Rail Regulator publishes new model contract to put right shortcomings of the past and to spur improved performance

23 December 2002
ORR/24/02

The Rail Regulator, Tom Winsor, has today published a new model access contract, dealing with the relationship between Network Rail as infrastructure provider and passenger and freight train operators as infrastructure users. This will enable the railway industry to improve its overall performance to the public, and to put right the shortcomings of the past. In developing this contract, the Rail Regulator has worked closely with the railway industry and its funders, including the Strategic Rail Authority and Passenger Transport Executives.

Tom Winsor said:

"The contract I am publishing today simplifies, streamlines and strengthens the contractual link between track and wheel, infrastructure provider and infrastructure user. The railway industry today is contractually-based. However, the first generation of access contracts was weak, with unspecific obligations and inadequate remedies. A better, stronger approach is needed if the railway industry is to perform well and its potential for efficiency and delivery is to be unlocked. I therefore intend to require Network Rail and train operators to use this model contract, and will make exceptions only if a sufficiently strong case is made.

"The emphasis of my model contract is on delivery. It is about creating a culture of compliance, not conflict. It is about creating the best possible framework for the sound delivery of quality railway services, and for private investment in the provision of public services on the railway on accessible, fair and affordable terms.

"The interdependence of its constituent players means that the railway industry, probably more than any other, needs to operate as a true joint venture. This means companies working together, not against one another, in a relationship of common endeavour, mutual respect and trust, and sound delivery of services.

"I have worked closely with the industry and its funders, including the Strategic Rail Authority and Passenger Transport Executives. This new approach fits with the SRA's new approach to franchising and so facilitates that strategy. Indeed, the new contract is now required more than ever, and is a major milestone on the road to a better railway."

The Regulator's policy conclusions are in Model clauses for passenger track access contracts - final policy conclusions. The Regulator is also now consulting on the drafting of the published contract itself which will give effect to his conclusions.

Eighteen of the 25 franchises expire in 2003-04. The associated access contracts also end at that time, and therefore the new model contract will apply from then. In addition, English Welsh & Scottish Railway Limited and several franchised passenger operators have provision in their access contracts for the amendment of their present arrangements to incorporate the Regulator's new model contract as soon as it is finalised.

In addition, the Regulator is today publishing his proposals on:

• the ways in which Network Rail will establish and then deliver on specific improvements to the performance of the network in individual train operators' areas through the mechanism of local output commitments; and
• the obligations of Network Rail and train operators to provide to one another timely and accurate information about their operations and plans.

The Regulator is also publishing a statement of the principles which have guided his development of these important reforms.

Notes to editors:

1. Developing better contracts - a statement by the Rail Regulator, 23 December 2002, is available from the ORR website at www.rail-reg.gov.uk/bluedocs/157.pdf
2. The second document in the series Model clauses for passenger track access contracts - final policy conclusions is available from the ORR website at www.rail-reg.gov.uk/bluedocs/158.pdf
3. The third document Draft model passenger track access contract is available from the ORR website at www.rail-reg.gov.uk/bluedocs/159.pdf
4. The fourth document Local output commitments and the provision of information - draft conclusions is available from the ORR website at www.rail-reg.gov.uk/bluedocs/160.pdf
5. The fifth document Criteria and procedures for the approval of passenger track acess contracts: third edition - a consultation document is available from the ORR website at www.rail-reg.gov.uk/bluedocs/161.pdf
6. Copies of these documents are also available from the ORR Librarian, Sue MacSwan, 1 Waterhouse Square, 138-142 Holborn, London EC1N 2TQ, tel: 020 7282 2001, fax: 020 7282 2045, e-mail: rail.library@orr.gsi.gov.uk
7. The deadline for the consultation responses in 14 February 2003.
8. Access contracts are the means by which capacity of the railway network is consumed. They are between Network Rail (as infrastructure provider) and train operators (as infrastructure users). Under sections 17-22C of the Railways Act 1993, the Regulator is responsible for determining the terms of access contracts, including their nature, content and duration. Under section 21 of the Railways Act 1993, he is empowered to publish, encourage and require the use of his model contract for access to infrastructure.
9. The publication of the Regulator's policy conclusions and drafts for consultation is the culmination of a considerable industry-wide engagement in the project. It begins the final stage of the completion of the Regulator's regulatory and contractual reform programme, designed to:
   • establish a sound and sustainable incentive-based financial framework for the delivery of railway infrastructure services by Network Rail (previously Railtrack);
   • improve the accountability of Network Rail to the public interest through the reform and enhancement of its network licence; and
   • simplify, streamline and strengthen access contracts, thus bringing Network Rail and the train operators closer together in a true co-operative joint venture.

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