In November 2018, we published a consultation on a new regulatory policy for holding Network Rail to account for delivery of the commitments in our determination, and the obligations in its network licence. This new policy replaces the existing economic enforcement policy for Network Rail and comes into effect for the start of Control Period 6.
We received 22 responses from a range of stakeholders. We are grateful to all those who responded. The responses available below.
Following careful review of stakeholder responses, we have made some amendments to the policy, including:
- in response to comments around the need for early action and proactive monitoring by the ORR, we have explained in more detail our commitment to using leading indicators throughout CP6;
- we have provided guidance on the definition of stakeholders, although we stress that this is not exhaustive and we would expect Network Rail to respond appropriately to all stakeholders (including those not explicitly listed) and recognise that their needs are likely evolve over the course of CP6; and
- we have provided greater clarity around our use of financial penalties and sanctions.
The changes are discussed in detail in the decision letter below.
ORR’s Holding Network Rail to Account policy - Impact assessment on the use of ORR Hearings
5 April 2019
ORR’s Holding Network Rail to Account policy - impact assessment on approach for levying financial penalties and financial sanctions
5 April 2019
27 March 2019
November 2018 consultation
Date published: 27 November 2018
Closing date: 25 January 2019
Following the final determination of our 2018 periodic review (PR18), we are consulting on a new regulatory policy for holding Network Rail to account for delivery of the commitments in our determination, and the obligations in its network licence.
The new policy will replace the existing economic enforcement policy for Network Rail, coming into effect for the start of Control Period 6. It reflects significant changes to Network Rail’s business model in recent years, and ORR’s new approach as set out in the 2018 periodic review.
The consultation letter explains the context for the policy and our proposed approach, including new elements (summarised in the diagram below).
Holding Network Rail to account: what is new
- Consultation letter
27 November 2018
- Holding Network Rail to account policy consultation
27 November 2018
- Research paper: A behavioural economic perspective on performance incentives
As part of the background research for this policy consultation, we commissioned expert consultancy from Nick Chater, Professor of Behavioural Science, into the application of principles from behavioural economics to Network Rail’s context.
- Press release - 27 November 2018
- Consultation on ORR’s approach to assessing the quality of Network Rail’s stakeholder engagement in CP6
Summary of stakeholder discussions on these consultations
As part of our consultation process into how we regulate Network Rail in CP6 (our approach to assessing the quality of Network Rail’s stakeholder engagement in CP6 and the consultation on our policy on holding Network Rail to account), ORR held events in Manchester, Glasgow and London to explain our proposed changes and hear feedback.
ORR discussed the proposed changes in the way that Network Rail will be held to account, and how we will ensure that they liaise with stakeholders and then took questions from the attendees.
Common themes which emerged were:
- The need to rebuild trust in the railway
- ORR’s role in managing risk
- How ORR can coordinate, e.g. Network Rail’s timetable with the rest of industry
- How ORR will manage performance in CP6
- Whether customer information could be added onto the new scorecards
- How supervisory boards, or successors to them, could be of most use in ensuring performance
- How ORR will monitor enhancement projects
- The need for clear definition of stakeholder engagement
- How ORR will monitor enhancement projects as they don’t sit within specific route responsibility
- How ORR will reward good performance
- How the System Operator’s performance and engagement will be measured
- How the hearings can operate without leading to adversarial relationships between Network Rail and those taking part in them
- The need for clarity over when ORR will step in and take action
- Monitoring of delivery of enhancements in Scotland in CP6 and how often will the HLOS tracker be published.
- Concerns that targeting financial bonuses could impact Network Rail’s ability to recruit the right people into the business.
- The need for greater emphasis on routine monitoring and early resolution of issues, acting earlier to stop the need for further escalation.
- The need to continue independent views/reporters on NR assessment
- How the stakeholder assessment will take account of how units outside of the System Operator or routes are engaging, e.g. Network Rail’s technical authority.
The events were a useful addition to our consultation process and we are grateful to all those who attended.