Network Rail needs £1bn more than ORR has offered

Network Rail has told the Office of Rail Regulation (ORR) that it needs £1bn more to spend over the next five years than it has been offered, as it tries to hammer out a deal over funding.

The ORR said in June that it would give Network Rail £26.5bn over five years from April 2009, around £2.5bn less than Network Rail had asked for.

This week it told the ORR that it needs just £1bn more than offered after it agreed that it could shave £800m off its original £31bn expenditure projection for the period.

But the rail operator warned that it could not make any more cost cuts and may need to seek "alternative sources" of funding to make up the shortfall.

Paul Plummer, director, planning and regulation, said: "We have made good progress in discussing some aspects of our plans with ORR and we believe we have provided strong evidence that further changes are required to enable us to build a bigger better railway over the next five years.