Recommendation 25

But Network Rail recognised that there “is still a mountain to climb” to achieve the full efficiency improvements it has committed to, and that it will need to continue to increase savings.63 Network Rail estimated that 60% of remaining planned efficiencies would come from renewals activities (like for like replacements to renew the railway).64 However, the Office of Rail and Road highlighted in 2020 that plans for renewals were immature.65 A review of Network Rail’s delivery plans, published by the Office of Rail and Road in January 2021, highlighted that Network Rail needed to do more work to develop a smooth renewals profile and consider how this would improve efficiency in Control Period 6.66 Lessons must be learned from the problems with renewals activities in Control Period 5 which caused significant inefficiencies.67 A subsequent review letter, published after our 56 Qq 53, 54 57 Rail Industry Association (OES0004), p3 section 3 58 Q 34 59 Office of Rail and Road, Annual efficiency and finance assessment of Network Rail 2018–19, July 2019, p3 60 Qq 32, 46 61 Office of Rail and Road, Annual efficiency and finance assessment of Network Rail 2019–20, July 2020, p14 62 Q 34 63 Qq 32, 34; Office of Rail and Road, Annual efficiency and finance assessment of Network Rail 2019–20, July 2020, p5 64 Q 46 65 Office of Rail and Road, Annual efficiency and finance assessment of Network Rail 2019–20, July 2020, p6 66 Office of Rail and Road, ORR’s review of Network Rail’s delivery plan update (RF8) for the financial year 2020– 21, January 2021 67 Q 34 Overview of the English rail system 15 session, highlighted that COVID-19 has had a significant impact on the development of some efficiency plans and has caused cost pressures, meaning that assumptions made at the start of Control Period 6 are now too optimistic.68