Performance has “not been good enough” as the organisation that runs the UK’s rail infrastructure from its national centre in Central Milton Keynes works to deliver a £38 billion programme of investment to upgrade and improve the nation’s rail network.

Chairman Richard Parry-Jones is to step down and will be replaced by Sir Peter Hendy, the current Transport Comissioner in London. He has pledged support for chief executive Mark Carne but told the House of Commons: “Network Rail’s spending should stay within its funding allowance.”

The moves are part of the government’s plan to “reset this programme and get it back on track,” Mr McLoughlin said. He has also appointed a special director of network and ordered a report by economist and regulator Dame Colette Bowe.

Network Rail chief executive Mark Carne admitted the organisation had been “overly optimistic” on its delivery schedule. He said: “During my first year in the job I have looked closely at every aspect of our business and it has become clear that Network Rail signed up to highly ambitious five-year targets set by the regulator.

“Based on historic improvements from a low base, we were overly optimistic about the capacity of our company and our supplier base to step up several gears in order to achieve the plan, especially given the complexities of a network that is at full capacity much of the time."

On the big items like electrification and capital projects, it was always part of the regulatory process that the costs and programme would be revisited as projects became properly defined. However, the more detailed project costs have been higher than assumed at the earliest stages of definition. 

As a result, the total enhancement programme cost now exceeds the available five-year budget.  Some projects are also delayed beyond the original dates.

Incoming chairman Sir Peter Hendy said: “Network Rail has a critical role in the railway industry and the whole British economy, by facilitating economic growth and enabling job creation.

“I am delighted to be asked to chair the Board and help it, the executive team and  the whole organisation fulfil Network Rail’s full potential. I am looking forward to working with Mark Carne as he takes the organisation forward.”

Some of the improvements are already bearing fruit, with the network handling record numbers of passengers, improvements in safety and a 4% increase in journeys in the past 12 months. “But I do not pretend everything isperfect.” He added. “Because it is not.”

Delivery of the £38 billion programme of improvements – “the most ambitious programme since the Victorians” – has not been good enough, the Secretary of State said. “Important aspects of Network Rail’s investment programme are costing more and taking longer,” Mr McLoughlin said.

These include electrification of main lines, the supply chain for the signaling upgrades and slower than planned construction.

The minister has ordered the electrification of the Great Western Line as a priority,which means that work to electrify the Midland Main Line between Corby and Kettering has been put on hold.

That broight an angry reaction from businesses in Northamptonshire.

The decision to pause the electrification and continue with other projects represents a “blatant lack of respect” for the region, said Wellingborough Chamber of Commerce president David Cross.

He added: "This is a serious blow to both the East Midlands and Wellingborough. Work has already been done on the bridges and now it goes on hold. What a turn around by our newly elected government.

This decision represents a blatant lack of respect for our region and is another example of the East Midlands being shunned in favour of the South.” 

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