Passenger services will suffer under cuts, claims Network Rail

IMPROVEMENTS to Britain's rail network to cope with increasing passenger numbers are at risk because of planned budget cuts, Network Rail has warned.

Iain Coucher, the chief executive, said he was "extremely concerned" at proposals to reduce the firm's spending plans over the next five years.

One-fifth could be sliced off parts of the company's Scottish budget by its regulator at a time when passenger totals are at their highest peacetime levels.

However, the Office of Rail Regulation (ORR), which controls Network Rail's spending, said the savings could be achieved by greater efficiency, and there should be no impact on passengers.

It has ruled the firm can spend £2.5 billion to run tracks, signals and major stations, as well as lay some new lines planned for Scotland from 2009-14. This is nearly £300 million less than Network Rail had planned and involves a 21 per cent cut in operating costs, 8 per cent more than planned.

The money comes principally from the Scottish Government and train operators such as First ScotRail. Across Britain, the regulator has trimmed Network Rail's budget from £29.1 billion to £26.5 billion. The firm signalled it would lobby against these "draft determinations" before the ORR makes its final ruling in October.

Mr Coucher said: "Demand for more and better rail services continues to grow. It is vitally important that we get the right level of funding to meet passenger and freight user needs."

Anthony Smith, the chief executive of Passenger Focus, an official watchdog, said:

"Passengers must not be expected to cover the cost of poor or expensive working practices or project management. However, the ORR must be realistic and not force Network Rail to deliver a railway on the cheap."

Alex Johnstone, the Scottish Conservatives' transport spokesman, said: "As the cost of driving continues to rise, taking the train will be an increasingly attractive option and it is therefore essential that all partners, including Network Rail, have access to the resources they need to further develop the rail network."

National Express East Coast, which runs cross-Border trains on the east coast main line, welcomed the inclusion of £30 million to improve the maintenance of overhead power lines, which it said was one of the biggest causes of delays.

Paul McMahon, the ORR's deputy director for competition and regulatory economics, said Network Rail could make the savings with more-efficient working methods.

The ORR said it would allow Network Rail to spend £7.5 billion across Britain to enable more trains to run, such as re-opening the Airdrie-Bathgate line to create a new Edinburgh-Glasgow link. This is expected to take pressure off the main line via Falkirk, and work on electrifying that line, due by 2016, could also be accelerated.

• More than 200 extra car parking spaces are to be created at Musselburgh, Cupar and Stonehaven stations with £1.7 million of Transport Scotland funding.