ORR confirms £14m penalty for Network Rail

9 May 2008
ORR/13/08

The Office of Rail Regulation (ORR) today announced that it is confirming the penalty of £14m on Network Rail.  This penalty has been imposed because ORR has found systemic weaknesses in Network Rail’s planning and execution of engineering work, which represent a serious continuing breach of its licence.  These problems had been exposed in ORR’s investigation into the overruns over the New Year.

ORR has received a number of representations on the financial penalty. Network Rail considered the problems highlighted were not systemic and the proposed penalty was unnecessary and excessive. It also proposed a scheme for it to commit to spending £14m on a series of improvements if ORR mitigated fully the proposed penalty. Passenger Focus, train operators and others, supported Network Rail's proposed alternative to a fine.

ORR Chief Executive Bill Emery said: “The Board considered the representations very carefully. We remain convinced that the systemic weaknesses we have found in Network Rail’s approach to the planning and execution of its engineering work are a serious and continuing breach of its licence meriting a financial penalty. We consider that to accept Network Rail’s proposal to mitigate the fine in its entirety would reduce the effectiveness of the incentive that penalties place on the company to secure compliance with its licence. We are therefore confirming the penalty of £14m.”

ORR’s decision will be set out in a formal notice to be issued shortly.

Notes to editors

1. ORR concluded on 28 February that serious weaknesses Network Rail’s planning and execution of engineering work requiring possessions had resulted in a continuing breach of its network licence. ORR made a draft order requiring Network Rail to implement changes in its approach by 31 December 2008 and to submit a plan showing how it would do so. ORR confirmed the order on last month and gave Network Rail until 30 June to submit its plan.
2. ORR issued a notice under section 57C of the Railways Act 1993 describing its intention to impose a penalty of £14m for the breach and inviting representations by 31 March. The notice is at: http://www.rail-reg.gov.uk/upload/pdf/280208_section_57C_notice.pdf
3. The representations are on ORR’s website at: http://www.rail-reg.gov.uk/server/show/nav.158
4. A copy of the Report of ORR’s investigation into Network Rail’s management of engineering projects is available at http://www.rail-reg.gov.uk/upload/pdf/352.pdf
5. ORR will shortly publish a further notice under section 57C confirming the penalty.

Press enquiries

ORR Press Office – 020 7282 2188/2007