Network Rail's network licence

Network Rail operates under a network licence. This licence contains a set of conditions under which Network Rail must operate. As the operator and owner of the national rail infrastructure, it has a key role to play in railway safety and improving railway performance and efficiency. The network licence is a tool we have for holding Network Rail to account. For further details on this see our page on Network Rail’s accountability.

In this section

The licence conditions cover a wide range of subjects. This section provides brief details about the licence conditions. For more information see the network licence.

Licence conditions

Licence condition	Purpose
1: Insurance against Third Party Liability	Requires Network Rail to have insurance against third party liabilities on terms approved by us.
2: Claims Allocation and Handling	Network Rail is required to be party to approved arrangements for handling claims against operators of railway assets and allocation of liabilities among operators of railway assets.
Conditions 3 and 4 deleted on 12 April 2007
5: Passenger Focus and London TravelWatch	Requires Network Rail to attend/participate in meetings between Passenger Focus/TravelWatch and any passenger service operator who may be or may have been affected by licensed activities. Obligations limited to two meetings per year.
6: Safety and Standards	Network Rail must be a member of Rail Safety and Standards Board (RSSB) and party to RSSBs Constitution Agreement. It must comply with Railway Group Standards.
7: Stewardship of the Licence Holder's network	Requires Network Rail to secure the operation and maintenance of the network in order to satisfy the reasonable requirements of persons providing services to railways and funders. This also covers the quality and capability of the network. Network Rail also has to produce an annual business plan as well as develop and maintain RUSs.
8: Environmental Matters	Network Rail is required to have an up to date written policy to protect the environment from licensed activities taking into account any guidance given by us.
9: Timetabling	Requires Network Rail to give train operators relevant timetabling information and to consult operators and complete the arrangements for making temporary changes to the timetable (such as engineering works) at least 12 weeks before the change.
10: Non-discrimination	Requires Network Rail not to unduly discriminate between persons or parties.
11: Prohibition of Cross-Subsidy	This condition prohibits Network Rail from giving or receiving any unfair cross-subsidy. Network Rail must ensure that there is no unfair cross-subsidy between the Network Business and any of its other business/activities and maintain separate accounting records for these.
12: Ring-fencing and Accounting Records	Network Rail is restricted in the types of activities it can get involved in. It can seek consent to get involved in some restricted activities.
13: Restriction on Interests in Train Operating and Rolling Stock	The licence holder must not, without our consent, own or run any railway vehicle in Great Britain, except where it is used for the operation of the network.
14: Co-operation with the Mayor of London and Transport for London	Network Rail must work with the Mayor of London and Transport for London on railway services, facilities and investment projects.
15: Provision of Information to the Office of Rail Regulation	Network Rail has to provide us with information we need to carry out our functions. It must also prepare an annual return by 1 July each year and make it available to the public on request within one calendar month of delivery to us.
Condition 16 deleted on 12 April 2007
17: Payment of Fees	Network Rail is required to pay us an annual fee.
18: Restriction on Use of Certain Information	Network Rail should not authorise access to or disclose any person's protected information without their consent, other than to specified people.
19: Change of Control	Network Rail must notify the Secretary of State if any person takes it over.
20: Systems Code	Requires Network Rail to have a Systems Code which sets out arrangements for obtaining access to, using and developing computer systems for operating trains on the network.
21 deleted on 12 April 2007
22: Regulatory Accounts	Network Rail must provide us with annual information on its (and its subsidiaries) financial performance and financial position for us to assess and determine the licence holder's access charges. The information also allows us to monitor the financial performance and financial position of the licence holder against the Determination Assumptions. Network Rail must prepare these financial statements in accordance with our Regulatory Accounting guidelines issued from time to time.
23: Appointment and Role of Reporters	The function and purpose of the Reporter is to provide us with independent, professional opinions and advice on data relating to Network Rail's provision of railway services, with a view to us relying upon those opinions or advice. Network Rail must comply with any Reporter Guidelines issued by ORR.
24: Asset Register	Network Rail must ensure that it has access to and records of its relevant assets. This must include knowledge of their condition, capability and capacity for maintenance, renewal and replacement, improvement, enhancement and development, and the operation (including timetabling) of the network.
25: Dependent Persons	Network Rail must ensure that in its dealings with specified people, it acts efficiently and economically and in a timely manner.
26: Disposal of Land	Requires Network Rail to gain ORR consent before disposing of any land.
27: Corporate governance	Requires Network Rail to act as if it were a PLC with the Permitted Business as its sole business. It must comply with FSA Principles of Good Governance and Code of Best Practice and ensure that its board of directors contains a majority of non-executive directors, 2 of which must have substantial railway experience.
28: Management Incentive Plan	Requires Network Rail to have a management incentive plan. It must ensure that the level of remuneration of specified people, including directors, is expressly related to specified standards concerning their personal performance and Network Rail's performance to improve those standards.
29: Level of Financial Indebtedness	This condition caps the amount of borrowing Network Rail and its subsidiaries enter into. The condition also sets a cap on the amount that Network Rail can borrow against its Regulatory Asset Base.

Last updated: 19 December 2008

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