Network licence conditions

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

Part A Network Management and timetabling
1. Network Management This condition sets out Network Rail’s core obligations to secure the operation, maintenance, renewal and enhancement etc of the network in order to satisfy the reasonable requirements of persons providing services to railways and funders. This is in respect of the quality and capability of the network and the facilitation of railway service performance.

This condition also includes some specific obligations for Network Rail to:

  • produce a delivery plan;
  • establish and maintain route utilisation strategies (RUSs);
  • develop policies and criteria demonstrating how it will meet the core obligations;
  • maintain appropriate, accurate and readily accessible information about the relevant assets;
  • co-operate with potential operators or funders on allocation of capacity;
  • run an efficient and effective timetabling process; and
  • asset management policies and criteria to maintain, renew, replace, enhance and develop the assets.
2: Timetable information for passengers This 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, unless this timescale conflicts with its core obligations in condition 1.

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Part B Restrictions on activities
3: 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.
4: Financial ring-fence 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.
5: Interests in rolling stock and train operators 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.
6: 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.
7: Land disposal Requires Network Rail to gain ORR consent before disposing of any land.
Network Business means:
(i) the business of providing and operating the licence holder’s network, including the maintenance, renewal, replacement, improvement, enhancement and development of the network;
(ii) any ancillary service related to the business and activities in paragraph (i);
and, without limitation, includes:
(a) the purpose of financing the business in paragraph (i) and the services in paragraph (ii); and
(b) any payment or transaction lawfully made or undertaken by the licence holder for a purpose within conditions 4.13(b)(i) to (vii)

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Part C Dealings with third parties
8: Stakeholder relationships Network Rail must ensure that in its dealings with specified stakeholders, it acts efficiently and economically and in a timely manner with degree of skill, diligence, prudence and foresight. It must also cooperate with the Mayor of London and Transport for London on railway services, facilities and investment projects.
It must publish how it will deal with its stakeholders.
9: Non- discrimination Requires Network Rail not to unduly discriminate between persons or parties.

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Part D Information requirements
10: Information for ORR Network Rail has to provide us with information we need to carry out our functions.
11: 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.
12: Annual and periodic returns Network Rail must 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.
Network Rail must prepare and provide returns for each period not later than 21 days after the relevant period has ends.
13: Reporters The role 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.
14: Restricted use of information Network Rail should not authorise access to or disclose any person’s protected information without their consent, other than to specified people.

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Part E Corporate matters
15: Governance This 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.
16: 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.
17: Financial information Requires Network Rail to publish information in compliance with FSA rules.
18: Fees Network Rail is required to pay us an annual fee.
19: Change of control Network Rail must notify the Secretary of State if any person takes it over.
Permitted Business means the Network Business and the Permitted Non-Network Business.

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Part F Standard industry obligations
20: Insurance Requires Network Rail to have insurance against third party liabilities on terms approved by us.
21: 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.
22: Safety and standards Network Rail must be a member of Rail Safety and Standards Board (RSSB) and party to RSSB’s constitution agreement. It must comply with Railway Group Standards.
23: Environment 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.
24: 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.

Last updated: 22 December 2009

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