Regulating Network Rail

Network Rail is a private sector monopoly owner and operator of a national asset of considerable public importance and as such is accountable to the public interest. It is therefore unable to operate, maintain and develop that asset according to purely commercial criteria, and is subject to regulation in a number of ways, primarily by the independent Office of Rail Regulation (ORR). ORR's principal function is to regulate Network Rail's stewardship of the national rail network.

The national rail network infrastructure (track, signalling, bridges, tunnels and stations) is owned and operated by Network Rail. 

Network Rail operates under a network licence, which was issued by the Secretary of State on 31 March 1994 to govern Railtrack PLC's activities, but enforced and amended by ORR. ORR issued a statement on 27 June 2002 that set out the regulatory approach it intended to adopt towards Network Rail as well as the changes it made to strengthen the company's network licence.

ORR has a range of statutory powers under the Railways Act 1993. Using these powers, it sets the contractual and financial framework within which Network Rail operates the network, ensuring that the company carries out its activities efficiently and well, and that it is appropriately funded.

The framework for the regulation of Network Rail is designed to provide effective incentives so that the company is rewarded for doing a good job. If necessary however, ORR may enforce compliance with the network licence if the network operator fails to fulfil its obligations, and it may also impose monetary penalties.

The Rail Safety and Standards Board (RSSB) was subsequently established, in relation to which ORR took the lead on implementation.