Schedules 4 and 8 possessions and performance regimes

Reference: ORR/011/2012
Date published: 26 November 2012
Start date: 26 November 2012
Closing date: 28 January 2013

We are seeking views on a range of detailed issues relating to Schedules 4 and 8 – the compensation train operators receive for the financial impact of planned and unplanned rail service disruption attributable to Network Rail or other train operators. 

Schedule 4 compensates train operators for the impact of planned service disruption, and Schedule 8 compensates train operators for the impact of unplanned service disruption. 

Compensation is intended to cover fare revenue losses or costs, such as those associated with running replacement buses.

Passengers and freight customers care about disruption to their service. It is therefore important that we ensure that Network Rail and train operators are incentivised to work in the best interests of passengers and customers by avoiding disruption.

Consultation views will inform part of our periodic review of Network Rail's outputs and expenditure (PR13) – our assessment of what Network Rail must achieve during 2014-19, the money it needs to do so, and the incentives needed to encourage delivery and outperformance.

Consultation document

Related documents

Main themes arising from consultation responses

We received over 60 responses to our consultation. 

This included responses from stakeholder organisations and individuals. 

We are grateful to those who responded. We have published the non-confidential responses we received from organisations below. 

We also received a significant number of responses from individuals and MPs. 

Whilst we have considered these, we have not published them below. 

Given the breadth of some of the responses and specific suggestions made, we have also made all non-confidential responses available to Network Rail. 

Some key themes that arose from the consultation responses

Issues affecting Schedules 4 and 8

The majority of stakeholders agreed with our proposal to continue to set Schedule 4 and 8 payment rates so they compensate to train operators for the full impact of service disruption to due to Network Rail and other operators (where this is currently the case).

Schedule 4 for passenger operators

Respondents told us they considered Schedule 4 is generally working well and is understood by users. Passenger operators called for Network Rail to improve its methodology for calculating Schedule 4 costs and also improve its possession planning to reduce the level of late changes and cancelations of possessions. The majority of stakeholders agreed with our proposal to extend cost compensation to Type 1 possessions where Network Rail cancels a possession at short notice. They also agreed with our proposals to review rail replacement bus cost compensation rates to ensure they reflect actual bus costs.

Schedule 8 for passenger operators 

In most cases stakeholder responses supported our proposals. However, train operators generally were opposed our proposal to set a higher threshold before they can claim additional compensation for sustained poor performance, and Network Rail disagreed with our proposal to keep the circumstances the same in which Network Rail and train operators can propose changes to Schedule 8 payment rates through paragraph 17.

Schedule 4 for freight operators 

Respondents considered that Schedule 4 is working well and that there is no need for major reform. However, stakeholders said it was important that Schedule 4 payment rates are at least maintained at current levels to ensure that Network Rail is properly incentivised to minimise possessions disruption to freight operators.

Schedule 8 for freight operators 

Freight operators raised a number of concerns regarding the update of Schedule 8, including in relation to the way we proposed to setting benchmarks and payment rates, and the extent we had considered the implications of our proposed changes to Schedule 8 alongside proposed changes to other areas, such as access charges. Network Rail was content with most of our proposals. The majority of responses from freight operators and Network Rail were against our proposal to continue to set bonus payment rates at 50% of the level of compensation payment rates.

Schedule 8 for charter operators 

Our proposal to remove the requirement on Network Rail to apply a cap on the maximum Schedule 8 payment charter operators are liable to make in respect of an individual incident they cause, generated a lot of interest from stakeholder organisations and members of the public. With the exception of responses from Network Rail and franchised train operators, the vast majority of responses were opposed to this proposal.

Views expressed by stakeholders in response to this consultation have been reflected in our draft determination. Following this, we reviewed stakeholders' responses and published our final determination on 31 October 2013.

Responses