The Rail Value for Money Study calls for efficiency savings of 30% across the whole of Network Rail over the next eight years.

Sir Roy said: “A reduction of this magnitude is achievable, and is essential if passengers and taxpayers are to get the fair deal they deserve from the rail industry”.

Supply chain management is seen as a key area for savings with cuts of between £230m and £580m annually envisaged by 2019.

The report states: “The industry spends large amounts of money with suppliers and contractors, but lags behind other industries in terms of supply chain management through:

• demand profiles which are unpredictable and that fluctuate wildly;
• relationships which are seldom truly collaborative, and often purely short term;
• and processes which fail to engage contractors early enough in the programme/project life-cycle, thus limiting the contribution from contractors and inhibiting innovation.”

Civil Engineering Contractors Association external affairs director Alasdair Reisner said: “Contractors with experience of previous shake-ups to the rail sector were wary, amid fears that implementation of the McNulty proposals could create a log-jam in the delivery of existing programmes of work.

“As such, we welcome Sir Roy’s view that a ‘big-bang’ approach should be avoided, in favour of a managed transition over the coming years.”