ProRail's use of railway budgets

Budget application and changes in scope and planning
Between 2005 and 2010 ProRail spent up to €1.1 billion less on managing, maintaining and constructing the railway system than the Ministry of I&M had budgeted. This underspend should be treated with caution, however, because certain sums might have been counted twice. Planned construction and maintenance projects were delayed both on inception and during execution. Budgets were therefore deferred to later years and the scope of some projects was reduced. 

Provision of information to the House of Representatives
The House of Representatives does not have full information on the changes in budget, scope and planning of ProRail's projects. The information on ProRail it receives from the Minister of I&M is confusing. This is because ProRail and the ministry use different methods to prepare their budgets and accounts and disclose VAT differently in their annual reports and accounts. This is in accordance with the reporting rules applicable to them. Furthermore, the ministry and ProRail use different terms for ProRail's tasks. The information the minister submits to the House is incomplete. ProRail's management plan informs the House about the proposed use of the management and maintenance budget but no accounts are provided on the actual use of the budget. The budget and accounting cycle is therefore not closed.

Possible causes
Different circumstances at the Ministry of I&M might be a cause of delays in the execution of ProRail's projects. The ministry leaves the implementation of important strategic issues largely to ProRail. For the exercise of its own responsibilities the ministry relies on ProRail. Steering of ProRail is also diffuse: the ministry employs various management philosophies and accountability arrangements at the same time. Furthermore, the Minister of I&M has not separated the policy management of ProRail from the supervision of ProRail. This confuses the management. Other factors that may play a role are the lack of adequate staffing at the Ministry of I&M and the lack of full financial accounts. At ProRail, too, we found circumstances that may explain the delays in operations. ProRail's operational management and information management are not in order. There are also staff shortages and the hiring of external personnel has led to problems with retaining knowledge. Furthermore, responsibilities are not allocated effectively internally.

The Minister of I&M should make agreements with the House of Representatives about ProRail's role and tasks, the associated allocation of responsibilities and the provision of information. She should also develop performance indicators that track the progress made with the use of the railways budgets. As in 2009, we recommend that share ownership of ProRail be transferred to the Ministry of Finance and that the minister establish an independent body within the ministry to supervise ProRail and develop more intervention points to manage with greater discrimination. 

ProRail's management should urgently put its information management in order and improve its internal management. ProRail should say 'no' to the ministry more often if engagements are not realistic. A step back could be considered regarding the growth and expansion of the order book until the tasks, time, money, resources and people are in balance within the organisation.

The Minister of I&M accepts the recommendation that the House of Representatives should be better informed. She partially shares our conclusion regarding the uncertainty of the information provided. She also shares our conclusions on the BB21 and Mistral budgets. She does not share the other conclusions. 

ProRail's executive board agrees with our conclusions and recommendations and will follow them up. We noted with pleasure that the executive board will take measures to improve the agreement between the various budgeting and accounting systems in use at the ministry and ProRail.

The minister provided new information in her response regarding the underspend in 2005-2010. She added a new variant to the constantly changing figures. With great concern we found that – despite all the efforts made – the minister apparently cannot provide an orderly and auditable – and thus convincing – financial overview of the relationship with ProRail in the period 2005-2010.

The minister notes that she manages efficiency by having financial statements prepared by ProRail audited once every three years. We think this is striking given the diffuse steering and management of ProRail. In her response, the minister does not consider the possible causes of delays in the execution of ProRail's tasks. We would remind the minister of her responsibility to manage ProRail as one of the ministry's implementing agencies and of the consequences for the further development of the railway industry.

We would urge the minister to consult ProRail this year on the preparation of orderly and auditable financial statements as at 31 December 2010. We would also urge that administrative measures be taken before the end of 2011 to guarantee the preparation of stable overviews.