Network Rail chief executive confirms that train operators will be able to develop stations

Train operators are to be given long term control of stations and financial incentives to redevelop them under plans unveiled today by Sir Roy McNulty.

The plans will also see Network Rail chief executive David Higgins give the green light to break up the body’s centralised grip on repairs and investment, with plans unveiled to set up a number of separate regional track operating companies run by regional MDs.

Overall McNulty’s plans are designed to save £1bn per year in the next five year “control period” starting in 2014. This will reduce costs by 30%, in part through an overhaul of construction and maintenance procurement.

Reacting to the report, Higgins said: “The [existing] short franchising process discourages other operators from investing in the stations. The plan is to transfer longer leases – 100 years - on the stations, and it will then move from one franchisee to the next. The person who does the improvement will get the value at the end of the franchise period.”

It is thought the move could prompt a major re-appraisal of development sites outside the 18 mainline stations controlled and managed directly by Network Rail. Higgins added that Network Rail was looking to take control of “one or two” more major stations, in order to benefit from redevelopment.

McNulty was commissioned by transport secretary Philip Hammond to review how to improve the cost-effectiveness of the UK’s railways, with his recommendations also thought likely to see increases in fares.

Higgins meanwhile confirmed that Network Rail will in future be run on a regional basis, and that procurement would be shaken up to see much earlier and deeper engagement with contractors.

Consultancy KPMG is one of three consultants bidding to manage the programme of culture change within Network Rail as it changes from a confrontational, process driven business to an integrated client. He said: “Decision-making must be quicker, there isn’t enough autonomy, we need to empower more.

“We need to bring in partners earlier – we shouldn’t aim to replicate the industry, but to use it.”