It is unclear at present whether Network Rail will be allowed to retain ‘some, all or none’ of the £1.8bn it plans to raise from property sales

 

vauxhall_nandosRedeveloped: A restaurant in a railway arch in Vauxhall, London

 

Network Rail’s plans to raise £1.8bn from property sales to help offset cost increases in infrastructure enhancement schemes are being threatened by the Treasury.

It is understood that Treasury officials are considering how to use the money Network Rail receives to help meet wider government financial targets rather than allowing the company to retain it all for railway projects.

High interest from potential buyers means Network Rail is confident that it will be able to raise the funding, particularly from selling the leasehold for land around railway arches. However, industry sources familiar with the situation said the Treasury’s position means it is unclear at present whether Network Rail will be allowed to retain “some, all or none” of the money raised.

It could mean that Network Rail’s work on politically sensitive projects such as TransPennine route upgrades could be deferred. “Believe me, that has been pointed out to them [the Treasury],” Passenger Transport was told.

To date, discussions have involved Treasury officials and Network Rail senior management. Failure to gain guarantees from the civil servants means Network Rail is planning to raise the issue at higher levels of government.

“It’s got to be pushed up and escalated to a level where, hopefully, someone will be able to understand the political consequences,” a senior industry executive familiar with the negotiations commented.

The discussions are being further complicated by public sector accounting rules over the sale of leasehold rather than freehold property.

 

Further coverage appears inside the latest issue of Passenger Transport.

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