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The National Audit Office has today concluded that the upgrade to the Thameslink routes through London has a realistic prospect of delivering value for money, but there remain risks which the Department and Network Rail need to manage carefully. In particular the Department and Network Rail now face a challenge to be ready to deliver the new services, having not begun this work early enough.

The £7 billion (cash prices) programme, sponsored by the Department for Transport (the Department), involves:

• Two phases of infrastructure works carried out by Network Rail at a total cost of £5.5 billion (2017 prices). Phase one included the redevelopment of Blackfriars and Farringdon stations, and was completed to time and budget in 2011 and cost £2.4 billion. Phase two began in 2013, and included redeveloping London Bridge station and introducing new track and signalling technology in central London. It has a budget of £3.1 billion.
• A new fleet of 115 new trains with lease costs of £1.7 billion (present value, 2017 prices), and two new maintenance depots to service them, with lease costs of £0.3 billion (present value, 2017 prices).
• Under new franchise arrangements a combined Thameslink, Southern and Great Northern (TSGN) franchise was awarded to Govia Thameslink, to maintain and develop passenger services on the Thameslink routes and bring the new trains into service.

The total budget for Network Rail’s infrastructure works has increased from its 2012 budget by £474 million (9.4%) to £5.5 billion (2017 prices). The budget for phase two increased by 18.0% from £2,629 million to £3,103 million, and was largely associated with the works at London Bridge. As Network Rail developed its detailed design and accessed the site, it found that conditions at London Bridge were not as expected, requiring changes to the design, additional work, and acceleration of other works to keep to schedule.

Since the Department agreed the increased budget, Network Rail has kept its infrastructure budget stable and has improved its financial control of the programme. Network Rail has introduced measures to improve the way it manages design changes and has used more sophisticated cost forecasting techniques. Network Rail has also taken steps to improve the programme’s cost control following cost increases resulting from the impact of design changes at London Bridge. Reporting by the main contractor, Costain, and Network Rail’s contract management, did not immediately bring this to light.

The acceptance of the new trains is currently behind schedule, but efforts are being made to recover lost progress. Siemens had difficulties finalising the on-board software for the new trains, which delayed Govia Thameslink’s acceptance of the first train. This meant that Govia Thameslink introduced the first train into passenger service just over three months later than initially planned. Further technical issues emerged when the trains were brought into service. Siemens have sufficiently addressed these issues to allow Govia Thameslink to accelerate its acceptance of trains to make up for lost time. If current progress continues, Siemens will have caught up to the original acceptance schedule by December 2017. Govia Thameslink is also carrying out testing to determine what infrastructure adjustments Network Rail will need to make to fully deploy the trains on the Thameslink network.

The wider rail network cannot yet reliably support the Thameslink programme’s new services. Between July 2015 and March 2017, 13% of all cancellations and delays of more than 30 minutes on the franchise have been due to failure of track and other Network Rail assets such as signalling systems. In 2016, Network Rail estimated that an investment of up to £900 million (cash prices) of maintenance and renewal work was needed to achieve the resilience needed to run the new services on the Thameslink network reliably, in addition to infrastructure investments already planned in that area. Limits on access to the railway means that Network Rail has prioritised a £300 million programme of work in its South East and London North Eastern routes to improve particularly vulnerable parts of the network.

The Department and Network Rail did not initially make adequate arrangements to manage the introduction of the new services and there is limited time remaining for planning to be completed. Development of these plans also requires a high degree of collaboration across the rail industry, and clarity over who has the authority to make decisions on how the rail network operates. However, the Department and Network Rail did not fully consider what arrangements they would need to manage the transition to bringing the enhanced services into use. In late 2016, the Department and Network Rail established the Industry Readiness Board, consisting of a wide range of industry representatives, to oversee collaborative planning for the new services. In mid-2017, the Department also took steps to better define accountabilities for operational service on the programme.

The Department is deferring the full introduction of the new services by up to a year, in order to improve their ability to manage the risks of each service change. The Department and Govia Thameslink had initially planned for a number of services from Sussex and Kent, the Midland Mainline, the East Coast Mainline and Great Northern line to be connected through central London, in May 2018, with more services to be connected from December 2018. The Department requested options from Govia Thameslink to reduce the risks of passenger disruption from introducing too much change on the network at any one time. In October 2017, the Department approved a proposal it had requested from Govia Thameslink to introduce the new services planned for 2018 more gradually, with the final increase in services occurring in December 2019.

Full Report:  Update on the Thameslink Programme

Amyas Morse, head of the National Audit Office, said: “The Thameslink programme has a realistic prospect of delivering value for money, with significant benefits for passengers in terms of increased capacity, and more trains but a number of key risks and challenges still remain to be overcome. The Department’s recent decision to introduce new services more gradually than originally planned means that passengers will get the full expected benefits one year later than planned, but it is a sensible step to protect value for money and passengers from further possible disruption due to large numbers of new services being launched at the same time.”

Notes for Editors

£5.5bn
Total of cost of Thameslink Programme infrastructure works (2017 prices)

£1.7bn
Lease costs of the new Class 700 trains manufactured by Siemens (present value, 2017 prices)

£0.3bn
Lease costs of the train depots at Three Bridges and Hornsey (present value, 2017 prices)

£474 million
Infrastructure budget increase (9.4%) from 2012 budget (2017 prices)

10
New platforms at London Bridge station completed and open to the public

45
Number of new Class 700 trains in passenger service on the Govia Thameslink (as of September 2017)

1 year
Deferral to the introduction of the final services, to better manage the risks of each service change

24
Maximum number of Thameslink trains planned to run through central London during peak hours from December 2019

£900 million
Estimated extra maintenance and renewals funding needed to improve the reliability of Network Rail assets such as track and signalling across the Govia Thameslink network (cash prices not included in infrastructure works costs)

£300 million
Amount of the £900 million maintenance and renewals work that will be carried out before April 2019.

13%
Proportion of cancelled and significantly late services caused by the failure of Network Rail track and signalling between July 2015 and March 2017 on the Govia Thameslink network.

1. The Department for Transport is sponsoring the Thameslink Programme, a complex investment in rail infrastructure and rolling stock, and a significant change to services. The objectives of the programme are to increase passenger capacity on the Thameslink route by running higher frequency, more spacious trains on an expanded network. The NAO has previously reported on the programme; in June 2013 we published Progress in Delivering the Thameslink Programme, and in July 2014 we reported on the procurement of the new Class 700 trains in our report Procuring New Trains.

2. As part of the Department's responsibility for providing passenger rail services, it is responsible for designing, letting and managing rail franchises. The Thameslink, Southern and Great Northern franchise, was taken over by Govia Thameslink Railway Ltd in September 2014. The franchise is the largest of the 15 rail franchises managed by the Department, bringing together four rail services, Thameslink, Southern, Great Northern and Gatwick Express, connecting London with towns and cities across the south east and east of England.

3. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.

4. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 785 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £734 million in 2016.