Home > Publications > PR13 guide > Regulating Network Rail 2014-19

Regulating Network Rail 2014-19

Download a PDF version of the guide ( 913 Kb)

As the regulator for Network Rail, we decide how the company is funded to meet the priorities of the governments. During control period 5, we will also make sure that it meets its obligation to provide a safe, high-performing, efficient railway.

Incentivising co-operation across the network

We will provide incentives to Network Rail and the industry to operate efficiently without compromising safety. Here is how we will incentivise them:

• The route level efficiency benefit-sharing mechanism – this is designed to encourage Network Rail and the industry to work together to reduce the day-to-day running costs of the railways.
• The enhancements efficiency benefit-sharing mechanism – this will promote co-operative working to deliver improvement projects cost-effectively, such as projects to increase capacity and electrification of the railways.
• A volume incentive improving alignment between Network Rail and train operators by linking a greater proportion of Network Rail income to traffic volumes.
• A fund of £50m to incentivise cross-industry innovation.

How we’ll monitor Network Rail

While our preferred approach is to create incentives for the industry to work together to deliver greater efficiency without too much intervention, we will also regulate through a mixture of formal review and assessment, target-setting and benchmarking, performance and safety monitoring, investigation and enforcement action:

• We will review Network Rail’s and the rest of the industry’s performance in health and safety, and we’ll publish them in the Annual Health and Safety report.
• We will monitor Network Rail’s performance in areas such as reliability, punctuality, improvement work and customer service – and publish our findings quarterly on our website in Network Rail Monitor.
• We will set targets and priorities to assess Network Rail’s progress in areas such as financial performance and efficiency. As part of this effort, we will publish an annual Efficiency and Financial Assessment of Network Rail.
• We will monitor Network Rail to ensure it complies with the conditions of its Network Licence, such as effective stewardship of the network, cooperating with stakeholders, providing clear information on performance.

If Network Rail is at risk of not meeting its targets or we think it is in breach of its Licence, then we will intervene to try and prevent the problem. If appropriate, we may enforce compliance through sanctions, such as fines. At the strategic level, we will scrutinise the company’s work and spending plans through the Periodic Review process.

Taking enforcement action

We want to see Network Rail succeed and, wherever possible, we will work closely with the company to help it deliver. This approach has worked in the past – to give just one example, 2012 saw a 12% reduction in the number of delays to freight services after we worked with Network Rail to set up a recovery board to resolve the underlying issues.

But when we have to, we will intervene with enforcement action – including financial penalties – just as we have in the past. For example, if Network Rail fails to deliver its performance target for long distance rail routes in 2013-14, it faces a substantial financial penalty, up to £1.5m for each 0.1% it falls below target.

Providing transparent information

Part of our mission is to provide stakeholders and passengers with better information so they can hold the company to account for themselves. As well as the reports we publish about Network Rail’s performance against our targets, we will also publish the following:

• The GB Rail Industry Financial report: financial data from train operators, Network Rail and government showing how the railways are funded and highlighting how money flows across the rail industry, helping to drive better value for money.
• Detailed train performance figures: including the number of trains arriving within one minute of schedule, across all routes. These figures give passengers a more accurate picture of train performance than the normal ‘on time’ measure of trains arriving within 5-10 minutes of schedule.

Area	Outputs
1. CaSL (Cancellations and Significant Lateness) measures passenger trains which are either cancelled (including those cancelled en route) or arrive at their scheduled destination more than 30 minutes late. 2. Freight Delivery Metric (FDM) measures the percentage of freight trains arriving at their destination within 15 minutes of scheduled time. 3. Note safety is not a devolved responsibility so all safety related outputs, indicators and enablers apply to England, Wales and Scotland.
Train service reliability	Annual target for the percentage of trains on time (measured by PPM for England & Wales and Scotland, with 92.5% on time by March 2019 All franchised operators in England & Wales to reach 90% PPM by March 2019
	Annual target for the percentage of trains cancelled or very late in England & Wales (measured by CaSL1), with no more than 2.2% in this category by March 2019
	92.5% of freight trains on time (measured by the Freight Delivery Metric 2)
Enhancements	Wide range of improvement projects completed. Delivery milestones will be published in March 2014 delivery plan alongside development milestones for early stage projects
Safety	Legal safety obligations to be met
	Network Rail required to deliver a plan to maximise the reduction in risks of accidents at level crossings, using the £67m ring-fenced fund 3
Disruption to passengers and freight caused by engineering works	Disruption reduced by over 10% for passengers and 30% for freight in 2019 compared to 2014
Network capability	Track mileage & layout, line speed, gauge, route availability, electrification at least maintained, and improved where there are enhancement works
Stations	Minimum average condition
Asset management	Asset management capability
	Asset data quality
	Milestones for ‘ORBIS’ data improvement project