The rail industry needs to redouble its efforts to put users at the heart of its work and the regulation of Network Rail (NR) should reflect this, the Government has told the industry regulator.
The comments came in a Government response to the Office of Rail and Road's initial consultation on the 2018 periodic review (PR18), which will determine Network Rail’s outputs and funding in control period 6 (CP6) - expected to run from April 2019 to March 2024.
The Department for Transport (DfT) said it generally supports the Office of Rail and Road’s (ORR) proposals for a reformed regulatory and charging regime it intends to run for CP6 but added ‘there is a lot to be done to reach a determination that produces real benefits for passengers and other users’.
In its response to the ORR’s consultation, the DfT said it supports a move towards a route-based regulatory regime, including holding routes to account for performance.
This follows the Shaw Report earlier this year, which recommended substantial devolution of power and responsibility to Network Rail’s eight area-based routes.
The DfT also suggested ‘areas for further focus’ for the ORR, including giving issues related to HS2 greater prominence and a greater emphasis on potential options for private investment in rail infrastructure, in line with the Shaw Report.
Officials also highlighted that the DfT would be considering other issues that would impact on PR18, including funding available for CP6 ‘ against the backdrop of a continued need for restraint in public spending’.
The ORR’s consultation set out its proposals to regulate Network Rail at route-level, alongside a ‘tailored approach’ to regulating its system operation functions - such as timetabling, capacity management and analysis and long-term planning functions - with separate working papers on each topic.
At the moment Network Rail’s system operation functions are not subject to specific regulation or monitoring by ORR.
In its working paper on regulating Network Rail’s ‘system operator’ function, it argued that a refreshed approach ‘has the potential to support the company in making the best possible use of the existing network’.
The ORR said this ‘would be a notable change from our current approach’, under which it mainly focuses on its infrastructure management functions, such as the delivery of enhancements.
It suggested that the current incentive regime places ‘significant weight’ on certain performance measures, ‘while providing limited stimulus to accommodate additional traffic or to identify better ways to use the current network’.
The ORR said identifying the system operator activities that Network Rail undertakes nationally on behalf of its routes and customers and setting a separate settlement for these functions ‘could complement our proposal to regulate more at a route level’.
‘This would help mitigate the risk of increased devolution to routes, and help promote coherent planning and service provision to those train operators that cross route boundaries,’ the ORR said.
However it acknowledged that the fact that ‘routes currently play a key role in undertaking some important aspects of operating the system’, would complicate such an approach.
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