[2025] UKUT 00138 (LC)

Neither expert has attempted to forecast NR’s requirement for sleepers beyond CP9 and nor do we. We say more about the extent to which the future can be predicted under Issue 2 below; for now, our findings are confined to the period up to and including 2039 – in other words, the end of CP9 in 15 years’ time. The experts’ views about NR’s requirement over those periods are some distance apart, as described above.

We begin by saying that in the absence of a proper study of sleeper lifespan, working from an appropriate sample, it is not possible to determine the normal lifespan of a sleeper. None of the studies referred to by the sleepers experts set out to be such a study. We are also unable to determine matters such as the number of additional sleepers a track renewal train would replace, compared to conventional methods, since all we have is the assertions of the two experts. As we indicated above, the Darren Sharp report relied on by Mr Jarvis was impossible to interpret. As to the papers relied on by Mr Heubeck, we were not assisted by the Richard Spoors report (paragraph 106 above) because it related to what it described as a “relatively small sample” of sites (43) where renewal work was being carried out. It is not possible to make any deductions about the lifespan of sleepers from a small sample of sleepers already identified as requiring renewal. The Purbrick and Cope paper recorded expectations for the lifespan of sleepers with Pandrol clips, but did not and could not (at that date) test the reality.

We do however accept Mr Heubeck’s view that climate change has given rise to new track maintenance challenges for NR, and that budget constraints are limiting the renewal of sleepers at present and are likely to continue to do so; both propositions chime with commonsense and one’s general knowledge of the physical and economic climate.

It may be helpful if we repeat our findings about NR’s requirement to date:

The average requirement across CP6 (2019-2024) was about 440,000 sleepers per annum; and we think that it is useful to look at averages across CPs so as to avoid the distortion arising from individual years of particularly high or low demand.

Both experts took a view about future trends, described those trends and then put a figure on them. For Mr Jarvis, demand was going to revert to its usual levels, and while he regarded the long-term average as 750,000 he adopted a cautious approach and put it at between 600,000 and 650,000; at the hearing Mr Ormondroyd took this to mean 625,000 and Mr Jarvis stood by that figure.

His approach was, as we said, based on a conviction that sleeper replacement is driven by sleeper lifespan, and that when a sleeper is worn out money will always be found to replace it. He was not prepared to accept that climate change might require that higher priority be given to other safety-critical work, nor that it might prove simply impossible to replace all sleepers so that difficult decisions might have to be made instead to close lines or impose speed restrictions.

When we turn to the numbers Mr Jarvis attached to his predictions we find that they are too far adrift from reality. He forecast a minimum demand of 500,000 per annum in CP6, which can be seen to be too high. His average of 400,000 across CP7 looks high on the basis of the first year of that period (307,000). Requirement could catch up, but to generate an average of 625,000 across “CP6, CP7, CP8 and beyond”, taking an average of 440,000 for CP6 and even accepting Mr Jarvis’s average of 400,000 for CP7, an average of 1,035,000 per annum would be needed in CP8. To generate that average over CP6, CP7, CP8 and CP9 an average of 830,000 per annum would be needed across CP8 and CP9, which Mr Jarvis himself accepted in cross-examination was not realistic.

So we cannot accept Mr Jarvis’s predictions about future volume.

We have no difficulty in agreeing with Mr Heubeck’s description of future demand as reduced or static in CP7, followed by modest growth in CP8 and stronger growth in CP9. We say that because, as we said above, we agree with what he says about climate change and about restricted resources, and - importantly - because his description is consistent with the Strategic Business Plan for CP7, which refers to

“… acceptance that we will not return to CP6 levels of asset performance in the near future, due to the cost and deliverability challenges but this can be mitigated to increase maintenance activity, as well as improve management through technological advancements…

Maintaining CP7 exit levels of asset performance in the long run will be challenging from a funding and deliverability perspective and likely prohibitively disruptive to our customers, but we also recognise that it will be important to take action to redress asset condition in CP8 and beyond. We therefore consider that it would take two control periods to achieve this, CP8 and CP9."

The difficulty we have with Mr Heubeck’s evidence is that his translation of that description into numbers is as pessimistic as Mr Jarvis’s figures were optimistic. Despite the average requirement for CP6 being 440,000, he starts from 350,000 which is lower than every year for which we have a figure except 2024/25. His maximum of 420,000 in CP8 means that even in 2034 the requirement is below the average for CP6. And Mr Heubeck’s maximum of 490,000 in CP9 means that it will be 10 to 15 years from now before requirement returns to the level seen only three years ago in 2021/22. These predictions are implausible.

So we cannot accept Mr Heubeck’s predictions either. Nevertheless we accept his general characterisation of the coming years. NR’s Strategic Business Plan predicts a reduction of 20% in track maintenance in CP7, followed by growth across CP8 and CP9, and for that to be meaningful in terms of catching up on renewals left over from CP6 and CP7 it must represent a higher average demand than that seen in CP6 and CP7. But it is unlikely to see a full return to the levels seen between 2011 and 2017 (see table 1 above, paragraph 55).

If we take that 20% and apply it to the average requirement in CP6, that generates an average requirement of just over 350,000 per annum in CP7, which is not out of kilter with the 307,000 or so required in 2024/25. We find that the best estimate that can be made of NR’s future requirement, expressed as averages across Control Periods so as to represent modest growth but real growth over CP8 and stronger growth in CP9, is:

We take the view that it is not possible for us to make findings about levels of requirement in individual years because of the inevitable ups and downs in demand; as we said above, an average is the best we can do. But the accountants will need to use figures for individual years for discounting purposes. In the table below we have set out figures for their use which produce the averages which we have found are the best estimate for CP7, CP8 and CP9 (beginning with a rounded figure for 2024/25 for convenience):