Regulating Network Rail 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.