Press releases

ORR and Network Rail working for greater competition and lower costs on rail signalling

21 April 2022
Following an Office of Rail and Road (ORR) study on the state of the railway signalling market, the rail regulator has today published Network Rail’s response to increase competitiveness and lower costs in the market.
Cover Image
Red signal on track

In November 2021, ORR set out its recommendations aimed at attracting more suppliers to the signalling market in order to boost competition and achieve better value for money when procuring signalling equipment.

With the market in Britain valued at £800-900 million per year, Network Rail and ORR are working together to drive further improvements.

To address the underlying challenges highlighted in ORR’s report, Network Rail has been working for several months on the development of a revised commercial approach for how it procures and delivers signalling in Control Period 7 (2024-2029). 

Its forthcoming supplier contracts to deliver the roll-out of the European Train Control System (ETCS) infrastructure will be materially different from the approach used over recent control periods, which will improve the attractiveness of Britain’s signalling works to suppliers by lowering barriers and investment required to enter the market.

Network Rail has also agreed with ORR to develop and provide additional reporting information to improve transparency and inform decision making about signalling renewal market performance. 

Network Rail’s response to ORR’s recommendations also includes specific commitments to lower the costs and entry barriers which have historically been incurred as a result of the need for suppliers to interface with each other.

Network Rail will also strengthen the way that it balances potentially competing national and regional needs and strengthen the linkage between supplier tendering success and volumes of work delivered by suppliers.  

ORR Chief Executive John Larkinson, said:

“We are pleased that Network Rail’s assessment of the challenges in the signalling systems market are aligned with ours and it is progressing with plans to remedy them. These initiatives can play a key role in reducing the cost of signalling, meaning Network Rail’s funds can go further.

“The transformation to a digital railway presents an opportunity to reinvigorate the signalling market with improved value for money. This can play an important role in helping Network Rail meet the fiscal challenges of the post-pandemic world. 

“We will continue to work closely with Network Rail to ensure the benefits of its proposals are realised as fully as possible in both conventional and digital markets.”

A letter setting out Network Rail’s response to ORR’s remedies in further detail has been published on ORR’s website.

Notes to Editors

  1. The Office of Rail and Road is the economic and safety regulator of Britain’s railways. It also acts as the competition authority with powers held concurrently with the Competition and Markets Authority to apply competition enforcement and markets powers in matters relating to the supply of services relating to railways.
  2. ORR’s signalling market study final report.
  3. The five remedies are:
    • Closer monitoring and reporting of costs, prices, volumes and other information on the health of the market;
    • Reducing reliance on incumbent suppliers and encouraging new suppliers to enter the market;
    • Promoting common standards and ensuring suppliers have access to technology
    • Incentivising Network Rail’s regional management to make pro-competition decisions; and
    • Giving suppliers greater confidence that contracts are funded and volumes will be delivered.
  4. Network Rail has set out plans to ORR to finalise its revised commercial strategy for signalling procurement in Q1 and Q2 of 2022 and then commence the formal procurement process, with a target of placing contracts for these new arrangements in 2023.  Before commencement of the formal procurement process an updated and more detailed timeline will be shared with ORR.