The rail industry is changing, and the way we regulate is too. Our consultation on the overall framework for regulating Network Rail sets out our proposed new approach to regulating the company, including by building on its devolution of responsibilities to its routes and the creation of a distinct system operator.
Why route devolution matters
Route devolution addresses key challenges with finding ways to improve how Network Rail performs. One is its size: routes, by being smaller, are closer to their customers and able to make decisions more quickly. Another is its monopoly status: comparing performance of routes is a form of competition because the greater transparency is a powerful motivator.
While separate treatment of the Scotland route is well established, for this periodic review (PR18) we will scrutinise each of the routes’ separate strategic plans to set funding and provide a description of the high-level outcomes we expect them to deliver over control period 6 (CP6, which we expect to run from 2019 to 2024). These settlements, which will be informed by their customers, provide a clear baseline against which the routes can be held to account, and support improvements in efficiency.
Bringing Network Rail closer to its stakeholders
During CP6, we want the benefits of devolution to be realised by routes having greater focus on their relationship with customers and their other stakeholders. Individual routes are best placed to lead this engagement in the interests of passengers, freight customers and taxpayers. We want to see how well they respond to this challenge, including in the preparation of their strategic plans. The role of Network Rail’s corporate centre is important, not least in sharing best practice, while grading the routes with respect to their quality of engagement should increase this focus and drive up standards.
Using reputational incentives
Our approach to monitoring and enforcing very much carries forward into CP6. But we want to be smarter in how we prioritise our efforts: inter-route comparisons support us doing that. Recognising Network Rail’s public sector status, we want to be more systematic and explicit in the way we use reputational incentives in our approach; supplementing the financial incentives facing the company.
Network Rail is a single company, and the effectiveness of our approach relies on its support for devolution - and indeed the support of government and industry. Early developments have been positive: for example in the forms of stakeholder workshops, customer-led measures in scorecards, and grading of different aspects of route plans. We are now keen to work with Network Rail and stakeholders to develop the overall framework further. We welcome your views and you can find out more and respond by email to pr18@orr.gov.uk by 21 September 2017.