Regulating Network Rail 2014-19

As the regulator for Network Rail, we decide how the company is funded to meet the priorities of the governments. We will make sure that it meets its obligation to provide a safe, high-performing, and efficient railway in CP5 (2014-19).

How we'll monitor Network Rail

While our preferred approach is to create incentives for the industry to work together to deliver greater efficiency without too much intervention, we will also regulate through a mixture of formal review and assessment, target-setting and benchmarking, performance and safety monitoring, investigation and enforcement action. Due to poor performance in some key areas during CP4, we will have to take a more hands-on approach in key areas until such time as we're satisfied that Network Rail is performing sustainably at the required level – and can therefore be given greater freedom to manage its business in future.

  • We will review Network Rail's and the rest of the industry's performance in health and safety, and we'll publish them in the Annual Health and Safety report.
  • We will monitor Network Rail's performance in areas such as reliability, punctuality, improvement work and customer service – and publish our findings on our website in Network Rail Monitor. Network Rail has fallen short of key performance targets in many sectors, particularly on long distance routes. We need to see a significant improvement in CP5 to make up the lost ground and generate real momentum towards delivering the improvements that Network Rail has been funded to achieve:
  • We will set targets and priorities to assess Network Rail's progress in areas such as financial performance and efficiency. As part of this effort, we will publish an annual Efficiency and financial assessment of Network Rail.
  • We will monitor Network Rail to ensure it complies with the conditions of its Network Licence, such as effective stewardship of the network, cooperating with stakeholders, providing clear information on performance.

If Network Rail is at risk of not meeting its targets or we think it is in breach of its Licence, then we will intervene proactively and at an early stage to try and prevent the problem. If appropriate, we may enforce compliance through sanctions, such as fines – although we would prefer for the company to be delivering its business and investing its resources in ways that make this unnecessary.

Taking enforcement action

We want to see Network Rail succeed and, wherever possible, we will work closely with the company to help it deliver. This approach has worked in the past – to give just one example, 2012 saw a 12% reduction in the number of delays to freight services after we worked with Network Rail to set up a recovery board to resolve the underlying issues.

But when we have to, we will intervene with enforcement action – including financial penalties – just as we have in the past. For example, if Network Rail fails to deliver its performance target for long distance rail routes in 2013-14, it faces a substantial financial penalty, up to £1.5m for each 0.1% it falls below target.

We will also have greater flexibility in performance measures to make sure Network Rail responds to what the train companies actually need from them.

Providing transparent information

Part of our mission is to provide stakeholders and passengers with better information so they can hold Network Rail to account for themselves. As well as the reports we publish about the company's performance against our targets, we will also publish the following:

  • The GB Rail Industry Financial report: financial data from train operators, Network Rail and government showing how the railways are funded and highlighting how money flows across the rail industry, helping to drive better value for money.
  • Detailed train performance figures: including the number of trains arriving within one minute of schedule, across all routes. These figures give passengers a more accurate picture of train performance than the normal 'on time' measure of trains arriving within 5-10 minutes of schedule.
Area Outputs

1. Freight Delivery Metric (FDM) measures the percentage of freight trains arriving at their destination within 15 minutes of scheduled time, covering delays for which Network Rail is responsible.

2. ETCS is the agreed future train control and command system for the European main line network. It forms part of the European Rail Traffic Management System (ERTMS).

3. Note that safety is not a devolved responsibility. All safety related outputs, indicators and enablers therefore apply to England & Wales and Scotland.

Train service reliability

Annual target for the percentage of trains on time (measured by PPM) for England & Wales and Scotland, with 92.5% on time by March 2019.

All franchised operators in England & Wales to reach 90% PPM by March 2019, except Virgin Trains which has a combined target of 88% PPM and 2.9% CaSL and East Coast which has a combined target of 88% PPM and 4.2% CaSL. First Great Western will have a minimum of 88% PPM for its long distance services.

Annual target for the percentage of trains cancelled or very late in England & Wales (measured by CaSL), with no more than 2.2% in this category by March 2019.
Annual target of 92.5% of freight trains on time (measured by the Freight Delivery Metric 1)
Enhancements Wide range of improvement projects completed. Delivery milestones will be published in March 2014 delivery plan alongside development milestones for early stage projects. Includes funding for initial ETCS 2 cab fitment.
Safety Legal safety obligations to be met
Network Rail required to deliver a plan to maximise the reduction in risks of accidents at level crossings, using £99m ring-fenced fund3. This fund combines £67m from the DfT HLOS and £32m of further funding.
Disruption to passengers and freight caused by engineering works Disruption reduced by 8% for passengers and 17% for freight in 2019 compared to 2014, supported by an extension of funding for '7 day railway' projects.
Network capability Track mileage and layout, line speed, gauge, route availability, electrification at least maintained, and improved where there are enhancement works.
Stations Average condition maintained.
Asset management Asset management capability excellence achieved.
Asset data quality standards for all asset types.
Milestones for 'ORBIS' data improvement project.