes. Costs are shared with pension scheme members on a 60:40 basis. Pensions are measured differently for IFRS than for actuarial funding reports. IFRS discounts

13 Strategic report (LNW) (FNPO) (LNE&EM) Freight and National Freight East Midlands Passenger Operators Operators Passenger Anglia and London North Eastern London North Western Scotland South East Wales Wessex Western

Network Rail Routes Network

Network Rail LimitedAnnual Report and Accounts 2018 14 Route performance Route Network Rail Limited Annual Report and Accounts 2018

Strategic report Anglia

The Anglia route runs a diverse railway that connects commuters, leisure travellers and freight to vital destinations including Cambridge, Norwich and the City of London. Our rural, coastal and intercity routes connect people across the region and the lines that serve London Liverpool Street station are increasingly popular for commuters. Anglia’s railway is a crucial economic gateway connecting businesses and people to three major UK ports at Felixstowe, Thameshaven and Tilbury. It also serves the busy Stansted and Southend Airports.

Key statistics 4,230 passenger and freight services per day 770 level crossings

1,697 route miles 2,500 employees

235 stations £517m spent on renewals and enhancements in 2017/18

Key scorecard targets Minimum Target Maximum

2017/18 47.2% Scorecard Outturn 2016/17 4 0.1% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

While we have seen some positive changes in our safety Higher than anticipated compensation to train operators and culture, we have not made the progress we wanted to in additional reactive maintenance expenditure, arising from the reducing the number of our people hurt while working on the challenging performance conditions in 2017/18, were the key railway in Anglia. We are, however, adamant that fewer factors behind not achieving the financial target. people will be hurt while working on Anglia route and have refreshed our health and safety plan as a result. We have made a considered effort to remove temporary track speed restrictions, which are both disruptive to The past year has also been a challenging one on train passengers and freight, and costly to the business. We hit our performance. While all four lead operators missed targets, c2c, target to reduce the number of delays caused by TfL Rail and London Overground are all running more than nine infrastructure failures, such as track faults and have installed out of 10 trains on time, Greater Anglia has improved on last new uninterrupted power supply units which will prevent the year and c2c is the best performing operator in the country. problems we had with signalling earlier this year. We have

15 Strategic report Meliha Duymaz, Meliha director, managing Route Anglia June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 De-layering of the supply chain. A direct of the supply chain. A direct De-layering Rail Network between relationship contractual in has resulted and specialist SME sub-contractors We engineering opportunities. value identifying out also used a new methodology to carry have lines closed which hasonly two with the work compensation payments operator train reduced closures so fewer the programme and accelerated passengers in total. been necessary for have Rail / supplier project Network An integrated efficiencies. in organisational resulting team of a planning and the implementation Long-term to the line approach production ‘manufacturing’ could increase we runs has meant of wire delivery during each session. productivity with suppliers focused to delivery Holistic approach enabling activities to complete and incentivised wiring works. of the physical in advance well to secure of the process management Robust works. to complete access to the track Efficiency case study: Efficiency is project Line Renewal Overhead Eastern The Great lineoverhead tension fixed the life-expired renewing to Chelmsford Street Liverpool (OLE) from equipment The old wires, system. with a modern auto-tensioned and speed sag in hot weather 1949, around introduced have and cancellations, delays which cause restrictions, and prevent to be imposed to run the service safely and trains. to both infrastructure damage further benefits significant delivering already is This project and reduced reliability increased through delivered costs with the new system maintenance the last 18 Over and Ilford. Chelmsford between financial has delivered this project months can be largely £7m. These efficiencies of circa to the following: attributed • • • • • line renewals programme will continue to forge towards to forge will continue programme line renewals out of paths needed freight much to increase Work completion. the await while we begin in spring 2018, will also Port Felixstowe changes on safety Order Act Works and of a Transport outcome of three the outcome also awaiting are We crossings. to level level route-wide around Orders Act and Works Transport and Essex. Cambridgeshire Suffolk, across closures crossing the us improve machines will help renewals track Our hi-tech will we and train, by of travelling and comfort reliability Anglia to help them introduce with Greater to work continue focus on to We will continue by 2020. a new fleet of trains our customers, for railway and reliable a robust maintaining of our the safety improve plans to further have and we briefing improved additional training, with workforce on leadership. focus and a greater materials 16 Anglia continued to improve a new team strides in embedding real also made such as signal problems to operational respond we how and trespass. conditions weather extreme failures, complaints works the number of railway reduced have We the average of reducing our target and exceeded 55% by of this has been Much 13 days. by age of complaints of disruptive on pre-notification focus a greater by achieved to our neighbours. works in the year Activities for seen a number of improvements has The last year including the users along the route, passengers and rail North. The at Cambridge new station opening of a brand to the connections much needed has created new station of the to boost growth and is expected Science Park nearby new housing and as attracting as well economy local next to the A14 and A10, with parking businesses. Located it is helping alleviate and 1,000 cycles, 450 vehicles for City. of Cambridge and platforms congestion on the roads users are crossing and level driver is of course our key Safety at user technology of new installation following safer now Lane in at Trinity and a new footbridge crossings, worked we recognise We one of our highest risk crossings. Cheshunt, while they our people safe to help keep need to do more of safety a new director appointed and have work, a new plan with our workforce and created transformation and behaviour. a change in culture and unions to effect to the Gospel Oak to Barking the delay Following owing to design issues with principally project, electrification of materials, delivery and the late line structures overhead substantially was on the 14-mile route the infrastructure in January 2018. This was and energised completed and collaboration cross-industry with significant delivered It is operators. support of the DfT, TfL, ARL and the freight for which is available that the infrastructure, anticipated to Place its Authority will receive of the new trains, testing and the ORR in mid-July 2018. Passengers Service from into the benefit be reaping will soon neighbours along the route trains. and quieter of longer, greener on the projects vital on two made good progress have We reliability greater Main Line that will deliver Eastern Great means project the Crossrail for Our work delays. and fewer line services to run Elizabeth closer to enabling are we also continued have We west. London to the central through and the renewals line of overhead our £290m programme line will enable the branch changes on the Southend Victoria We Anglia fleet to run with additional services. new Greater their patience as for our thanks to everyone give once again disruption has been a lot of weekend that there recognise we these much needed improvements. deliver while we ahead In the year with a on Anglia route, year going to be another exciting It’s of to a close. The £25m upgrade drawing number of projects 2018 is helping to in May completion Wick station Hackney access to the improve and area the local connect better on the Lee progress significant will also make We station. a 2019 will deliver May which by Rail Programme, Valley an and Angel Road, Stratford tripling of peak services between new station Hale and a brand at Tottenham station upgraded in Enfield. housing development the Meridian Water to serve Spring 2019 will also see the completion of the £68m signalling and safety overall of the Wherry lines, improving upgrade and our overhead project The Crossrail of the railway. reliability Network Rail Limited Annual Report and Accounts 2018

Strategic report London North Eastern and East Midlands

The London North Eastern and East Midlands (LNE & EM) route contains strategically important national assets which connect communities and economies across the length and breadth of the country. LNE & EM encompasses three of the country’s most important rail corridors: the East Coast Main Line (ECML); the Midland Main Line (MML) and the TransPennine route. Geographically it is the biggest Network Rail route, with 4,600 miles of track spanning the length of the country from Scotland to London via Leeds and Sheffield.

Key statistics 4,600 miles of track 221m passenger journeys each year 396 stations 3,400 passenger trains every weekday 5,696 employees 58m freight tonnes every year, equivalent to £940m spent on capital expenditure 6.9m lorry loads compared to £788m in the previous year Serving communities home to 7.6m people

Key scorecard targets Minimum Target Maximum

2017/18 56.9% Scorecard Outturn 2016/17 51.0% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

Overall the route has delivered a positive (better than forecast) Sadly, the impact of suicides on train performance has been Financial Performance Measure (FPM) (inclusive of Opex and significant for Northern, TransPennine Express (TPE), Grand Capex). But unfortunately missed its overall financial targets; Central, Hull Trains and Virgin Trains East Coast (VTEC). this was mainly driven by the adverse weather at the latter half Suicide prevention patrols have been implemented at the of the year, which increased compensation payments to train south end of the ECML and a programme of lineside fencing operators, and the loss of planned work. In totality the route has enhancements is underway. This follows the very successful delivered an increase in its overall CAPEX work totalling £940 introduction of security patrols co-ordinated by a dedicated million, compared to prior financial year of £788m. Network Rail funded British Transport Police inspector which

17 Strategic report Rob McIntosh, McIntosh, Rob director, managing Route London North Eastern and East Midlands June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Efficiency case study: Million-dollar Efficiency 2018) man (March a one- are stores unit’s delivery A maintenance tools and parts to keep equipment, stop shop for though, things stores many running. At the railway lead to – which can get a bit complicated can money. wasted logistics programme Andy Lewis, professional £1,000,000 with making tasked manager, was stock at stores the reviewing by of savings worth finding EM north area, the LNE & across to be unneeded materials opportunities for stock is managed how and improving returned within the stores. as weren’t that stores aware were Andy said: “We was definite could be and there as they efficient a tall It was at a lot of sites. improvement for room has been a huge success – we but the project order and then of savings a million pounds worth reached of £1,100,000. target surpassed our stretched not we’ve where been a single week hasn’t There been able to find some unused stock and get some more found alone we back – in one week money to return.” of materials than £100,000 worth communities and economies that it serves. We have have We that it serves. and economies communities opportunity once in a generation commenced our already Main Line, and the East Coast on Railway Digital to realise all the with to fruition, to bring this will be continuing we opportunities cross-industry transformative and sustained it creates. the to deliver see LNE & EM begin work will also Next year the Midland Main Line since it was of biggest upgrade cleaner, with passenger journeys transforming completed, Corby to railway services on the electrified and more greener to London. The East seats on journeys as 50% more as well of the IEP trains, Main Line will see the introduction Coast the Rail for in Network project and the biggest infrastructure route of the TransPennine – the upgrading years next few – will begin in earnest. crucial to is in the coming year undertaking are we The work of our the reliability and improving railway our growing first, to put safety will also continue but we infrastructure, and the of our staff, on the safety particularly focusing of the public, on our railway. safety 18 has seen a 45% reduction in delays caused by suicides for for suicides by caused in delays 45% reduction has seen a (GTR). Thameslink Railway Govia a had have on the ECML failures line equipment Overhead and VTEC. Trains Hull Central, on Grand impact significant with line reliability in overhead heavily to invest continue We line assets. Overall, of changes to overhead a programme and Great both Thameslink for asset reliability improving throughout impact has had a positive Northern GTR services the year. that incidents been a number of external also have There the year. throughout performance impacted have the by impacted was East Midlands Trains for Performance due to a fire earlier this year of Nottingham Station closure of arson. Performance to be the result found later which was at Manchester events by impacted TPE was Northern and for near Manchester bombing including the arena stations, Piccadilly. at Manchester on the tracks and a protest Victoria conditions of autumnal weather The earlier than usual start performance, also affected years to recent compared in February and snow East Midlands Trains, particularly for plans in have We route. the across performance affected the Rail Head Treatment us to start place that will allow by issues caused earlier in 2018 to address programme Train autumnal weather. in the year Activities on the ground LNE & EM has seen work the last year Over outputs of our key look to deliver as we increase control the end of the current plan towards enhancement preparing are we London arteries, all our key period. Across of the new Thameslink services and the introduction for to our existing a series of improvements began and upgrade track of reliability to improve infrastructure line equipment. overhead saw its first The Midland Main Line programme capacity to Corby commissioning of the £130m Kettering on time and to budget in completed was which project a Council County In partnership with Derbyshire February. passengers in April opened for was at Ilkeston new station of with the London Borough contracted have 2017 and we at a new station for the development Barnet to complete plans. in support of their housing and growth Cross Brent in investment Main Line has seen significant The East Coast to improve railway of the electrified areas key renewing successfully were projects Three and reliability. performance of the in August 2017 to support the introduction completed the East onto (IEP) trains programme express new intercity party third has been some successful Main Line. There Coast including the rail in the year delivery project funded inland large a Inland Port, to Rossington connection to support hub that has the potential freight intermodal 5,000 jobs. Route TransPennine reached on was milestone A significant to the DfT in with the submission of our proposals Upgrade different four December 2017. The submission provided and is on the route scenarios that could be implemented the DfT. Alongside this, early by being reviewed currently 2019 have in March starting the main work ahead of works signalling and including a new platform, at pace, continued at Micklefield. junction ahead In the year need we is straightforward; as the LNE & EM route Our role meets the needs of the that our railway to ensure London North Eastern and East Midlands continued East Midlands and NorthLondon Eastern Network Rail Limited Annual Report and Accounts 2018

Strategic report London North Western

London North Western (LNW), the largest of Network Rail’s route businesses, is the economic ‘Backbone of Britain’ - the vital connection between many main cities. We serve all customer segments of the rail market. Our customers travel long distance for business and leisure, competing with domestic airlines. We help carry commuters in and out of Manchester, Liverpool, Birmingham and London. LNW is also a key rail freight route. We are home to the West Coast Main Line, the busiest mixed-use (freight and passengers) railway in Europe, serving London, Birmingham, Manchester, Liverpool, Edinburgh and Glasgow. Our infrastructure runs from London Euston and Marylebone in the South through the Chiltern and West Midlands regions, the North West of England and Cumbria before joining with Scotland at Gretna.

Key statistics

24% of Britain’s railway 159 signal boxes 6,009 train services a day 571 stations 246.5m passenger journeys each year 4,500 track miles 7,100 bridges 6,853 employees 728 level crossings

Key scorecard targets Minimum Target Maximum

2017/18 37.1% Scorecard Outturn 2016/17 50.9% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

Activities in the year workplace safety improvements. Our Take 5 for safety Workforce safety performance on LNW was good in initiative is embedded in everyday life. We remain 2017/18, exceeding target. But, as always on safety, the committed to instilling a safe, caring workforce culture job is never done. Safety remains our foremost priority. As where we welcome everyone and embrace new ideas and we head into 2018/19 we have plans for ongoing workforce fresh thinking. campaigns to involve all LNW staff actively participating in

19 Strategic report Martin Frobisher, director, managing Route London North Western June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Improved safety and efficiency safety Improved work on railway access plan track team & Delivery Possession LNW’s Track on the railway. work critical out safety to carry are trains out when be carried possessions need to place at night. takes of the work not running. Much to maintenance routine from ranges The work LNW team In 2017/18 the upgrades. major railway possessions. By than 10,000 more oversaw which these possessions by the process improving has the LNW team planned and delivered, are and efficiency. safety improved dramatically In 41 “irregularities”. were In 2016/17 there Our 21. This is still too many. were 2017/18 there But 19 them completely. aim is to eradicate on than 50% improvement a more is irregularities by mistakes are “Irregularities” year. the previous wrong in the putting possession protection workers with, say, complex location at a example, place. For a to approach on the lines converging 20 different weather, and in foul in darkness often station, could layout with the track someone unfamiliar line. These block the wrong mistakenly services and and train work delay can irregularities track risks for serious safety very lead to potentially costly very are and work to trains Delays workers. customers. inconvenience and can using by this improvement achieved The LNW team learnt solving (PPS) techniques problem practical PPS programme. under the Lean business training use signals now we major changes: Firstly, led to two work infor being shut of track to define a section the This reduces to using sets of points. preference (eg, detonators and risk of possession protection being placed warning boards) flashing ‘stop’ now are rotas possession staff Secondly, incorrectly. is an ‘expert’ at every there up to ensure drawn a possession. take we where layout complex track in is always knowledge critical safety This ensures the right place at the right time. The next major phase of the Liverpool Lime Street Lime Street Liverpool major phase of the The next The long- in summer 2018. place takes transformation and Manchester- Walsall-Rugeley Bromsgrove, awaited in time for also set to complete are line upgrades Preston change. 2018 timetable the December 20 London North continued Western stations at our managed satisfaction Passenger Lime Euston, Liverpool London New Street, (Birmingham as were target above was Piccadilly) and Manchester Street to intend something we This is complaints. work railway 2018/19. build on in milestones as (GNRP) hit major North Rail Project The Great customers for travel train its quest to transform it continued included the Its achievements in future. and both now connecting viaduct Chord of the iconic Ordsall unveiling the first time. Ordsall, for main stations Manchester’s congestion will ease rail GNRP upgrades, together with other and services in future the city giving rise to more across Liverpool afield as Newcastle. as far times journey improved one of its stage underwent station Lime Street new platforms. of two the creation including transformation for its months five closed for line was The Blackpool-Preston reopened in April 2018, allowing but upgrade, electrification to run along this line. trains new electric progress conditions hampered poor ground Unpredictably This line electrification. on the Manchester-Bolton-Preston to December. This May from led to it being delayed the collapse of compounded by further challenge was committed remain We our principal contractor. Carillion, it will bring this scheme. When complete, to delivering services train electric reliable spacious, more more faster, customers. for by a high was impacted target financial The route’s Main Line Coast on the West incidents number of trespass and performance train affecting south of Rugby, The operators. to train Schedule 8 payments increasing to Bolton upgrade completion of the Manchester delayed factor was a contributing and also had a financial impact when the May issues seen to some of the performance introduced. was 2018timetable line. The the Walsall-Rugeley to electrify continued Work months two will complete project electrification Bromsgrove is under Meanwhile work deadline. May its intended after to continued Consultations on HS2 enabling activity. way scheme. Rail 2, Bicester-Bedford the East West place for take levels short of the record frustratingly fell punctuality Train led on LNW in 2016/17. A combination of factors achieved and crew train by action industrial weather, to this, notably as sadly a high incidence of suicides on the line. As well between fatalities performance, operational impacting financial impact. adverse and Euston had a significant Rugby in this at stations deployed were patrollers Thirty platform these tragedies. to prevent purpose is to intervene Their area. the Office of Rail to the regulator, submitted we In February years to the five Business Plan for Strategic our and Road, operations, than £5bn of vital more 2024. It proposes LNW’s in support of activities and renewals maintenance excellent delivering safely CP6 (2019-24) vision: “One team The plan prepares customers and taxpayers.” service for future and for construction of HS2’s the impacts LNW for demand in London, in commuter growth forecast and Manchester. Birmingham, Liverpool ahead In the year in the first half plan to celebrate The GNRP milestones we which of Halton Curve, of 2018/19 include the unveiling and Chester services between frequent will enable more and the new Maghull North and Newton le Liverpool, Merseytravel. for delivered have which we stations, Willows Network Rail Limited Annual Report and Accounts 2018

Strategic report Scotland

For the past three years Scotland’s railways have been managed under a single leadership team, the ScotRail Alliance. Together, this partnership, formed of Network Rail and Abellio ScotRail, run a range of domestic and cross border services. Passengers use the network for leisure and short distance travel, as well as daily commuter and intercity services. The rail industry in Scotland is key to the country’s economic success, contributing up to £670m per year. As use of the network increases we are working closely with the Scottish Government and other stakeholders in order to deliver and enhance services for passengers that provide vital links between communities and employment, industries and markets.

Key statistics 96m passenger journeys each year Working with over 160 suppliers 2,500 passenger trains every day £704 spent on infrastructure renewals and enhancements 1,718 route miles 12,000 freight trains that run to, from or 358 stations within Scotland per year 591 level crossings 4.2mt of product has been transported to, from and within Scotland excluding coal in the 2,580 employees last 12 months.

Key scorecard targets Minimum Target Maximum

2017/18 52 .1% Scorecard Outturn 2016/17 31.4% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

Safety remains a key focus across the route with Lost Time that serve as a reminder of the need to focus ever more on Injury Frequency Rates (LTIFR) showing an improvement getting our processes and assurance at the front end of our year on year. Efforts to instil a safety conscious culture business up to the very highest standards. continue with the development of safety briefing videos that are used to help engage front line members of staff. Train performance continues to be a concern for the route Nonetheless, there have been some operational incidents with public performance measures declining year on year,

21 Strategic report Alex Hynes, director, managing Route Scotland June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Efficiency case study: Efficiency change in a fundamental Scotland has delivered risk through of signalling maintenance delivery of the condition of A review based maintenance. and maintenance the asset had been undertaken to minimise schedules smoothed and realigned This has and maximise productivity. time travelling reduced backlog and savings, in significant resulted asset reliability. improved In the year ahead In the year and reliable a punctual is to deliver year next Our aim for in Scotland and services and freight passenger for railway will be nearing of the projects A number the border. across place taking works improvement with further completion the route. across capacity see further will station Waverley Edinburgh to with the completion of extensions improvements 10-car the new accommodate and six to five platforms will see the Dunbar station trains. Express Azuma Intercity to help of a new second platform of construction start for Main Line, expected on the East Coast capacity improve completion in 2020. and Alloa of the Stirling, Dunblane The delivery on the improvements the final facilitate will electrification in 30% increased corridor resulting Glasgow Edinburgh journey with the fastest times, journey and reduced capacity 42 minutes. to be around expected will include platform project The Shotts electrification Shotts, Carfin including to a number of stations extensions will be station while Livingston South Calder, and West project in 2019, the to be complete Expected reconstructed. line connecting electrified fully the fourth will create cities. largest Scotland’s will station Street Queen’s of Glasgow The redevelopment and longer trains for platforms extended providing continue that is set to spacious facility and more a brighter creating accessible. in 2020, that will be fully be complete and Inverurie Aberdeen between will be installed Dual track number of trains the times and increase journey to reduce at Dalcross will be constructed new stations Two available. communities. local accessibility for to improve and Kintore Main Line that will will commence on the Highland Works of the longer High Speed Trains, support the introduction this year. later on the route to be introduced which will start to proposals will be developing we In addition to these works line. on the within stations access arrangements the improve 22 Scotland continued a Following our target. 2% against down at 89.7%, currently by a affected further was autumn, performance difficult Storm Caroline including incidents related weather number of negative which had a hugely the East” from and “The Beast network. of our remoteness and the scale given impact of thawing the subsequent and weather winter rain, Heavy parts of causing incidents major in two and ice resulted snow Landslides on the a short time. to be closed for the network a huge number to Anniesland via Maryhill line caused Glasgow between while the line failures, measure of public performance to a landslip. due also blocked William and Mallaig was Fort on the line at Ballast train of a High Output The derailment off the ballast coming excessive by caused Ravenstruther, to the overall also a major contributor was belt, machine’s year. the for performance train as a suffered have of financial performance Some elements Endeavours last year. performance train of the poor result processes improve the business to across being made are ways of efficient and more innovative new, and identify hard to work continue We this decline. to address working an improved with ScotRail, our Alliance partner, to deliver and senior a single managing director service led by team. management in the year Activities (EGIP) Programme Improvement Glasgow The Edinburgh toworks of the Edinburgh the electrification completed for energised was High Line and the route via Falkirk Glasgow allowingroute of the Electrification in October. trains electric a 20% reduction to deliver will help to operate trains electric when the new capacity times and adds 30% more in journey year. in the later fleet is introduced ScotRail electric will increase works improvement Waverley The Edinburgh Platform flexibility at the station. and operational capacity in December 2017 and accommodates completed 12 was being introduced trains class-385 electric the new eight-car Programme Express in 2018. The Intercity ScotRail later by to the east of the longer platforms (IEP) is introducing the East from capacity greater accommodating station, Edinburgh Main Line (ECML). The newly constructed Coast at the Saltire the ‘Building award’ received Station Gateway Scottish Civil Engineering Awards. of the opening celebrated project to Inverness The Aberdeen to improve as part of the work station the new Forres major cities in the North of the two between capacity included platform out carried Scotland. Other work at Elgin as crossing to the level and an upgrade extensions on the line. as signalling work well of to support the introduction projects The electrification through Junction Grangemouth from trains new electric and Stirling to Alloa and Dunblane Grahamston Falkirk including being undertaken work preparatory with continue masts. bridges, piling and installing altering the completion of the The Highland Main Line celebrated to with £4.5m invested refurbishment Viaduct Findhorn for for purpose it is fit and ensure the structure improve generations. future improved has delivered All programme The Access for with the country, across accessibility at a number of stations to enhance the installed and footbridges new lifts, stairs mobility. people with reduced for facilities Network Rail Limited Annual Report and Accounts 2018

Strategic report South East

The South East route delivers almost a third of the total passenger journeys across the network. Our infrastructure connects the capital and its southern and south-eastern suburbs with Kent, Surrey, Sussex and Channel Tunnel routes to Europe and we manage four of the busiest stations in the country – London Victoria, London Bridge, Charing Cross and Cannon Street. Commuters make up the largest proportion of our passengers, but we also carry leisure travellers to the south coast and run the line to and from Gatwick, the UK’s second busiest airport.

Key statistics 510m passenger journeys each year 6,700 freight services in 2017/18 5,000 passenger trains every day 23% freight growth since 2014 2,000 route miles £903m spent on renewals and enhancements in 2017/18 372 stations 3,000 employees

Key scorecard targets Minimum Target Maximum

2017/18 70.7% Scorecard Outturn 2016/17 47.1% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

This has been a truly transformational year for the South East within 90 days. While our lost time injury frequency rate route; the underlying performance of our assets and our people (LTIFR) has deteriorated this year, it improved in the second has improved dramatically and our customers are feeling the half of the year following the appointment of a Safety benefit – though it’s clear there is still much more we can do. Transformation Director, with more mature improvement plans and stronger, more inclusive governance We continue to embed a strong safety culture, with arrangements now in place to drive cultural change. improvement in the number of Close Calls raised and closed

23 Strategic report John Halsall, John director, managing Route South East June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Efficiency case study: Improving case study: Improving Efficiency at depots and sidings safety at safety public and workforce to improve A project and installing by depots and sidings in Kent and other handrails walkways, refurbishing savings efficiency of has delivered improvements estimate. the budgeted £3.7m against the use of through primarily achieved This was on tools taught improvement’ continuous ‘structured This included an in-house leadership programme. to of similar works delivery and packaging tendering site-by-site appropriate deliver waste, eliminate avoiding and than ‘one size fits all’ solutions rather at depots ensuring those working scope changes by the start. from engaged and sidings were remaining footpath crossing over the four-track Brighton four-track the over crossing footpath remaining at Salfords. Main Line ahead In the year year is of the new financial event the most significant far By in the rail is clear that we change. It 2018 timetable the May the new in the way down let passengers industry have that, I am for has been planned and introduced; timetable sorry. very on a recovery together working Rail and GTR are Network expect they reliability passengers the plan which will give our focus has been achieved, Once that stability and deserve. and of the capacity the remainder will turn to delivering by completion of the enabled benefits connectivity Thameslink Programme. will be provided additional capacity on the route, Elsewhere supply upgrades, such as power enhancements, through see step-free will stations Further which enable longer trains. a wide benefiting being delivered, access enhancements of passengers. range as part of the £300m our work will also complete We planned nine-day two including programme, resilience Bridges and Brighton Three between of the railway closures major 2019 to enable 2018 and February in October and signalling and tunnel drainage to tracks, improvements passengers. service for reliable a more provide 24 South East continued South by largely driven year, this has improved performance Train – a great operators our train with collaboration greater with teams performance our new joint of which is example joint for standard setting the are who GTR and Southeastern, the industry. across working on the lowest among the remains performance That said, without challenges, has not been and the year network and suicides in trespass a spike weather, including adverse Bridge terror such as the London and major incidents around of our work completion The successful attacks. of the Thameslink Programme, London Bridge as part platforms, new concourse and extra including the fantastic the benefits. beginning to feel now are means passengers congestion high, though increasing remains Asset reliability cause can incident that any means on the route is passengers. That for knock-on impacts disproportionate response fault our reducing on further focusing are we why such as infrastructure in intelligent times and investing condition monitoring. remote to thanks largely positive, was overall performance Financial in lower-than- resulting performance railway improved Looking operators. to train compensation payments forecast plans for well-evidenced robust, submitted we to the future, with, and consultation period following the next control in support of our of stakeholders a wide range by, scrutiny the South East route. vision for underline that this year delivered have we The improvements some of the most in place on South East are the team We Rail. Network people within and talented committed and I am development in our people’s to invest continue already are programmes that our new leadership delighted route. the of people across for hundreds benefits delivering in the year Activities this year, completed successfully upgrades The infrastructure set the have the Thameslink Programme, primarily through Thefor passengers. improvements significant for foundation open to fully is now iconic, new London Bridge station and signalling all track completed have passengers and we to enable service improvements area in the surrounding work in the future. on the Brighton Main Line, at Redhill An additional platform will support the new timetable commissioned in January, service on the North Downs an enhanced and could allow offering better in future, and Redhill Reading line between to Gatwick Airport. connections as part of a £300m asset major work delivered have We at renewal including a junction programme, resilience Sevenoaks through improvements drainage Earlswood, along the management and trespass and vegetation Tunnel and delays – all designed to reduce busiest parts of our route passengers. service for a better provide means the new International at Ashford Signalling work serving the stock will be able to continue rolling Eurostar to the whole which is of huge economic importance station, supply on power also made progress have We of Kent. and Sussex to support longer and more in Kent upgrades services. frequent the railway over The opening of a number of footbridges been able to close some of our high-risk level have means we and the last near Dartford – such as Stone Crossing crossings Network Rail Limited Annual Report and Accounts 2018

Strategic report Wales

The railway in Wales and Borders connects people, businesses and communities to support both regional and national economic growth. Almost 50% more passenger journeys are made to, from and within Wales than a decade ago. We employ well over 6,000 people directly or indirectly and spend tens of millions of pounds with local suppliers every year. Our devolved leadership team works within a national framework while proactively supporting the aspirations of Transport for Wales, Welsh Government, the Department for Transport and the wider Wales and Borders stakeholder community. Our route Supervisory Board, chaired independently, ensures we build on our partnership approach; the Board holds the industry to account, brings track and train closer together and supports improvements to passenger services.

Key statistics 30.4m passenger journeys each year 248 stations 1,100 level crossings 1,600 employees 3,002 bridges £395m spent on renewals and enhancements last year 1,340 services per day 1,505 track miles

Key scorecard targets Minimum Target Maximum

2017/18 64.8% Scorecard Outturn 2016/17 60.5% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

We have seen some great improvements in safety for our a result of a reduction in staff lost time accidents - from 23 to workforce and for the communities we serve. This year we just 17 LTIs in the year. closed six level crossings and commissioned 13 audible warning devices on level crossings across our route, as part of Our Public Performance Measure (PPM) was 92.2%, slightly our level crossing risk reduction programme. Our workforce below target. However, this was a 0.3% improvement on last lost time injury (LTI) frequency rate has improved by 33% as year’s figure. Wales and Borders has the lowest level of

25 Strategic report Andy Thomas, director, managing Route Wales June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Efficiency case study: Efficiency and utilities has enabled us to energy Devolving improved savings of £846,000. This efficiency make to will continue and water of energy management year. us £234,000 every save that for the first time in ten years, over 90% of AMs were were 90% of AMs over years, ten the first time in that for surveyed of those Rail, and a third with Network familiar is improving in Wales Rail of Network that devolution agreed of the network. the performance previous of the results on the acted have we year In the past facilities and staff such as refurbishing survey, employee have We opportunities. volunteering find more helping staff and our apprenticeship through new talent attracted science, technology, our schemes and deployed graduate (STEM) ambassadors to schools andengineering and maths and diversity Our workplace the route. colleges across 11 new appointed programme inclusion champions to 33, and our total bringing quarter, champions in the last in leadership in our women participated 12 women this year are women . More Play) (Fair with ChwaraeTeg programme and half of before than ever in Wales in the railway working women. now are leadership team and Borders the Wales ahead In the year for time Period 5 is an exciting Control year of The final our mission to run a will continue We and Borders. Wales meets that better railway growing and efficient reliable, safe, for maximum value the needs of passengers and provides and our funders. taxpayers the North along track renewing are we year the next Over Talbot Port signalling between Line, upgrading Coast Wales Main Line. and modernising the South Wales and Swansea the next 12 over also planned are Another 116 projects our assets across and refurbish renew to repair, months and Borders. Wales Wales for the new Transport that KeolisAmey, anticipate We the over who will take company, operating train franchised increased will bring significantly in October, Arriva from reins and additional capacity. passenger service performance and the with Arriva will work we ahead During the months the into a smooth transition to ensure Government Welsh implement to Wales for with Transport and new franchise passengers. the experience for plans to begin improving period, our next funding for Business Plan Our route Strategic the Office of Rail 6, will be published following Period Control The plan has the support of final determination. and Road’s diverse many and seeks to deliver Government the Welsh rail which benefit as many improvements schemes and local and Borders. Wales users as possible across 26 Wales continued which occurs on the each incident for recorded delays delay national the overall less than 5% of with network, route. occurring within the minutes operating and freight train in partnership with our Working affecting in service reduction a further achieved we companies, year’s 4.5%. This builds on last by which improved failures two of 14.5%, bringing us to 19% in the last improvement passengers for journeys consistent in more and resulting years, or cancellations delays with fewer customers and freight within also delivered We failures. with infrastructure associated savings of 4.5%. efficiency our budget, which included of people across teams the great our success to owe We of score people engagement Our route and Borders. Wales Network above and national best practice above 68% was of 53%. score overall Rail’s in the year Activities most the was Wales, Trains Arriva operator, Our lead train of 82.8% of an average in 2017, achieving operator reliable or within 59 early station arriving at their terminating trains area Cardiff seconds of schedule. The flagship £300m to to contribute scheme continued signalling renewal Lines Valley on the improvements performance significant services and passengers), 50% of route (which carry arriving within five 95% of trains over achieving consistently of their scheduled time. This boost in performance minutes of lives to day day to the a huge improvement has meant thousands of passengers. volumes renewals of our key 100% also delivered We This included the investment. £175m capital representing high modular signalling and a successful Coast North Wales for railway reliable in a more resulting output programme, and a number of bridge renewals completed passengers. We of the 100-plus including a major upgrade refurbishments a bridge fit creating footbridge, station old Llanfairpwll year this popular tourist destination. for funded a number of third-party also completed We Welsh by principally funded projects, investment These include the commissioning of the North Government. unlocking the potential Project, Enhancement South Wales Holyhead and services between frequent and more faster for and Treherbert also made to were Improvements Cardiff. accessible to them fully to make stations Machynlleth not to those who may passengers, opening up the railway and and new highways been able to use it previously have crossings enabling us to close level at Talerddig overbridges their risk to the community. and eliminate in February results Survey The National Rail Passenger dissatisfied with that 79% of passengers are indicated Rail has been helping Arriva Network on trains. crowding solutions for identify Wales for and Transport Wales Trains passengers. seats for more providing during the Champions League final approach Our collaborative Welsh Government’s the Ken Skates, by was praised in Cardiff who thanked and Infrastructure, Economy for Secretary Cabinet this global to and from helping to get passengers safely us for industry during Storm the rail also praised Mr Skates event. in tirelessly who worked 2018, and the teams Emma in March conditions. challenging weather exceptionally with partners to respond operating with our train worked We Assembly issues. The Welsh to stakeholder one voice of January 2018 found survey Members’ (AMs) favourability Network Rail Limited Annual Report and Accounts 2018

Strategic report Wessex

The Wessex route is one of the busiest in the UK, providing a vital economic artery into central London from the south coast, with 230 million passenger journeys each year generating £1bn in revenue. As well as a commuter service connecting many towns and cities between London and the south coast, the route is an important freight link for the UK, bringing goods in and out of Southampton docks, one of the country’s busiest deep-water ports. Our network also plays a key role in supporting tourism and weekend travel across the region. Our biggest challenge is peak-time capacity. Passenger numbers on Wessex continue to grow, having more than doubled in the last 20 years. London Waterloo is the busiest transport terminal in the UK, with almost 100 million passengers travelling through the station each year.

Key statistics 230m passenger journeys each year 1,924 bridges More than 2,000 passenger and freight services 1,878 employees Around 1,180 miles of track £328m spent on renewals and enhancements on the route from 2014-2019 (CP5) More than 200 stations 323 level crossings

Key scorecard targets

Minimum Target Maximum

2017/18 53.4% Scorecard Outturn 2016/17 50.3% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

27 Strategic report Becky Lumlock, director, managing Route Wessex June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Efficiency case study: Efficiency our efficiency plans, to deliver continued of have We work Isolations Safer is our Faster, particular interest successful during the recent which, as demonstrated us with the will provide area, trial in the Guildford time productive of the amount opportunity to increase up to 20%. night possessions by within mid-week members using fewer These possessions will be taken work) productive part in more take can (so they of staff miles travelled. vehicle fewer and involve Complete the final phase of the Waterloo and South West and South Waterloo phase of the the final Complete Waterloo of the former with the reopening Upgrade five in December 2018, creating Terminal International This, alongside the work platforms. new high-frequency peak time 30% more will provide last year, completed at Waterloo. capacity with improved station Twickenham at work Complete and 115 new homes, as well a new public plaza facilities, the for proposal with the approved forward as moving a new featuring station of Guildford re-development will also continue homes. We and 438 new building station of on construction Council Borough with Reading to work station. Park Green a new Reading and renewals of track programme our extensive Continue with industry to while working closures, crossing level at overcrowding solution in tackling a long term agree our for the groundwork and laying Clapham Junction Feltham, helping prepare work at re-signalling significant railway. the digital us for will look to we on our people. Next year focused Remain the complete programme, mentoring our reverse extend and continue Learning Programme out of our Everyone roll Engineering and on our Science, Technology, to focus engagementMathematics (STEM) ambassador early schools and colleges. with local programme We carried out a range of successful renewals across our our across renewals of successful a range out carried We journeys. reliable with more passengers providing network, in tracks £8 million on renewing investing This includes million to than £7 more and investing Southampton and bridges in Portsmouth Victorian life-expired replace London. South West and to the success of our business. A diverse key Our people are trusted, people feel where is one environment work inclusive This year to work. and able to bring their whole selves supported and inclusion champions the number of diversity increased we and network than 60, launched our Inspire to more on the route 2.49%. by workforce our female increased have ahead In the year will: We • • • • 28 Wessex continued pleased to have are and we number one priority is our Safety Frequency in our Lost Time Injury 29% reduction a achieved our safety to hold continued have We year. this Rate than 1,000 which more staff, frontline for workshops than 25 events held more and to attend, registered employees of Trade topics as part safety of on a variety the route across Week. Union Health and Safety with of our relationships in terms made good progress have We of the number reducing close to the railway, those who live targeted Through significantly. complaints worker railway of planned our neighbours informed keeping communications, and highlighting the effect as upskilling our teams as well works we and our reputation, on our neighbours have their actions 52%. by the number of complaints reduced have and we performance train for year It has been a challenging the last 12 to over wanted we the level not achieved have the following problems Post-commissioning months. last August undermined overall upgrade Waterloo as figures, on PPM impact and had a negative performance and fleet issues. In weather did a number of infrastructure, Chris Grayling, of State, April 2018 the Secretary South Western into review commissioned an independent of this to be the results expect and we performance, Railway working are we In the meantime, this year. published later in alliance with our colleagues at South Western hard, issues. Service these performance to address Railway, 2016/17. from 6% down are failures infrastructure affecting period the control over improvement a 27% This represents on also saw us intervene infrastructure Intelligent to date. that failure of a predicted in advance nearly 500 occasions services. disrupted have may in on to the route Railway South Western welcomed Since we to improve closely been working have August 2017, we were our passengers. We for and punctuality reliability a public meetingpleased to set out our plans together at in January 2018. This includes Focus with Transport on the incidents to deal with any new teams introducing the increasing a year; 365 days 24 hours a day, network to area the Waterloo in inspections number of infrastructure rolling out new and delays turn into they before fix problems to the track going onto teams to avoid technology and lessens our staff for which is safer the power, disconnect passengers. disruption for also introduced have we As part of our alliance agreement, of finalising in the process and are teams performance joint plans. improvement performance our joint due to the financial performance affects performance Train operating train to pay required are compensation we we on where been focused have We delays. companies for that will deliver in improvements investing spend our money, cash compliant. remain we business benefits, while ensuring in the year Activities risk at level strides in reducing made great have We new including completing outline designs on two crossings, have Hart Lane. We North and White bridges at Farnborough and Common Shortwood crossings, level also closed two on the railway. safety Enham, improving the most complex phase of the £800 million completed We at platforms rebuilding Upgrade, and South West Waterloo Thanks to this moving. trains while keeping station Waterloo giving running on our route, now are trains car new ten work, space. our passengers more Network Rail Limited Annual Report and Accounts 2018

Strategic report Western

The Western route stretches from London across the Thames Valley to Oxford, Worcestershire, the Cotswolds, the West and South West, serving some of Britain’s most important towns and cities. We own, maintain and operate more than 1,847 miles of track and manage Paddington, Reading and Bristol Temple Meads stations. We transport hundreds of thousands of workers on their daily commutes, and connect national and international travellers with some of Britain’s most popular tourist sites. For many people, their first experience of the UK is the rail line linking Heathrow, Europe’s busiest airport, to the Western route’s busiest station, London Paddington.

Key statistics 92m passenger journeys each year 650 level crossings 2,200 train services per day 2,600 employees c. 6m tonnes of stone, steel and petroleum £1,150m spent on renewals and carried annually enhancements on the route in 2017/18 2,839 bridges

Key scorecard targets

Minimum Target Maximum

2017/18 48.3% Scorecard Outturn 2016/17 42.0% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Asset Management 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

Activities in the year measure target for this year. We have set further ambitious We have made excellent progress on safety this year, with goals for the coming year, including significant investment in positive results across the board, including an impressive 32% front-line accommodation, and we are committed to reduction in lost time injuries across our workforce. Looking attracting and nurturing the strongest talent regardless of after our workforce is important to us: we want great people race, gender, religion or sexual orientation. working in a great culture, so it was good to exceed our people

29 Strategic report Mark Langman, Langman, Mark director, managing Route Western June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Efficiency case study: Efficiency of the sidings: The electrification Didcot/Cocklebury Main Line is bringing a new fleet of Western Great The new longer trains to the route. trains electric not in are when they new longer sidings for require the new sidings to be for use. The original plan was collaboration following at Didcot. However, located identified it was Rail GWR and Network between the new sidings be possible to locate that it would and by Swindon, in Cocklebury, at existing facilities of approximately this change a saving agreeing made. £11m was Delivery against our financial plans in operations, plans in operations, our financial against Delivery planincome has been on and other renewals maintenance, Strong delivered. of additional efficiencies with a number has expenditure of our route-wide and control management the despite position cash neutral an overall in resulted faced. we challenges financial ahead In the year in the Bristol the signals replaced 2018 we Easter Over of its type ever programme the single largest area, most of Bristol’s Rail, relocating Network by undertaken we This year to our Didcot signalling centre. signal control Bank. Filton Bristol at into tracks extra two will also install and more will enable of all this work The combined result We 2019. Bristol and London from services between faster electrification Western the Great to complete will work the benefits extending and Newbury, to Cardiff programme passengers. to more trains of electric journeys, will improve timetable The new 2019 Western times journey seats, faster services with more more providing the route. across and new connections will come with the Thames Valley The biggest change for will 2018/19 for line. Our focus of the Elizabeth the arrival and the this huge programme work on be the final of in advance the network of the new lines onto integration in December 2019. This line line opening fully the Elizabeth new tunnels through to Paddington, Reading will run from rail the total increasing under London, to Essex and Kent, 10%. Benefits to passengers will by London for capacity over as MTR take of this year summer from to be felt start using new Class 345 trains. Paddington some services from a Western plans for to develop will continue Meanwhile we party schemes such as and third Rail Link to Heathrow, with transformed, is being route The Western MetroWest. and better capacity greater seats, more new trains, one of the most exciting and this remains connections, in generations. our railways periods for 30 Western continued with key of delivery, year also been a strong 2017/18 has bringing work, years’ several online after coming projects of passengersby thousands felt being which are benefits have we improvements and The upgrades the route. across the route across and stations signalling, track made to power, a generation. in fleet upgrade the largest enabling are trains class 387 Electrostar the first brand-new Last year & Harlington; and Hayes Paddington to run between started to 2017 and May to Maidenhead in their range extended they electric new overhead delivered we December as Didcot by and comfort In addition to greater lines to Didcot. power seats. This influx offers up to 30% more each train reliability, a has released the Thames Valley stock into of new rolling West to the to move Turbo trains Class 165/6 fleet of newer and Bristol, Exeter services on local improving and South West, routes. Cardiff of the new GWR has been the arrival Just as significant and in diesel operate which can Trains Express Intercity which and braking acceleration modes with faster electric 10% more provide These new trains times. journey reduces during peak hours London Paddington and out of seats into Meads. Bristol Temple seats through and 20% more in the to our route a new operator welcomed we This year line on the Elizabeth operating who are of MTR Crossrail, form London and managing stations for behalf of Transport to prepare The effort Main Line and Twyford. Acton between which the service will the new Class 345 trains, for the network at Christmas 2017. a major part of our work use, was includes continuing Programme Upgrade Our Railway major notably the South West, across work resilience weather of the start and Chipping Sodbury, at Hinksey works drainage services between enabling increased resignalling, Cornwall commissioning of a new and the Plymouth and Penzance, of the reliability This will improve at Bristol Parkway. platform and London and Bristol GWR services between both direct managed to have that we Services. The fact CrossCountry by lineside neighbours during reduce complaints significantly to being to our commitment is testament of work this volume a good neighbour. Western Behind all of this success is our Alliance with Great the independently- by This partnership, supported Railway. us a sharper has given Supervisory Board, Route chaired benefits on customer service and enabled us to deliver focus while minimising disruption and cost. The new timetable of result just one direct on 2 January 2018 was introduced which is being applied to other working, this ethos of joint and the CrossCountry Express, including Heathrow operators, operators. freight short fallen have and asset reliability performance Both train recovery a strong having asset performance (despite of target aggressive have but we in the second half of the year) the this, such as plans to rectify short- and long-term willwhich area, the Paddington in circuits of track replacement reliability. help improve largely impacted, has been negatively performance Financial operating compensation paid to train due to increased during the our asset performance from companies. This arose weather- summer and autumn (some but not all of which was the and storms towards of the snow plus the effects related), has also been programme renewals Our track end of the year. access on track balance the huge demands for as we impacted on passengers. with the need to minimise the impact our route Network Rail Limited Annual Report and Accounts 2018

Strategic report Freight and National Passenger Operators

Freight and National Passenger Operators route (FNPO) manages nationally focused customers whose interests extend across our geographical routes’ boundaries. As well as freight operating companies (FOCs), customers include CrossCountry, Caledonian Sleeper, charter operators and aspirant open access passenger operators. FNPO is different to the other routes: we do not directly manage assets or control train operations, but deliver by working closely with and through the geographic routes, System Operator and other parts of Network Rail. We are accountable for the delivery of performance and other outputs for our customers and provide them with a principal point of contact.

Key statistics Together, our customers operate around 1,000 The rail freight sector produces £1.7bn trains a day including 600 freight trains economic benefits for Britain Rail freight removes 7.6m lorry journeys from The Caledonian Sleeper trains cover 3,500 the roads annually miles every night between Scotland and London The FNPO team has 68 members of staff, 38% CrossCountry covers around 1,500 route miles of whom are female and calls at over 100 stations

Key scorecard targets

Our route scorecard for 2017/2018 includes 28 individual measures. Our full-year scorecard achievement is 61.5%, which was above target. Minimum Target Maximum

2017/18 61.5% Scorecard Outturn 2016/17 61.0% 2017/18 Safety 2016/17 2017/18 Financial Performance 2016/17 2017/18 Investment 2016/17 2017/18 Train Performance 2016/17 2017/18 Locally Driven Customer Measures 2016/17

Safety A key focus over the past 12 months has been working with We finished the year on target for all our scorecard safety colleagues across the industry to reduce the number of measures except for Signals Passed at Danger (SPADs), freight operator staff injured on Network Rail infrastructure. which ended the year at 59 against a target of 44. This is also a key work stream for the cross-industry National

31 Strategic report Paul McMahon, McMahon, Paul director, managing Route National and Freight Operators Passenger June 2018 27 Network Rail LimitedAnnual Report and Accounts 2018 Efficiency case study: Efficiency container largest the UK’s is of Felixstowe The Port (in per day movements port and it sees up to 66 train the in Anglia and teams freight and out). The route closely with the port been working South East have right time to improve operators and freight of amount A significant the port. from departures and working joint creating has gone into work session at the visualisation a weekly establishing all parties. by port, attended in distributing role an essential plays Rail freight of Kingdom and because the United goods around the benefits are network, of the freight the nature right time efficient Improved, wide ranging. has been impact mean that the positive departures The FNPO and operators. multiple routes across felt at other this approach is looking to replicate team continuous to drive end-user terminals the network. across improvement strategy and we are working with the charter sector on a sector with the charter working are and we strategy track. onto the released effluent plan to eliminate on the Sleeper and routes with Caledonian worked We of the introduction for necessary works guage clearance stock. new rolling following service recovery on freight our focus Continuing network. on the and incidents delays such as schemes Network Freight Strategic will see key We and Enhancement Line Capacity Branch the Felixstowe lengthening being Midlands train Southampton to the our customers. for capacity extra provide to delivered to will be continuing team Our Business Development to streams in revenue new opportunities to bring develop users access the railway and to help more the railway and connections. new railheads through can be that to define a measure working are We services in-line speed on selected to improve implemented aspirations. with operator Output Level with industry to support the High Work in Scotland. freight for metrics (HLOS) Specification to sit end-user scorecard a freight developing are We alongside our customer scorecards. with DfT on the CrossCountry to work Continue refranchise. • ahead In the year • • • • • • • 32

We have worked with the industry to produce our CP6 with the industry to produce worked have We This is the first time FNPO has Business Plan. Strategic to have proud are plan and we a stand-alone submitted with our numerous it collaboratively produced stakeholders. to support the needs of our customers. FNPO has grown to increases made some specific we During the past year freight including adding a number of route our team our links to the also strengthened have managers. We Operator. such as System functions central Operating with the Freight been working have We of such as the Port and port and terminals Companies to of Felixstowe and Port station power Immingham, Drax right time departures. improve to build on work of the fitment for of client on the role taken have We trains. freight (ECTS) onto signalling technology digital Heath, Hope Small seen schemes at Chelmsford, have We Bristol East and Southall be delivered Manchester, Street supply chains. sector construction support for to provide stable with the industry to provide to work continue We CP6. for access charges track and sustainable a charter developed conferences, charter held two We Freight and National Passenger Operators continued Operators Passenger National and Freight our through supported is delivery and Group Safety Freight with our customers. tours safety of joint programme over with raised on close calls targets to exceed continue We Our teams’ within 90 days. and closed raised 276 calls we and target hour is above safety at a weekly attendance of topics during the year. a wide variety covered have Finance and was well access income performed track Freight with the year, for targets in line with growth broadly to show continuing traffic and construction container in small increase and an unexpected growth, encouraging in the summer. late coal traffic our position against year in an adverse finished the We financial performance the overall business plan, for of of high levels (FPM), mainly as a result measure paid under schedule 4 and 8, as well compensation being weather result of the adverse as a levels, traffic as reduced and a surplus up to returning despite This was in February. including period 11. performance Train In line on target. were our results the majority of the year For had a the East’ in March ‘The Beast from with other routes, means This targets. of our on the delivery impact significant Metric Delivery Freight year at 93.5% the finished that we a 94% (MMA) against average annual (FDM) moving target. scorecard the last financial from down was performance Country Cross of 90.1% PPM (MMA). We a target at 87.7% against year performance in place a joint and put developed have targets. future to achieve strategy Sleeper to closely with Caledonian very worked have We of 75% MMA at 75.1%. FNPO supports the target exceed and monitoring added scrutiny Sleeper through Caledonian Service Freight Sleeper service by of the Caledonian Managers. Delivery Customer focused individual customer scorecards, seven also have We with our customers. agreed jointly which are measures in the year Activities • • • • • • • Network Rail Limited Annual Report and Accounts 2018 Strategic report

The digital railway is already happening: digital deployment on Thameslink will allow 24 trains per hour to run in each direction at peak times through the core area between Blackfriars and St Pancras International.

Digital Railway

In 2017/2018 the Digital Railway Programme has continued to build upon the momentum achieved from the previous year, by working in close collaboration across the railway industry and with our partners in government.

Digital Railway (DR) has continued to receive strong support collaboration and innovation. The successor to ECI, the from Government including a reference in the Industrial Joint Design Group (JDG), has since been established as Strategy White Paper and the Secretary of State for a new way of working with the supply chain, building on Transport agreeing to speak at the launch of the DR strategy the success of the ECI workstreams, creating a in May 2018. We have also achieved the following: community of suppliers with a wide range of skills and • We have supported the Network Rail routes in preparing capabilities to support DRP development activities. their Strategic Business Plans, incorporating digital • The DfT has issued an Invitation to Tender (ITT) for the railway technology into their future signalling forthcoming South Eastern franchise with support from workbanks. the DRP working with the South East route to develop • The DR Programme (DRP) strategy was produced with the Traffic Management scheme. Digital Railway cross industry and government consultation, and was options are also being investigated for the publicly endorsed by the Secretary of State for TransPennine route. Transport in May 2018. • March 2018 saw the demonstration of Automatic Train • A contract was awarded to Siemens in December 2017 Operation (ATO) over European Train Control System to deploy on board European Train Control System (ETCS) Level 2 through the Thameslink Core via a Class (ETCS) as part of the first-in-class fitment of go- 700 mainline service train from Peterborough to anywhere freight trains. Horsham. The delivery of ATO over ETCS is one of the • Back-to-back commercial agreements were also put in first deployments of the digital railway on the mainline place with the freight operating companies. rail network – a world first – and it is delivered as part of • Work has continued on the deployment of Traffic the £7 billion Thameslink Programme. Management on the Wales and Anglia routes. The deployment of Traffic Management between London and Bristol is progressing towards go-live planned for 2018. • The internal audit of the DRP carried out in November David Waboso, 2017 concluded with a good rating, noting a robust Managing director, operating model in place to support delivery. • The second Early Contractor Involvement (ECI) report Digital Railway was issued as part of the DRP’s ongoing commitment to 27 June 2018 actively engage with the supply chain in order to support

33 Strategic report – of lettable rental rental – of lettable David Biggs, director, Managing Property June 2018 27 – Commercial property income property – Commercial – Network Rail managed – Network – Occupancy rates at our – Occupancy rates Network Rail LimitedAnnual Report and Accounts 2018 – Increase in income from Network Network in income from – Increase Rail Property business space estate – Last year 95.6% year – Last business space estate 95.3% 626,559 sqft 1.20% Key statistics Key +4% £304m stations like-for-like retail sales growth retail like-for-like stations space in our managed stations – space in our managed stations 610,393 sqft last year supporting the reduction in Delays Per Incident by improving improving by Incident Per in Delays supporting the reduction access to the railway. underway have we initiatives Key being sold, with business is currently Estate Our Commercial 2017, in November launched to the market the transaction in the 2nd half of the the sale to be complete expect and we asset and railway is a non-core Estate The Commercial year. All the commercially. business that operates a successful Rail and Network by sale will be retained the from proceeds Plan. Safeguards Upgrade the Railway will help us to fund on the will be no impact that there will be in place to ensure railway. running of the and efficient safe sold this disposals programme our strategic Other assets from reinvestment. railway £36.5 million for delivered have year 34 Property creating great places for rail passengers, communities. and rail businesses for places great creating railway and reduce the burden on the taxpayer. We play a key role in contributing to to contributing in role a key play We taxpayer. the on burden the reduce and railway We are experts in developing railway-owned land and property assets to help fund the the property and land fund assets help to railway-owned experts are developing in We railway investment, customer experience, regeneration, housing and economic growth, growth, economic and housing regeneration, experience, customer investment, railway Open for Business: Partnering with the private sector with the private Business: Partnering Open for of stewardship strategic long-term, in providing Our role been more assets has never land and property Rail’s Network and to grow British population continues as the important housing and infrastructure, on transport the pressure space increases. commercial and ambitious proactive a more taking now are We and delivering with stakeholders to working approach in role a full playing by communities for outcomes positive housing, providing land for releasing schemes, regeneration and supporting economic growth. people to work space for our begun to transform business, and have open for are We to work stakeholders sector for it easier to make operations of a raft introduced have we with us. In the last year, partnerships, including; new to help encourage measures and a new development developers for cover insurance/risk agreement. asset protection land in a series of multi-site the first also released We of land for the delivery aimed at accelerating packages back into income to reinvest more housing while generating £44.2 million delivered have we In the past year the railway. have 707 homes. We for income and land in development to with a commitment our delivery to accelerate continued 2020. The current 12,000 homes by around for land deliver is 3,557 since 2015. total rolling stations sustainable secure, Safe, in our environments world-class create to continue We and advertising retail our commercial, through stations and December 2017 our like-for- October assets. Between 0.8% while our sales growth by sales increased like 3.5%. by increased are our stations division is striving to ensure Our stations need they facilities the to be, have people want places where communities, create local for with and deliver integrated are have We value. long term and drive social outcomes positive stations, and Clapham Junction on Guildford also taken Railway, South Western managed by previously which were Plan Upgrade of the Railway to support the ongoing delivery schemes. development and support future Supporting devolution services teams Our planning and land services, and property operation the efficient to ensure the routes alongside work we In the past year, expansion of the network. and future and support devolution to better our approach shifted have to optimise land strategies route-based implemented have also are We estate. Rail’s use of Network the long-term such as HS2, helping the routes supporting on major projects while maximising the and its heritage, the railway protect land. use of available land to improve strategy on a national also working are We purposes and railway operational for acquisition processes Network Rail Limited Annual Report and Accounts 2018 Strategic report

Great people, great teams

The Strategic Business Plan published in February 2018 quite rightly shines a light on the importance of great people and great teams. This people vision underpins Network Rail and the transformation that is ongoing, to enable devolution to separate route businesses. From this our People Strategy is also developing and will set the agenda for Network Rail to be one of Britain’s best employers.

Did you know - Apprentices? Aligned to this we are working hard to support the skills • Network Rail enrolled 814 apprentices, including; agenda and developing strategic workforce planning to • 145 female apprentice starts (18%). further develop our people. We are engaging with university • 80 BAME apprentices (10%). technical colleagues up and down the country and one of • We have beaten our ambitious forecast (of c. 600 starts our senior managers is chairing the Government’s Transport over the year), and have plans to increase apprentice & Logistics route for technical education. Work is also starts in 2018/19, expanding to a broader range of higher ongoing to lead the development of a number of / degree level programmes. apprenticeships via ‘trailblazer standards’ and we can often • We offer a range of apprenticeships across apprenticeship be seen supporting events like The Big Bang Exhibition. levels 2 to 7, and types of programme (e.g. engineering, administration, finance, cyber security, project Our work with the Armed Forces has also been publicly management, construction, surveying, property recognised by the Ministry of Defence’s prestigious badge of management, customer service). honour. The Gold Employer Recognition scheme award was presented to Network Rail for outstanding support to the Our apprenticeship programme has won the National Armed Forces community. Transport Awards’ Apprenticeship Champion of the Year Award, recognising our commitment to investing in the Did you know - Diversity & Inclusion? future talent that we need to build a better railway for a This year we have set about developing the 20by20 project, better Britain. to increase our number of female employees from the current 16% to 20% by 2020. Did you know - Graduates? • 153 graduate starts at Network Rail. Each route business and functional area has a 20by20 lead • We have 11 different graduate schemes available. and an action plan describing the necessary activities to • We are working closely with those on the schemes to achieve our ambition, some example activities are: hosting further develop these graduates through placements, open days for women; introducing women’s welfare packs; qualifications, skills training. encouraging girls and young women to continue studying STEM subjects; promoting female role models in our job

35 Strategic report Bang exhibition Network Rail stand at The Big Rail stand Network This photo shows some young some young This photo shows people getting involved with the people getting involved Network Rail LimitedAnnual Report and Accounts 2018 Our future vision is to create a more productive workforce workforce productive a more vision is to create Our future place to work. desirable Rail to be a more Network and for signalling and intelligent such as digital initiatives Future of skills the diversity to broaden will continue infrastructure Britain”. a better for railway a “better to make required Our disability policy of not discriminating against Rail has a policy Network due to their age, disability, employees and current potential sexual status, gender, health, marital status, employment membership or non-membership of a trade preference, social class or other non-job- religion, race, union, nationality, personal characteristics. relevant possible, be made to will, where adjustments Reasonable with a disability and those returning support new employees of illness. a period injury or from after to work opportunities and development training Rail offers Network the right people with the we have that to ensure to staff our customers, and also to for right skills to help us deliver potential. their full help our people achieve engagement Employee runs a series of business briefings, Rail Network Each year happening colleagues on what’s internal aimed at updating to staff opportunities for the business, and providing across Business to senior management. questions directly raise to allow the country around held at 11 locations briefings are Approximately as possible to attend. employees as many year, and the briefings each attend 6,000 employees on the available those briefings is made from material attend. those who cannot for intranet company’s the around with news from daily is updated Our intranet on the major industry and as information business, as well Rail, and weekly Network that impact events political to the whole business. Our circulated emails are round-up to is also available Network, magazine, internal monthly copy or via our intranet. in hard read out its periodic carried Rail 2017 Network In September 21,000 employees Over survey. engagement employee on points of 5 percentage an increase the survey, completed to working now are Teams levels. participation previous employees. from this feedback address 36 adverts and through social media; understanding why women why social media; understanding through and adverts across delivered activities Rail. These in Network or stay leave our by and supported and business functions the routes and gender diversity of expertise, will improve centres time. over gap the gender pay to reducing contribute of the 20by20 the profile CBE also raised Mark Carne welfare to improve a commitment announcing by project 2019, an initiative and in depots by trackside facilities everyone. which benefits reporting gap Gender pay government In December 2017, ahead of the UK gap. of our gender pay published the details deadline, we than lower is 11%. This is substantially gap Our 2017 pay of proud are of 18.1% and we gap UK pay the average are But we made to date. have we the progress it further. to reduce determined Other initiatives be an issue in that unconscious bias can know We or trialling anonymous are we which is why recruitment chance of bias. We any ‘name-blind’ shortlisting to eliminate all hiring for leadership training’ out ‘inclusive rolled have on unconscious bias, in the managers which includes a focus bias. gender and diversity hope of tackling by sponsored a menopause project, also developed have We women a guide for Hopkins MD ST&E, producing Graham this time that is and line managers to support them through an immense impact. cause about, but can spoken rarely supportive a very also developed function Our property back to the surveyors to encourage programme ‘returners’ a a period of absence, which has received after workplace up. take great the Business in the also maintained have we This year Race Banding for Benchmark, Silver Diversity Community us a Benchmarks, which has given and Gender Diversity 2018/19. into the future stone for stepping fantastic to the policies relating sure to make action proactive take We also extend We and supportive. compliant our people are by owned that are a people impact this to policies that have the ethics policy. example for other parts of the organisation, Great people, great teams continued teams great people, Great Network Rail Limited Annual Report and Accounts 2018

Being responsible

At Network Rail we promote sustainable development and responsible business through our Responsible Railway Plan and our vision of a “Railway Fit for the Future”. We are keen to always understand how our activities affect the environment locally as well as globally and, at the same time, we drive social responsibility and actively seek to maximise opportunities to create social value, all whilst running a safe and reliable railway.

Environmental management We have seen many energy, cost and carbon reduction

Strategic report Biodiversity initiatives across the business. For example, we are working As one of the largest landowners in the UK our impact on hard to recover energy costs and encourage energy national biodiversity is significant. In 2017 we developed reduction throughout our managed stations through an and published a rail industry biodiversity calculator to allow ongoing programme of in-depth survey work of all station Network Rail and our supply chain to demonstrate retail areas, with benefits to date exceeding £2.5m. Business commitments to “no net loss” to biodiversity and, in the case units are implementing energy efficiency projects to achieve of the Thameslink project and the Gospel Oak to Barking targeted energy savings, and are shaping energy and carbon electrification project, “net gain”. Work is now taking place to reduction plans for CP6. improve other tools, such as geospatial mapping, to better plan for ecological risks and opportunities. Weather Resilience and Climate Change Adaptation Many rail assets are vulnerable to weather, a reflection of the Waste characteristics of a nationwide transport system. Controls Network Rail is a major producer of waste and generates a are in place to mitigate the impacts from weather-related wide range of waste types including; construction, events, ranging from speed restrictions during high demolition, commercial and hazardous wastes. In 2017/18, temperatures and high winds to investments in improving Network Rail generated 2.14 million tonnes of waste, of the condition of high risk assets. However, the nature of which 33% was reused, 56% recycled, 5% recovered (for weather and the scale and age of the rail network mean that energy generation) and 6% sent to landfill. The landfill impacts are still experienced. diversion rate of 94% falls just short of our target of 95%, however with increased focus this year we are confident it We have been working to implement the 2017 Weather will be exceeded by the close of CP5. Resilience and Climate Change Adaptation Strategy with a particular focus on integrating climate change requirements into asset policies, and have developed a cost:benefit 2017/18 2016/17 analysis tool to support decision making and development of business cases for resilience projects. Waste diverted 94% 92% Social performance from landfill At Network Rail we are striving to improve our social performance, recognising that running Great Britain’s Re-used 710,818 tonnes 663,481 tonnes railway is more than just transporting passengers from ‘A’ to ‘B’. It is a vehicle for connecting communities, creating jobs, 1,197,820 1,128,469 regenerating areas of social deprivation, and driving socio- Recycled tonnes tonnes economic growth. Community engagement Recovered (e.g Many of our projects have chosen to ‘give back’ to the converting 106,556 tonnes 211,442 tonnes communities they serve by building long-term partnerships waste material into with local schools, businesses and lineside neighbours. In energy) 2017 a community art project changed the face of rail infrastructure in south east London by painting meaningful Disposed 120,852 tonnes 171,243 tonnes images that resonate with the local community across Network Rail bridges and rail infrastructure. Graffiti and vandalism has been replaced in London Bridge by a mural Energy and carbon dedicated to those who lost their lives in the terror attacks, For Network Rail, energy is a vital part of our core business whilst a Forest Hill structure now boasts an image from a and we spend over £60m each year on keeping the railway well-known exhibit displayed at the local Horniman Museum. running. Reducing our energy use not only reduces operating costs, but also reduces our carbon footprint and improves our Volunteering environmental impact. This year 10% of Network Rail employees used at least one of their five days of volunteer leave to support local charities and We have a regulated target to reduce emissions of carbon community groups, which is a 73% increase on last year. dioxide (CO2) by 11.2% over the course of CP5 from the CP4 Volunteering activities across the business have included exit baseline. In 2017/18 we reduced our emissions of CO2 by careers workshops in schools to promote Science, Technology, 6.3% compared to the previous year, with total reductions Engineering and Maths (STEM) subjects to young people, against the CP4 exit baseline of 17.5%.

37 Strategic report 1,645 2015/16 Andy Thomas, route route Andy Thomas, for director managing in Wales Rail Network Spear, with Charlotte British PCSO for Police, Transport supporting ‘Brew As part of the Monday’. Lives Saves Small Talk members of campaign, the across staff rail stoodcountry alongside Samaritans at stations volunteers 15 January on Monday 2018 to encourage over people to connect offering by a cup of tea, tea passengers free tips, bags and listening as promoting as well services. Samaritans’ 3,895 2016/17 Network Rail LimitedAnnual Report and Accounts 2018 6,748.5 This year we worked directly with over 3,860 suppliers, with over directly worked we This year £6.51bn. spending over SMEs, 66% of whom were used for All of the steel a major user of UK steel. are We in the UK is manufactured or upgrade replacement rail with British Steel. under an agreement 2017/18 support of the government’s commitment to reduce the to reduce commitment support of the government’s 2020. 10% by by national suicide rate authorities with local closely to work The industry continued those for early intervention and health agencies to promote in emotional crisis whilst at the same time deploying at measures suicide prevention and psychological physical network. the across high risk locations known is the training this year work A cornerstone of the industry’s In 2017/18 1,711 in suicide attempts. to intervene of staff than 2016/17 – and made – 7.5% more were interventions (launched in campaign bystander Lives Saves our Small Talk 2017) has enabled our customers to help prevent November railway. suicides both on and off the crossings Level risks to be one of the biggest safety continue crossings Level with our rolling In conjunction network. on the rail safety to reduce crossings level to close or alter programme to on how campaigns our awareness continued have risk we closed 55 level have we This year safely. use a crossing within number of closures the total which takes crossings CP5 to 320. Economic impact know? Did you • • 38

Number of days spent volunteering with volunteering spent Number of days charities and community groups garden and building renovations in Barnardo’s assisted living assisted Barnardo’s in renovations and building garden those and community support for centres, and children’s May 2017. in fire Tower by the Grenfell affected giving Charitable charity partnership two-year launched a 2017 we In March the end of the £123,000 by and fundraised with Barnardo’s in people using we saw a 5% increase year. In addition, first to their selected Giving scheme to donate our Payroll an donated have Rail employees Network charities; this year In addition to £45,000 to charity per month. of average a further donated passengers have Giving, train Payroll at our stations. collections charity bucket £1.1m through communities safe Keeping campaigns our community safety continued In 2017/18 we Over Britain. Great across on the railway trespass to reduce children to involve reported are incidents 25% of trespass closely with schools work we people, which is why and young activities. and prevention of education a range to provide we alone, Project Electrification West As part of the Great to 118,305 pupils at 301 activities safety rail delivered have line, between of the railway this area For school events. have 90 miles), we (approx Maidenhead and Bristol Parkway to 319 in 2017/18 compared incidents seen just 17 trespass of the route. the remainder across incidents Suicide prevention in 2017/18, network the rail 246 suicides took place across the industry despite year than the previous 4% more to this issue inresource significant dedicate to continuing Being responsiblecontinued Network Rail Limited Annual Report and Accounts 2018

Our approach to risk management

Our approach to risk management across Network Rail balances the risks associated with our operational environment and identifying opportunities to improve performance, through careful acceptance of some risk.

We recognise our status as a regulated rail network management and internal control principally to the audit and infrastructure provider and the importance of maintaining risk committee, which reports the findings of its reviews to the essential service provision. Board. The audit and risk committee receives regular reports from the internal and independent auditors and reviews The operational railway is continuously susceptible to

Strategic report progress against agreed action plans to manage identified changing environmental conditions. The success of the risks. Detailed oversight of safety related risks is delegated to railways in the UK, measured by the growth in passenger the safety, health and environment committee. numbers, and the continued drive for efficiency means that we must be both flexible and innovative in our risk mitigation Categories of risks (i.e., safety, performance, value) and strategies. Our enterprise approach to risk management who manages them provides multiple opportunities to review, monitor and All principal risks are mapped to performance reporting enhance mitigations depending on the changing conditions and strategic objectives. The assessment of risk is and challenges. informed by the performance targets and the company’s risk appetite statements. Each risk is appointed an Our principal risks are outlined in the ‘Key strategic executive committee owner. risks’ section on page 40-45. Embedded risk management processes We take an enterprise-wide approach to risk management and have an Enterprise Risk Management (ERM) framework in place for the identification, analysis, management and Network Rail has defined its reporting of all risks to strategic objectives. The purpose of our risk appetite as follows: ERM framework is to identify and mitigate risks to the delivery Network Rail has no appetite for safety, health or of a safe, reliable, efficient service to our customers. Our ERM environmental risk exposure that could result in framework supports all areas of the business to recognise both injury or loss of life to public, passengers and threats and opportunities early. Early recognition of risk allows workforce or irreversible environmental damage. us to work collaboratively and proactively with customers, Safety drives all major decisions in the organisation. stakeholders and suppliers to manage our extensive portfolio Network Rail will consider options to reduce safety of works better. Being better every day requires us to look at risk where the business case goes substantially areas where we can improve our service. By careful beyond our legal obligation to reduce risk so far as consideration of risk we can focus on those opportunities that is reasonably practicable. have the highest potential to increase efficiency and provide a better experience for our customers. In the pursuit of its objectives, Network Rail is willing to accept, in some circumstances, risks that The risk processes within our ERM framework provide may result in some financial loss or exposure tailored approaches for specialist areas such as safety, including a small chance of breach of the loan limit. project management and information security. The use of a It will not pursue additional income generating or standard risk assessment matrix and defined risk appetite cost saving initiatives unless returns are probable enables integration of operational and strategic risks. Line of (85% CI for income and 60% CI for cost reductions sight and links between risks are documented and visualised where potential returns are high). through our award winning risk visualisation approach. Strategic risks are linked to our corporate scorecard and The company will only tolerate low to moderate business plans are required to document and assess risks to gross exposure to delivery of operational delivery against the corporate risk appetite statements. performance targets including network reliability and capacity and asset condition, disaster recovery Clear escalation criteria and the use of business assurance and succession planning, breakdown in information committees throughout the business provide structured systems or information integrity. governance, challenge and assurance. We have introduced the concept of risk trajectory to enable more informed challenge The company wants to be seen as best in class and on the effectiveness of risk mitigations. The establishment of respected across industry. It will only tolerate low to early warning indicators (EWIs) provides the ability to moderate exposure that may result in short term continuously monitor how effective our controls are at negative impact on reputation and stakeholder managing the root causes of our principal risks. By using relationships and is easily recoverable, i.e. minimal current reporting and monitoring techniques, such as negative local or industry media coverage, and/or visualisation boards and periodic reviews, we can better link minor employee experience and political impact. risk with performance. This will continue to be balanced by regular positive media coverage at national and local level. Whilst the ultimate responsibility for risk management rests with the Board, it delegates the more detailed oversight of risk

39 Strategic report Planned To introduce proactive risk proactive introduce To of the use through management the by provided leading indicators System. Speed Warning Vehicle to utilisation vehicle Investigate that the most appropriate ensure used. are vehicles of system safe integrated Develop use by planning tool for work contractors. Rail and its Network of a Including development mapping solution to deliver planning and hazard improved identification. of task a single source Introduce to system based risk information to easily access all staff allow and risk information. hazard relevant revision Additional ESD: Complete andof 25kV isolation instructions to material training associated of trial.enable commencement risk tool kit and a fatigue Produce line managers. for guidance Scheme Sentinel revised Introduce track to core rules and revisions competences. safety programme Working Trackside Safer Signal studies for – feasibility and technology warning controlled Lineside Early Warning trials for System. Research and development of the and development Research signalling alternative COMPASS systems-based to facilitate system with the mode working degraded on the reliance aim of reducing and enhancing human processes of degraded the resilience human error. against operations measurement focused Continued risk accident the train through scorecard. corporate of the element campaigns public education Further at level action and targeted Crossing the Level through crossings programme. Risk Reduction in the reduction Additional targeted poor condition number of very to a risk that could present fences derailment/collision. train use of trainborne Extended condition track for equipment monitoring. • • • • • • • • • • • •

Network Rail LimitedAnnual Report and Accounts 2018

40 Current Actions Current Risk area: Safety Risk area: Safe Work. Work. Safe the and revised reviewed have We A Induction. Industry Common safety electrical for programme executive by agreed was delivery and SHE committee, committee isolation on improved focusing equipment, test methods, better / and competence accountabilities training. risk a fatigue established We aligned programme management and new standard to a proposed videos for educational delivered our staff. Trackside Safe Implemented - including programme Working signal of strategic development and system warning controlled high trials of tactical for preparation system. protection integrity We fitted a vehicle speed warning speed vehicle a fitted We vehicles to fleet to 7,700 system to get immediate enable our drivers within the speed support to drive limit. This has reduced speeding events. revised the implemented We at Work of People Safety standard on or Near the Line as a critical delivery the successful for element of Planning and Delivering Corporate Scorecard measure for for measure Scorecard Corporate for to allow adjusted risk reduction measurement targeted effectively of priority activities. communications Targeted the users of for campaigns Automatic Half Barrier and User crossings. level Worked crossings at level action Targeted Risk Crossing the Level through programme. Reduction using train- coverage Increased monitoring. borne track Recognition Plain Line Pattern 14,496 miles. for operational of lineside removal Targeted a risk to that presents vegetation derailment/collision. train in the number of reduction Targeted incursion sites. vehicle high risk road in the number of reduction Targeted high risk scour sites. • • • • • • • • • • • • • Risk Owner Group director director Group of Safety, and Technical Engineering Managing director, England and Wales Risk Safe Safe Britain’s railways are amongst the safest in Europe, however we are not complacent. Network Rail continues to assess to assess Rail continues Network not complacent. are we however in Europe, safest amongst the are railways Britain’s incidents of safety likelihood the to keep measures in preventive to invest and continues safety of all areas and monitor to a minimum. Failure to safeguard to safeguard Failure our workforce in single resulting and/or multiple to fatalities Rail staff Network and (employees contractors). Failure to prevent a to prevent Failure major avoidable accident train (collision, etc.) derailment in which results multiple injury/ to members fatality of the public/ passengers in loss of resulting finance reputation, and reduced performance. Risk management continued Network Rail Limited Annual Report and Accounts 2018 Risk management continued

• Targeted reduction in the number of • Continued targeted removal of very poor condition fences that lineside vegetation that presents a could present a risk to train risk of train derailment/collision. derailment/collision. • Further targeted reduction in the • Revision of the signalling design number of high risk road vehicle handbook. incursion sites. • Continued roll-out of new control • Continued targeted reduction in the framework in the form of Business number of high risk scour sites. Critical Rules. • Publication and implementation of • Development of Engineering the revised signalling design Competence Framework. handbook. • Development and roll out of Civils • Delivery and implementation of new Strategic Asset Management training and competence support Strategic report System to provide better asset materials for staff undertaking and information. monitoring safety critical communications. • Completion and implementation of a Network Rail Single Competency Framework for professional Engineers and Asset Managers. • Further system evolution and deployment of the Civils Strategic Asset Management System to provide better asset information. • Completion of Business Critical Rules improvement projects.

Failure to have Group director • 55 Level Crossings permanently • Closure of an additional 126 Level suitable and of Safety, closed in Year 4; 320 permanently Crossings (subject to feasibility sufficient Technical and closed in CP5 to date. studies and liabilities negotiations). infrastructure, Engineering • 27 (31 planned for the end of the • Development of the Meerkat systems and year) commissioned asset solution for user worked crossings. controls in place to improvements at level crossings in • Deployment of Red Light Safety safeguard Year 4; 65 asset improvements to Equipment Cameras at up to passengers and date in CP5. 18 sites. public at the • 12 crossings temporarily closed, • Embedding of Enhancing Level interface with trains removing risk, whilst permanent risk Crossing Safety within the business. and the railway reduction measures are developed • Procurement and installation of up (excluding train in Year 4; 48 temporarily closed in to 30 COVTEC SAWDs. accident risk), CP5 to date. • Completion of GRIP Stages 1-4 of resulting in a fatal • Recast of the previous Level Crossing the Anglia TWAO to include or major injury. Strategy to Enhancing Level completion of public inquiries in Crossing Safety. Cambridge, Suffolk and Essex. • TWAO Cambridgeshire, Essex and • Continued development of an Suffolk public inquiries are AHB+ solution. underway. • Procurement and installation of • Refresh of the All Level Crossing Risk overlay MSLs at up to 28 sites. Model to improve the accuracy of • Review and further development of risk modelling and calculations of the current Narrative Risk Safe level crossing risk. Assessment Process. • Supported RSSB to educate other • Establish the cross industry trespass Station Infrastructure Managers prevention programme. about how to use the PTI risk • Delivery of targeted public assessment tool across the railway communications campaigns. stations estate. • Development of a user interface for • Revision of the Community Safety the new All Level Crossing Risk Strategy, including development of Model (ALCRM) risk engine, together metrics to help measure the reach with full impact assessment of and impact of our Community changes to the national risk profile, Safety Campaigns. in preparation for CP6 activation. • Targeted local campaign for • Further delivery of community addressing the issue of trespass at safety campaigns and interventions stations. directed towards.

41 Strategic report Public education and engagement. education Public prevention. Trespass Suicide prevention. risk reduction. crossings Level Rolling out more sophisticated cash cash sophisticated out more Rolling tools and forecasting flow businesses to devolved encouraging cash for accountability take forecasting. are specifics facility Collateral with an aim to with DfT agreed in April 2018.implement of the asset sales Completion to meet the targets programme and HMT. with DfT agreed is business property retained Ensure for purpose. fit embedding Ongoing development, of the continuous and improvement business planning process. of early warning Development of CP6. the start for indicators of reporting Development CP6. for framework Develop and Communicate the and Communicate Develop vision, aligned to Transformation objectives. strategic Rail’s Network a clearly and communicate Establish of defined, prioritised portfolio with accountable change activities agreed. owners • • • • • • • • • • • • • Network Rail LimitedAnnual Report and Accounts 2018

42 Risk Area: Value Risk Area: Delivery of the Small talk Saves lives lives Saves talk of the Small Delivery suicide prevention. for campaign of the deployment out and Roll risk (PTI) Interface Train Platform Rail tool at Network assessment Managed stations. of the of the next cycle Delivery educational safety railway near in schools located programme and of trespass with high levels sites year during academic vandalism 2017/18. review. financial model Quarterly to modelling relating Improved cashflows and irregular material business areas. with the relevant open and transparent Regular with DfT and HMTengagement to our financial plans. with regard with DfT / HMT toEngagement and direction strategic ensure e.g. streamlined; are approvals sale process. is understood money for Value within the asset divestment agreed and approach portfolio at BICC. with HMG on reached Agreement eligible asset portfolio the property sale. for withOngoing engagement all options to ensure Government asset regarding explored are disposals. Establish the Transformation the Transformation Establish remit with a defined Directorate, and accountabilities. Group Working Transformation to direction to provide established and the development and oversee activity, of transformation delivery and of reference with a clear terms to the through structure governance and Board. committee executive programmes transformation Key by supported established to underpinning enabling projects delivery. successful ensure • • • • • • • • • • • • • Chief financial officer Group Human Group Resources director

Efficient

GreatTeams Great People Great Network Rail is committed to delivering value for money through robust planning and supplementing funding through funding planning and supplementing robust through money for value to delivering Rail is committed Network to enable the business to be of transformation programme an ambitious Rail is undertaking assets. Network selling non-core well managed. must be effect destabilising and any change is disruptive CP6. This brings opportunity but for placed well – to achieve net – to achieve asset from receipts sales to support funding shortfall and – to deliver savings efficiency programme. Failure to: Failure our within – live envelope. funding Network Rail notNetwork embedding and the right sustaining change initiatives at the right time, in to the right way, the right deliver benefits aligned to business key and strategies reports. external Risk management continued Network Rail Limited Annual Report and Accounts 2018 Risk management continued

Risk Area: Performance

Delivery of our extensive enhancement and renewals portfolios is a key priority for us. New controls and governance arrangements have proved successful over the last 12 months and seen us deliver our largest ever portfolio of works with no major possession overruns. By investing in our staff and attracting young talent to the rail industry we are managing risks to recruitment and retention and have low staff turnover. We understand change is unsettling and will continue to work closely with staff and unions to minimise adverse impacts. We are investing in our recovery and business continuity planning to reduce long-term impact of business interruption. This includes further controls in areas of information governance and cyber security. Managing train service reliability to meet performance targets remains extremely challenging, with a higher than Strategic report desirable likelihood of the risk materialising. Mitigations in this area remain a priority over the next 12 months and significant improvement in train performance is expected to provide the platform for CP6 delivery. We remain confident that over the longer term we will reduce risks in this area to within acceptable levels.

Failure to deliver Managing • Quarterly business assurance • Embed risk and assurance metrics the enhancement director, committees (BACs) held in each into monthly business reviews, portfolio to time Infrastructure Region and Programme, and as part reinforcing the quarterly BACs. and cost. Projects of the MD’s IP Executive Leadership • Application of risk visualisation Team meeting; Risk and assurance techniques and monitoring of risk metrics reviewed monthly. trajectories to manage risk at the IP • Risks aligned to and reviewed Executive BAC. against strategic objectives and risk • Implementation of the portfolio trajectories in the IP Executive BAC, approach to risk and contingency following the update of the management reflecting industry best Growing management system in 2017 practice and building on in-house through the One Vision One Way capabilities to model project, change programme. programme and portfolio risk. • Regular meetings between NR, DfT • Further development of risk and ORR to review the tri-partite management techniques for major integrated assurance process. Peer programmes with complex Review process fully embedded and timetable changes. aligned to the Enhancements • Contribute to the DfTs update to Delivery Plan. guidance on risk uplifts to support • Implementation of a robust tender business case submissions and review process to assure major investment decisions. infrastructure programme bids and ensure Network Rail is capable of delivering the expectations set out in the business case, along with the anticipated outcomes. • Ongoing integrated planning processes to assign critical resources at times of peak demand, e.g. bank holidays, with continuing focus on delivery governance (e.g. GRIP, DWWP) and assurance; resulting in 99.5% safe, on time hand back at bank holiday possessions. • Development of a portfolio approach to risk and contingency management reflecting industry best practice. • Ongoing improvements in the planning process (GRIP 4 Track) throughout the project life cycle with the continuation of GRIP4Track (G4T) across all elements of the programme. • Weekly G4T escalation reviews. • Understanding various access regimes and impact on cost.

43 Strategic report Completion of actions associated associated of actions Completion ‘Must Wins’ as Rail’s with Network CP5. for to renewals relate they related on renewals focus Continued risks as part of the ongoing delivery the IP of risk led by management Team. Executive of risks associated Management of the renewals with the smoothing CP5 from and transition workbank to the assurance to CP6, to provide industry supply chain. IP Track for strategy CP6 contracting renewals. to update to the DfT’s Contribute on risk uplifts to supportguidance submissions and business case decisions. investment Socialise the strategy to Socialise the strategy and position NR as an communicate of choice to emerging employer talent. of professions delivery Continue and identifying programme pathways career implementing within each professions. early talent and deliver Develop strategy. engagement leadership and deliver Review programmes. networks of development Continue in NR roles and alumni for professions. model to HR the potential Roll-out and defined managers. ExCom succession plan for Complete roles. / critical roles SWP. to rollout Continue Continue positive engagement with engagement positive Continue visibility of Unions providing Trade major change programmes. updated roll-out and Implement framework. bargaining collective to HR Business Partners Engage learning industrial relations deliver frontline to upskill their key manager. operational Business test plans. contingency • • • • • • • • • • • • • • • • • Network Rail LimitedAnnual Report and Accounts 2018 44 Embed improved governance across across governance Embed improved including the programme panel Assurance Board, Programme panels. Governance Track and Route Renewals deliverability reviews of reviews deliverability Renewals CP6 Business Plan for the Strategic and national basis. on a route Implement and communicate NR’s NR’s and communicate Implement of choice to be an employer strategy talent. to emerging to appointed Heads of Professions career and implement establish within each profession. pathways Ongoing support and engagement groups. with talent talent group and agreed Developed and roadmap. strategy that roles the list of critical Revised contribution the greatest will make plan. of the strategic to execution a model to understand Introduced of our the potential and measure talent. on material training the Developed managers model for the potential and HR. role critical designed for Process succession planning. and piloting a procure Establish, Planning (SWP) Workforce Strategic to our talent focus tool to give and initiatives. strategy Regular and positive engagement and positive Regular Unions providing with Trade groups bargaining opportunity for to meet early. Unions to with Trade Engagement the collective and update review framework. bargaining learning industrial relations Roll-out to HR Business Partner programme community. and to develop Support the routes operational build robust including plans, contingency HR mechanisms. appropriate • • • • • • • • • • • • • • • Managing director, Infrastructure Projects Group Human Group Resources director Group Human Group Resources director Efficient GreatTeams GreatTeams Great People Great Great People Great Failure to deliver to deliver Failure the renewals to time portfolio and cost. Failing to attract, to attract, Failing and develop retain of potential the full our pipeline of roles; key for talent in sub- resulting optimal leadership worse capability, business outcomes and a compromise of our ability to a better deliver a better for railway Britain. Failing to secure secure to Failing and employee Union Trade our support for change forward agenda. Risk management continued Network Rail Limited Annual Report and Accounts 2018 Risk management continued

Failure to recover Chief financial • Central Business Continuity (BC) • Testing schedule agreed for critical from a business officer team resourced and in place to assets. interruption to support the delivery of the Business • Desktop testing of all asset recovery pre-defined output Continuity Management (BCM) strategies. levels and within framework and provide expertise • Full scale scenario based testing of agreed recovery and advice. emergency response plans. timescales. • BCM framework designed and • Further Strategic and tactical tested through route and group investment to provide more resilient pilots. network and systems based on the • Critical systems and assets highest priority critical assets. identified across the business. • Business Continuity plans developed for critical assets. Strategic report Reliable • Resilience risks identified, documented and reviewed at business assurance committees. • Incident management process reviewed and improved. National Emergency Plan reviewed and updated.

Unable to achieve Managing • Delivery of Delay per Incident • Route Strategic Plans (RSP) will now TOC / FOC director, Programme, including the drive an update to the joint performance England and introduction of Chief Operating performance strategies agreed with targets as agreed Wales Officers and Senior Incident Officers operators. with stakeholders, to strengthen service recovery. • Introduction of route supervisory to meet NR’s CP6 • National Task Force (NTF) boards. business plan agreement for TOCs and FOCs • System Operator is implementing trajectory including driving increased focus on right time timetable resilience and CP5 exit position. starts as a key performance lever. performance modelling team to • Agreed joint BTP Industry reviews of improve detailed challenge to rolling all fatalities and attempts to aid stock specifications. prevention. • Delivery of the Route • Initial Industry advice and High Transformation Programme. Level Output Statement (HLOS) • Roll out of technology to improve setting out the Industry’s our predict and prevent capability Reliable performance agenda to CP6. such as Remote Condition • Review of seasonal management Monitoring, Intelligent process to better align TOC Infrastructure and Whole System preparedness with the routes. Modelling. • Development of CP6 metrics to • Alignment of performance better reflect local passenger and objectives across the industry. freight priorities. • Focus on response and recovery times when incidents occur. • Building on the work of our suicide prevention programme to include trespass. • Better understanding of sub- threshold delay through GPS data and new industry wide analysis database. • Further trials of traffic management to improve recovery of service.

45 Strategic report Network Rail LimitedAnnual Report and Accounts 2018 In addition, as Network Rail is a central government body government Rail is a central In addition, as Network purposes, consolidation for DfT group and a member of the security, Government on Her Majesty’s rely can its creditors for of State on the Secretary obligations and the statutory to settling liabilities. regard with Transport, risks facing of the principal set out the details have We of our in terms Rail on pages 40 to 45 described Network our risks identify We objectives. ability to meet our strategic that includes a continuous assessment a robust through In making this and review. of bottom up reporting cycle these principal risks considered have the directors statement but plausible severe ability to withstand Rail’s and Network of the consideration scenarios based on them. This included of and the safety industrial relations environment, political those combinations considered The process network. the rail but plausible to lead to severe most likely of risks which were of the in terms considered scenarios. The scenarios were Rail and the of Network resources on the financial impact work. improvement of future on delivery impact current Rail’s Network account into took The assessment forecasts. in its current headroom financial position and any such as or actions of funding other sources It also considered . work of improvement deferral including identified were actions A number of mitigating and exercises re-planning arrangements, insurance relations. of industrial management it though even selected was years The time period of three of some period, as the impact the next control runs into period. control the current beyond scenarios will be felt 46 Viability statement The Directors have assessed the viability of Network Rail to maintain the UK’s rail rail UK’s the maintain to Rail Network of assessed viability the have The Directors infrastructure over a three year period, taking account of Network Rail’s current position position current Rail’s Network of account taking period, year a three over infrastructure and the potential impact of defined scenarios on its principal risks and financial viability. risksfinancial and itsprincipal on scenarios defined impact of potential the and The Board considered three years to be an appropriate to be an appropriate years three considered The Board year of CP5 and the final over is certainty There timeframe. years of CP6. Network the first two over certainty increasing Draft similar to the substantially CP6 are for proposals Rail’s as the 2018. However published on 12 June Determination finalised the been CP6 has not yet for Determination Final three viability beyond able to confirm NR’s did not feel Board the Based upon this assessment, at this stage. years that the company expectation a reasonable have Directors and meet its liabilities in operation will be able to continue 2021. This longer- the period to March due over fall as they on statements supports the Board’s process assessment term on and going concern, made as set out below, both viability, page 87. control called blocks in five-year Rail is funded Network 2014-2019 and the from year block runs periods. This five Road (ORR) 2019-2024. The Office of Rail and next runs from of each the start before and outputs charges determines period. In doing so the ORR has statutory five-year that is a settlement to producing with regard obligations Rail. This allows holder, Network to the licence equitable to with regard of certainty Rail a high degree Network activities. and investment its operations for funding and outputs setting charges towards process The regulatory the from outputs required to define their stakeholders allows to and Holyrood Westminster in and governments network, built into are These available. have they set out the funding the ORR has Business Plan. Once Strategic Rail’s Network a produces Rail Network outputs and charges, determined bottom up forecasts by This plan is refreshed Plan. Delivery to manage outputs within the basis in order on a quarterly a £30.875bn Rail has secured Network available. resources (DfT), which Transport for with the Department loan facility support its investment upon to specifically to draw it intends remains 2019. This facility in the period to March activities Rail is also investigating Network within its parameters. to finance party capital third methods of attracting various including the disposal network to the railway enhancements 2018/19. assets, planned for of non-core cash used to project Business plans and financial models are and monitor financial risks and liquidity positions,flows financial and other key requirements funding future forecast licence. to our network including those relevant ratios, of the the resilience to understand is undertaken Analysis of the impact and its business model to the potential group risks. This principal risks, or a combination of those group’s and effectiveness of the availability account takes analysis to be taken that could realistically actions of the mitigating of the underlying or occurrence the impact or reduce avoid of such actions, effectiveness risks. In considering the likely monitoring and review regular the conclusions of the Board’s as systems, control and internal of risk management account. into described on pages 29 to 45, is taken Network Rail Limited Annual Report and Accounts 2018 Viability statement continued This year we have assessed four severe but plausible This builds on the three severe but plausible scenarios, scenarios covering fourteen of the principal risks: covering seven risks that were reviewed in the previous year.

Scenario 1 Scenario 1 A train accident occurs as a result of an attributable Non-delivery of planned efficiencies, scheduled cost error to Network Rail which leads to injuries and slippage does not occur and failure to achieve the fatalities to members of the public, reputational expected income from asset sales within the damage and ORR intervention. anticipated timelines leads to the deferral of projects, a shortfall of cash to deliver the CP5 Risks: • Train Accident (L0) business plan and a request for more money with • Business Continuity Management (L0) corresponding reputational damage.

Strategic report Risks: • Programme and Schedule Cost Slippage and NR Asset Divestment Scenario 2 Network Rail fails to exit CP5 within the financial and Scenario 2 delivery boundaries set, leading to fines, increased A large amount of organisational change either regulatory scrutiny, and reputational damage. nationally or in a given organisational area, further restrictions on senior pay and reward options from Risks: • London Infrastructure Changes 2018/19 HMG, and/or specific disputes arising from pay (L0) negotiations or other business consultations adversely • Project/Programme delays and/or impacts employee relationships and engagement. A increased costs (L0) national rail strike leads to significant UK economic • Effective Governance of the consequences, loss of talent and disengaged staff Enhancements portfolio (L1) results in reduced operational performance and • Great Western Route Modernisation difficulty in maintaining and improving safety. Business Delievery (L1) continuity issues are also created. Risks: • Destabilising Effect of Change, Industrial Relations Management, Talent Management and Business Continuity Scenario 3 Management Risk Network Rail fails to achieve a suitable settlement for CP6 and is unable to deliver the planned improvements and/or funding is inconsistent with Scenario 3 expected outputs. A train accident occurs as a result of an attributable error to Network Rail which leads to injuries and Risks: • CP6 NR Plan (L0) fatalities to members of the public, reputational • Ready to Deploy (L0) damage and ORR intervention. • System Operator Fit for the Future (L1) Risks: • Train Accident, Business Continuity • Future Funding & Outputs Framework (L1) Management and Destabilising Effect of Change Risk

On the basis of this robust assessment of the principal risks Scenario 4 facing the group and on the assumption that they are managed A significant loss of personal or operational or mitigated in the ways disclosed, the Board’s review of the information due to a security breach caused by an business plan and other matters considered and reviewed during internal or external threat actor resulting in the year, and the results of the sensitivity analysis undertaken operational loss, a civil lawsuit and/or EU fines and described above, the Board has a reasonable expectation related to GDPR legislation. that Network Rail will be able to continue in operation and meet its liabilities as they fall due over the period to March 2021.

Risks: • Cyber Security (L0) Directors’ approval statement • Information Governance (L0) The strategic report has been signed on behalf of the board • Data Protection Compliance (L1) of the company. • IT Disaster Recovery (L1)

Sir Peter Hendy CBE, chair 27 June 2018

47