RNS Number:2703R
Network Rail Limited
24 October 2003



The 'Re Rail Maintenance' announcement for Network Rail Limited released  
today at 07:00 under RNS No 2702R has been re-released to facilitate onward 
transmission by third party vendors.

The announcement is unchanged and is reproduced in full below.


                                   NETWORK RAIL

                     Engineering excellence for Britain's railway

NEWS RELEASE
PR03062
24 October 2003

                                                    Maintenance - 1

               NETWORK RAIL TO BRING RAIL MAINTENANCE BACK IN-HOUSE


Network Rail today announces that it is to bring rail maintenance activity back
in-house.   The contracts currently held by the seven Infrastructure Maintenance
Contractors will be transferred to the 'not for dividend' company, unifying the
operation and maintenance of rail infrastructure.

This far-reaching decision has been taken following careful consideration of the
conclusions of a fundamental review of rail maintenance that has been carried
out over the last six months.  Network Rail's detailed analysis of the
maintenance function has shown that creating a single integrated rail
maintenance operation will deliver three key benefits:-

  * Consistent application of high standards of rail maintenance across the
    rail network

  * Significant efficiency savings to be delivered from the annual maintenance
    budget (#1.2 billion in 2002/3)

  * Continued improvement in track-side safety standards

The final process and exact timing of taking each individual rail maintenance
contract in-house is subject to detailed commercial negotiations and safety case
approvals.  The speed of progress will be dictated by the need to ensure a
smooth transition.

Today's announcement represents the most fundamental restructuring of Britain's
railway since British Rail was reorganised in 1994, two years before
privatisation.  The transfer of some 18,500 people from infrastructure
maintenance contractors (IMCs) to Network Rail will be aided by the experience
gained from the successful transfer, from Amey plc, of the Reading area
maintenance operation in June 2003 and the planning and preparation of the
transfers of Wessex from Balfour Beatty and East Midlands from Serco.

                                                               Maintenance - 2

The current structure of outsourced rail maintenance involves seven IMCs - Amec,
Amey, Balfour Beatty, Carillion, Jarvis, First Engineering and Serco - twenty
contract areas, considerable management duplication and complex reporting,
hand-back and inspection procedures.

Network Rail's in-depth audit of rail maintenance has included the development
of a very detailed transition plan that fully addresses the issues of management
structure and capability.  In future, there will be a single management
structure with clear lines of accountability and a simplified relationship
between operations and maintenance.  Network Rail will ensure that maintenance
is carried out by a permanent workforce of well-trained individuals committed to
a strong safety culture.

Ian McAllister, Chairman of Network Rail, said: "Rail maintenance is a central
part of Network Rail's operation.  We have completed a detailed assessment of
railway maintenance and obtained a clear understanding of the reasons why costs
have risen in recent years.  Bringing maintenance contracts in-house will ensure
greater consistency of maintenance standards and help deliver efficiency savings
far more quickly than would otherwise have been possible.

 "We have thought long and hard before taking this decision.  We have studied
its implications in great detail and concluded that it is the right thing to do.


"We will now work closely with the maintenance contractors to ensure a smooth
transition."

Rail renewals contracts to remain unaffected


Network Rail remains fully committed to the ongoing use of third-party suppliers
for rail renewals contracts.  These are specialist functions where there is a
competitive supply market and it is entirely appropriate that contractors
undertake such work.  The creation of an in-house maintenance operation will
help to maximise the efficiency and effectiveness of renewals expenditure and
activity.

                                                               Maintenance - 3

Network Rail is currently pursuing positive negotiations with its suppliers and
recently signed a range of preferred bidder agreements.  These will form the
basis for continued involvement by third party rail contractors in the vital
task of renewing Britain's rail network.  Network Rail remains committed to
completing rail renewal contract negotiations and looks forward to the ongoing
constructive participation of our contractors.

Employee benefits protected


It is anticipated that most employees who are currently engaged in rail
maintenance activity and employed by one of the IMCs will be transferred to
Network Rail.  All terms and conditions of employment fall within TUPE
legislation.  In total, some 18,500 people will join Network Rail as part of
this programme.

Safety benefits


The railway is already a safe place to work.  Network Rail is determined to
continue to improve safety standards.  The ability to reinforce a consistent
track-side safety culture and a balanced approach to risk will be greatly
assisted by the formation of a unified maintenance operation with common
systems, technology and processes.  Network Rail's decision to in-source railway
maintenance will bring an end to casualisation and ensure that a full-time,
permanent work-force is created to complement its existing operations and
signalling staff.  Today's announcement will unify the core functions of
Britain's rail infrastructure provider.

Background to today's announcement


Network Rail has previously announced its decision to take direct control of all
rail maintenance activities in three out of twenty maintenance areas - Reading,
Wessex and East Midlands.  The Reading area maintenance contract (previously
held by Amey)  was successfully transferred in-house ahead of schedule on 22
June, 2003.  More recently, it was announced that Serco's maintenance contract
for the East Midlands area, which had been due to run until March 2005, will now
be taken in-house in January 2004.  In August, the decision to terminate the
Wessex area maintenance contract, currently held by Balfour Beatty, five months
ahead of plan was announced, meaning that this contract will come in-house next
month.

                                                               Maintenance - 4

On 10 October, Network Rail announced that it was pleased to have reached
agreement with Jarvis to bring all of Jarvis' rail infrastructure maintenance
contracts (Central, East Coast Main Line and Liverpool, North Wales and
Merseyrail) back in-house.  Today's announcement is entirely unrelated to this
earlier announcement.

The current tendering process for the combined Bristol, Gloucester and Exeter
(West Country) maintenance area will now cease, as will discussions to convert
existing contracts to the New Maintenance Programme.

The timetable for the transfer of maintenance activities will be dictated by
safety considerations and negotiations with the existing maintenance activities.
However it is expected that the transfers will be complete by the end of
Summer 2004.

                                    - ends -

Notes to editors:

Network Rail is the 'not for dividend' operator of Britain's rail network.  Our
objective is to provide safe, reliable and efficient rail infrastructure.


We own and maintain the tracks, signals, tunnels, bridges, viaducts, and level
crossings.  We also own the network's 2,500 stations, and manage the largest and
the busiest.  We provide access to the tracks for every passenger and freight
train, timetable their journeys, and operate the signalling, which controls
their movements.


Network Rail is a company limited by guarantee with members instead of
shareholders.  It is run as a commercial organisation, but any operating surplus
is re-invested in the rail network.


Our core focus is the operation, maintenance and renewal of existing rail
infrastructure, with the Strategic Rail Authority taking the lead on enhancement
projects.


We have set clear targets to improve performance and reduce costs, but safety is
always at the forefront of our activities as we rebuild Britain's railway.


     Details about the Company can be found on the Network Rail web site:
                             www.networkrail.co.uk


      For media enquiries please contact the Network Rail press office on
                               020 7557 8292 / 3


                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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