Interview: The Office of Rail and Road’s Periodic Review 18

UK – The end of the year is almost upon us, and it also marks the halfway point of the Periodic Review 2018 (PR18) – a process where the Office of Rail and Road (ORR) consults the government and other stakeholders, including Network Rail, on the changes to be made to British railways for Control Period 6 (2019–2024). To find out more about it Railway-News interviewed Chris Hemsley, Chief Economist of the ORR and Programme Director of the Periodic Review.

Railway-News: What are the ORR’s priorities for Control Period 6?

Chris Hemsley
Chris Hemsley, Chief Economist of the ORR and Programme Director of PR18

Chris Hemsley: Our aim for PR18 is to support: “a safer, more efficient and better-used railway, delivering value for passengers, freight customers and taxpayers in control period 6 (2019–2024) and beyond”.

To do this we are making two significant changes. We will be putting an increasing focus on regulating each of Network Rail’s route businesses, building on changes that the company is making to devolve more responsibility to these routes. This move to ‘route-level regulation’ will encourage closer working between Network Rail and train operators, and increase the role of local funders. It will allow us to make more use of comparison between routes when we assess the company’s plans and then hold it to account for delivery.

In addition, we will regulate Network Rail’s national system operator business separately; implementing regulation that is tailored to this important function so as to support improved timetabling, use of the existing network and analysis of how the network should be enhanced over time.

Together, this will provide for greater focus on the issues that matter to passengers and freight customers, including better reliability and capacity for more services.

RN: Can you summarise the advice to ministers which the ORR published this summer in the initial phases of PR18?

CH: Our advice included a number of main recommendations to the Secretary of State (separate advice was issued to the Scottish Ministers), including:
To build on the introduction of Network Rail scorecards and support an industry-driven process, to determine challenging targets for Network Rail to improve in ways that align with customer and end-user priorities.

That there needs to be a significant increase in the volume of renewals (work to replace infrastructure) undertaken in CP6, to reverse the impact of the work deferred in CP5, meet the pressures of growing traffic and address the condition of long-lived assets.
We also talked about:

  • the need for ORR to place clear obligations on Network Rail to further improve the management of its assets and operation of the network
  • the importance of delivering improved efficiency and that ORR would continue to scrutinise Network Rail’s efficiency
  • the need to establish appropriate arrangements for Network Rail to manage risk
  • how enhancements could be handled within the control period

RN: How much agreement was there between the ORR and other organisations and franchises on this advise?

CH: The Secretary of State for Transport subsequently issued his Statement of Funds Available, which reflected the ORR’s advice, including that there needed to be an increase in the volume of renewals work. We continue to work with a range of stakeholders to develop the detailed arrangements for CP6.

RN: What are the main areas of debate across the rail industry on CP6 and how do you propose to resolve these issues?

CH: The key focus in coming months is the scrutiny of the route and system operator business plans. We are looking to see how operators’ and other key stakeholders’ views have been incorporated into those plans. This includes the potential for routes to agree key performance metrics and targets with their customers.

RN: How much work remains to be done in advance of your publication of the Draft Determination for the PR18 next summer?

CH: We are just starting our intensive scrutiny of the routes’ and system operator’s business plans, building on the work we have already undertaken to understand how those plans have been produced and whether Network Rail’s processes look to be effective. This is a critical part of the review of Network Rail, as we challenge the routes and system operator to ensure that the plans are robust, will support an efficient and safe network, and reflect what passengers and freight customers want to see from the railway. Our workplan is available on The Office of Rail and Road website.

RN: How much impact will the statements on rail in Budget 2017 have on PR18?

CH: The funding for Network Rail has been confirmed by the Secretary of State, outside of the Budget in the ‘Statement of Funds Available’.

RN: What are the major differences in rail which we can expect when we enter CP6?

CH: We are looking to Network Rail’s routes and the system operator to work more closely with its customers, including through initiatives such as the new Route Supervisory Boards. For our part, we will continue to monitor the company as a whole, and also make increasing use of comparison across routes to identify good performance and where we need to intervene. This relies on routes and the system operator having good quality business plans, that reflect what their customers, passengers and freight users want from the railway. We are starting our detailed review of these plans, and will set out our assessment in our draft determination.

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