Budget cuts hit rail work

Network Rail is under pressure to cut costs after the industry's financial regulator left it with a £2.4 billion shortfall last week.

The Office of Rail Regulation (ORR) said the rail infrastructure firm will have £27 billion to spend in the next five years - a sum eight per cent less than it sought.

No money was allocated for completing electrification of the rail network, a day after transport secretary Geoff Hoon announced a national networks strategy group commissioned to accelerate the work. Cash could be found if the government decides that it is a priority, an ORR spokesman said.

Network Rail, which is to rebuild Reading and Birmingham New Street stations, said it is considering the settlement implications.

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