“Different buckets” for third party funding

Network Rail is open for business, with “three different buckets for third parties”, according to Chief Executive Mark Carne.

The first is third party delivery of Government/Network Rail-funded activity. This involves NR’s Route Managing Directors being able to decide to put the delivery of projects/activities out to market if they believe it will offer improved value for money. This creates contestability and enables others to deliver projects, said Carne, and could relate to a station, for example.

The second is third party-funded projects. If a third party has a particular project it would like to take forward, and is in a position to do so, then the most effective model may be for them to take on responsibility for the funding, design and build. NR would advise on standards and ensure compatibility with (or protection of) the existing rail network.

Carne explained: “Take a housing developer. They want rail for 20,000 houses. They will give a £40 million gift to upgrade rail as long as the return they make is high-value housing. East West is a perfect example of this. There could be 150,000 houses on that route. It could be stations, car parks and there is a wide range of possibilities.”

The third bucket is third party-financed schemes, with NR claiming that there is considerable private sector appetite to invest in assets such as railways.

Said Carne: “There is a wall of money for people who want to invest. This is the most difficult as they want a return. How do you transfer risk to the investor? Why should I borrow from them when I can go to Government and borrow for less?”