Network Rail's network licence requires it to comply with the conditions we set in the public interest.
In connection with the 2018 periodic review, we revised Network Rail’s network licence to reflect the devolution of responsibility to geographical areas, designated as routes (now called regions), and a System Operator within the organisation. The licence also reflects the policy in our overall framework for regulating Network Rail during CP6 and the reclassification of Network Rail as a public sector arm’s length government body.
The licence conditions are broad in nature. This section provides brief details about the licence conditions and their purposes. For more information see the section on the network licence.
Network Rail's station licence authorises it to operate one or more stations.
Part A: Core Duties and structure
1: Core Duties
Network Rail must secure the operation, maintenance, renewal and enhancement etc of the network in order to satisfy the reasonable requirements* of persons providing services to railways, and Funders. This is in respect of the quality and capability of the network and the facilitation of railway service performance.
*Examples of reasonable requirements include the outputs established in a periodic review or firm commitments included in Network Rail’s delivery plans.
Network Rail must secure the provision of appropriate, accurate and timely information about the planned and actual movements of trains on its network (including when there is disruption) so that train and station operators can meet their own information provision obligations to passengers.
Network Rail must treat its stakeholders appropriately in line with their reasonable requirements, doing so in a diligent, efficient and timely way.
Regions and System Operator responsibilities
Having made its regions largely autonomous, Network Rail must ensure that those regions, and its System Operator function, also comply with the same core duties.
2: Structure of the licence holder
Network Rail’s network must be formed of at least two geographical areas, one of which must be designated to Scotland. Those areas must each take responsibility for their part of the network. Network Rail’s System Operator function must be maintained so that it leads on the co-ordinated planning for the network as a whole.
Network Rail must ensure that its regional operations take into account the needs of those train operators – the freight and long-distance passenger operators – whose journeys cross more than one regional area.
3: Sufficient Resources
Network Rail must ensure that it has available the resources it needs so that it can carry out its core duties, including the resourcing of its regional operations and System Operator function, and take into account the requirements of freight train and long-distance operators.
4: Managing change
As part of the 2018 periodic review, Network Rail’s regions and its System Operator received separate settlements that outlined what they are each expected to deliver for their customers over control period 6 (CP6), and the funding they require to do so. Together, the settlements formed part of our overall determination for Network Rail.
We recognise that in CP6 there may be changes that affect Network Rail’s accountabilities or funding. These changes could be driven by decisions within Network Rail itself or by external factors, including changes in government policy. Given the importance placed on the settlements for CP6, Network Rail has a
Managing Change Policy to ensure changes relative to these settlements are managed appropriately.
This Condition obliges Network Rail to comply with its Managing Change Policy.
Network Rail has core duties. These capture Network Rail’s responsibilities (including those of its regions and its System Operator function) relating to network management, passenger information and stakeholder engagement.
Part B: Network management
5: General network management responsibilities
Network Rail has a number of network management responsibilities. Key requirements are for it to:
- plan how it will comply with its Network Management Duty over the short, medium and long term;
- adopt asset management policies and criteria;
- maintain Relevant Asset information; and
- comply with the Capacity Allocation Process.
6: Region network management responsibilities
This Condition focuses on Network Rail’s devolved regional operations. Network Rail must ensure that each route/region:
- plans how it will comply with the Network Management Duty over the short, medium and long term;
- adopts asset management policies and criteria;
- maintains Relevant Asset information; and
- complies with the Capacity Allocation Process.
7: System Operator network management responsibilities
This Condition focuses on Network Rail’s System Operator function. It must:
- plan how it will comply with the Network Management Duty over the short, medium and long term;
- adopt asset management policies and criteria;
- maintain Relevant Asset information;
- comply with the Capacity Allocation Process;
- establish a timetabling process; and
- provide access to information on enquiry services.
Part C: Information requirements
8: Information for ORR
Network Rail must provide us with information we need to carry out our functions.
9: Regulatory accounts
Network Rail must provide us with information so that we can determine its access charges and monitor its financial performance and position against our determination assumptions. Network Rail must prepare these statements in accordance with our Regulatory Accounting Guidelines.
10: Periodic and annual returns
Network Rail must prepare and provide returns for each period not later than 21 days after the relevant period has ended.
Network Rail must prepare and provide us with an annual return by a specified return date each year and publish it within one calendar month of the return date.
Network Rail must comply with any request we make for it to engage a Reporter to conduct a review into, and report on, any such matter as ORR reasonably requires.
Part D: Industry obligations
12: Information on Stakeholder dealings
Network Rail must treat its stakeholders in ways appropriate to their reasonable requirements, and publish the principles and procedures by which it will comply with its Stakeholder Engagement Duty and facilitate efficient and effective dealings with its stakeholders.
13: Safety and standards
Network Rail must comply with such Railway Group Standards and Rail Industry Standards that are applicable to its licensed activities, unless stakeholders agree to other arrangements.
Network Rail is required to have an up to date written policy to protect the environment from licensed activities taking into account any guidance given by us.
15: Rail Delivery Group
Network Rail must remain a Member of the Rail Delivery Group and comply with its obligations.
Part E: Restrictions on activities
16: Financial ring-fence
Network Rail is restricted in the types of activities it can get involved in. It can carry out 'non-core' activities either with our consent or in accordance with a de minimis limit.
17: Land Disposal
Network Rail must gain our consent before disposing of any land (unless the disposal is pursuant to any enactment).
18: Interests in railway vehicles
Network Rail must gain our consent to own or run any railway vehicle in Great Britain, except where it is used for the operation of the network.
Network Rail must not give or receive any unfair cross-subsidy. Network Rail must ensure that there is no unfair cross-subsidy between its Network Business and any of its other business/activities and must maintain separate accounting records for these.
Network Rail must not discriminate unduly between persons or parties; in particular, not between freight operators, or passenger operators that cross more than one region.
21: Restricted use of Protected Information
Network Rail must not authorise access to or disclose any person's protected information without their consent, other than to specified people.
Part F: Corporate matters
22: Corporate Governance
Network Rail must follow best practice corporate governance arrangements so far as is reasonably practicable. It must comply with the relevant provisions and principles of the UK Corporate Governance Code, and its Board must include two non-executive directors with substantial railway experience.
23: Incentive Schemes
If Network Rail implements a financial incentives scheme, it must be aligned with the interests of passengers, freight customers, and passenger and freight operators in a manner that is consistent with its Network Management Duty. The scheme must be published.
Network Rail is required to pay us an annual fee to cover our costs.
Network Rail is required to have insurance against third party liabilities on terms approved by us.
26: Claims allocation and handling
Network Rail is required to be party to approved arrangements for handling claims against operators of railway assets and the allocation of liabilities among them.
27: Regulatory Undertakings
Network Rail must obtain undertakings from other companies in the Network Rail Group such that they do not act in a manner that would cause Network Rail to breach its network licence.