THE owner of Scotland's railways has come under the close scrutiny of the transport regulator after being plunged into financial trouble by making a budgeary loss to the tune of £229m over three years while compensation claims due to poor performance have soared.
It has emerged that Network Rail in Scotland, the nationalised body that is responsible for the management and safety of the infrastructure, such as the tracks and the signals, overspent by £136m in 2021/22 alone.
Compensation costs alone for delays, service changes, cancellations and other disruption amounting to £41m, £25m more than planned for.
Network Rail Scotland said that was down to timetable disruption caused by adverse weather.
In 2020/21 compensation costs amounted to half that partly due to the pandemic curtailing travel. In 2019/20 compensation costs were at £31m.
The Herald understands that the regulator, the Office of Rail and Road is keeping Network Rail in Scotland under "close review" over "concerns" over financial underperformance which is expected to have a knock-on effect on future spending on the nation's railways.
The overspend has come as it was forced to dip into £329m of ringfenced funding asked for by the regulator to manage financial risks.
In the past three years it has spent or allocated most of this, with just £46 million remaining at the end of 2021-22.
It has in turn had to put off £83 million of spending on renewing the rail infrastructure over the past two years to improve its ability to manage financial risks in the next two years. Some £53m of the deferrals came in 2021/22.
The railway owners, which received £525m in grant funding from the Scottish Government still managed to overspend in ploughing £482m into infrastructure renewals last year, with much of that put down to upgradindg signals.
It comes ScotRail and cross-border services will be decimated today (Saturday) as Network Rail staff across the UK walk out as part of continuing dispute over jobs, pay and maintenance cuts.
More than 40,000 members of the Rail, Maritime and Transport (RMT) union at Network Rail a 15 train operating companies will walk out on Saturday in a row over jobs, pay and conditions.
ScotRail is expect to run a limited daytime service on a number of routes around the Central Belt and the Borders including trains every 30 minutes between Glasgow and Edinburgh.
It involves the operation of just 11 ScotRail routes on a limited scale in the central belt only which would operate between 7.30am and 6.30pm.
Across the UK only 20% of normal train services are expected to run and passengers are being urged by Network Rail to "only travel by train if absolutely necessary".
The railway owners spent £1.4bn in 2021/22 including £193 million in maintenance, an overspend of £33m. Network Rail Scotland attributed that to Covid-19 related expenditure, including cover for sick and self-isolating staff, spending on performance improvement initiatives, and additional costs in examining the infrastructure.
Analysis by ORR shows that Scotland were actually expected to deliver efficiency savings in operating expenditure and maintenance of £82m but only managed £64m.
Across the last three years it was supposed to deliver £412m in cost savings - but has only managed 43% of that total.
An ORR analysis states: "We are concerned about the robustness of its plans to deliver this step up in efficiency.
"We recognise that there is a high level of uncertainty around identifying future financial risks. However, difficult decisions may need to be taken if additional financial risks do emerge in Scotland. This also emphasises the need for Scotland to deliver its planned efficiency improvements."
A regulator source said: "It was agreed in the five year plan that they would make savings. Scotland is flagged as a concern and will be kept under close review."
A Network Rail Scotland spokesperson said: “We welcome the regulator’s acknowledgement of our efforts to deliver a safer, more reliable and cost-effective railway.
“We made £64 million of savings in a hugely challenging environment, with increasingly adverse weather and the continuing impact of Covid-19 affecting our business during the period reviewed by the ORR.
“Despite this, we recognise the need to become even more efficient and we’re confident of meeting the delivery targets for the remainder of the current railway control period.”
Four years ago Network Rail Scotlands was being probed by the transport regulator as it emerged that it was responsible for two in three of the delays which saw ScotRail forced to settle 65,000 successful claims from passengers in nine months.
Managers of Scotland's railways came under fire after official figures revealed that ScotRail were having to pay out up to 15,683 'delay repay' claims a month over a nine-month period .
The taxpayer was expected to bare the brunt of the claims estimated by industry figures to come to at least £1m as publicly owned Network Rail was expected to compensate ScotRail for issues they were responsible for.
It comes as it emerged that Network Rail’s maintenance staff earn nearly a fifth more than workers in similar roles, according to analysis by ORR-commissioned independent consultants.
The work looked to establish whether employment costs for more than 64,000 railway workers are higher or lower than “market comparators”.
The study found the average total reward – which includes pension costs and other measurable benefits – for maintenance workers at Network Rail is 18% above the average for people in comparable jobs, at £44,732.
Station staff employed by train operators are typically paid 12% above average for that type of position.
Many of those employees are taking part in strikes which have repeatedly decimated rail services across Britain in recent months.
Total reward for Network Rail workers who are not maintenance staff was “largely within market rates”, while operational management at train companies are paid 11% below those in comparable roles, according to the report by Incomes Data Research and Steer.
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