Office of Rail Regulation

Network operator's network licence

The national rail network infrastructure (track, signalling, bridges, tunnels and stations) is owned and operated separately from the running of trains. On 31 March 1994, a licence to operate the network was granted under the Railways Act 1993 to Railtrack PLC subject to conditions set out in the licence. Network Rail took over the licence in October 2002, when it became the owner and operator of the network.

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 subject to regulation in a number of ways, primarily by ORR. Network Rail operates under the network licence which is enforced and amended by ORR.

The licence conditions cover a wide range of subjects such as stewardship of the network, asset management insurance, timetabling, cooperation with others, accounting rules and restrictions on types of business, provision of information, environmental matters and disposal of land.

A number of modifications have been made to strengthen the network licence since it was granted:

• in 1997, the Rail Regulator modified Condition 7 of the licence to improve Railtrack's accountability for the stewardship of the network;
• in 1999, the network licence was reformed to improve the network operator’s accountability in a number of important respects such as asset knowledge, dealing with dependent persons and the disposal of land;
• in 2003, modification of Condition 6 to ensure that Network Rail is party to the contractual arrangements underpinning the Safety requirements of Condition 6;
• aligning the business planning process with regulating requirements in Condition 7;
• extension of Condition 7 in order to incorporate specific requirements into the condition concerning the development and establishing of route utilisation strategies (RUSs). This covers the definition and scope of RUSs, criteria for evaluation and procedural arrangements and Network Rail’s role in respect of the development of RUSs;
• Condition 12 - ring-fencing the licence holder from other businesses in the Network Rail Group with consequential changes to the cross subsidy and accounting separation roles in Condition 11;
• changes to the requirements for publication of information in Condition 15;
• a new condition on corporate governance - Condition 27; and
• a new condition introducing a Management Incentive Plan - Condition 28.

Additional modifications are being made by DfT to reflect the changes to the legislation brought in by the Railways Act 2005.

ORR has a range of statutory powers to enforce the network licence conditions under the Railways Act. 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 effectively, and that it is appropriately funded to do so.

ORR consulted on its draft enforcement policy and penalties statement in November 2005.

We are proposing to make some minor modifications to the network and station licences and documents showing these are available in related links together with the Notice.