- Press notices
ORR sets Network Rail's financial and incentive framework for the future
2 May 2012
Better aligned incentives across the whole rail industry, enhanced by greater transparency of the costs of Britain’s railways, will help to drive industry savings of up to £3.5bn by 2019, highlight plans set out by the Office of Rail Regulation (ORR).
Following extensive public consultation, ORR has outlined Network Rail’s financial and incentive framework for between 2014-19, which is focused on encouraging new collaborative ways of working across the industry to bring down the costs of Britain’s railways and delivering for customers and taxpayers:
- Alignment of incentives. Introduction of new and revised track access charges and efficiency benefit sharing schemes aimed at ensuring Network Rail, train operators, rolling-stock companies and the wider supply chain work collaboratively and efficiently.
- Greater transparency and regional focus. Network Rail’s efficiency will be assessed in more detail than ever before at ‘route’ level, and access charges will be calculated for individual routes to help improve use of rail capacity across the network.
- Evidence shows that greater 'on-rail’ competition - the direct competition between train operators for passengers – can promote greater value for money on Britain’s railways. ORR will explore opportunities for more flexible on-rail competition where it provides benefits for passengers and taxpayers.
These moves build on industry-led innovation to improve the way it works together through ‘alliances’ and Network Rail’s devolution, and provide strong building blocks for further future changes in the funding of the railways beyond 2019, where ORR expects to implement, for example, regional rail funding reviews.
ORR Chief Executive Richard Price said:
“Britain's railways have seen real progress in recent years - improved punctuality, good levels of safety, and upgraded rail lines and stations. While efficiency has also improved, much more needs to be done to improve value for money to retain the confidence of rail funders so that continued high levels of investment by taxpayers can be justified.
“ORR’s review of Network Rail’s financial and incentive framework for 2014-19 will help drive greater efficiencies throughout the railways through the creation of better aligned industry incentives, and the drive for greater transparency. Only by working closely and openly together, towards joint goals, will Britain’s railways deliver value for passengers and taxpayers.”
To read ORR’s publication on Network Rail’s financial and incentive framework for between 2014-19, visit: http://www.rail-reg.gov.uk/upload/pdf/financial-incentive-framework-cp5.pdf
Looking ahead in the PR13 process:
- By 8 May 2012 – ORR issues further consultations on efficiency benefit sharing between Network Rail and train operators, and rail freight charges.
- By 31 July 2012 – The Secretary of State for Transport and Scottish Ministers publish their High Level Output Specifications and Statements of Funds Available - what they want to achieve from the railways in this period and the funds available to do this.
- By 1 August 2012 – ORR consults on the specific outputs, for example, rail projects and performance targets, that Network Rail will be required to deliver between 2014-2019.