This has, by any standards, been a very eventful period for the ORR, and one in which the landscape in which we operate has changed dramatically. Not least, the impact of the 2014 reclassification of Network Rail as a government-owned company has had a major effect on Network Rail’s governance and the way the company is funded, with significant impacts on the way the business is run. Notwithstanding these major changes in the landscape, some 60% of our business plan commitments have been completed on schedule.
Not surprisingly, ORR has also undertaken a large amount of additional work outside the scope of the original business plan for 2015-16. That work is, largely, in response to the three significant reviews in which ORR has played a major part; those being carried out by Sir Peter Hendy, Nicola Shaw and Dame Collette Bowe.
These reviews look afresh at the funding, operation and regulation of Network Rail in the light of reclassification – covering both the question of how Network Rail is governed and held to account given its current status in the public sector, and potential changes which might result in a more sustainable, efficient and responsive railway in the future, more focused on the needs of both current and future rail users, and the interests of those who fund the railway – farepayers, taxpayers and freight customers. These are all questions which needed to be addressed and ORR welcomes the reviews.
ORR has also undertaken additional work looking at ‘Schedule 8’ (the regime that allows train operators to receive compensation for the financial impact of unplanned rail service disruption attributable to Network Rail or other train operators) and scoping our evolving role in the regulation of Northern Ireland’s railway.
ORR has contributed substantial resource and expertise to make sure we make a full contribution to these reviews, and I acknowledge the contribution of our staff in this report.
By the end of Q2 (September) and despite these additional significant pressures, we have achieved eight of our thirteen public business plan commitments. Inevitably, some milestones have been pushed backwards to ensure we have been able to prioritise progress on the Reviews.
Delivery of key milestones
At the time of writing, work to review and revise elements of our guidance on strategic risk priorities and to raise awareness of railway safety regulations is expected to deliver in in Q4.
We’re also looking at our planned activity to publish key statistics on strategic risk priorities, to identify whether this is necessary or whether it is better to refer directly to the core statistics, without adding another layer of publication.
I’m also able to report progress with two other milestones since the end of Q2. We published our revised policy on regulatory interventions and enforcement – coherently drawing together our approaches on rail and road, and across safety and economic regulation. We have also published the annual assessment of Network Rail’s financial performance and held a freight customer event. We have deprioritised a planned report on Network Rail’s civils adjustment mechanism, given that the funding of the renewals of civil structures is now a part of wider discussions about Network Rail’s funding.
Turning to service standards, we have met some 60% of our targets. We have fallen narrowly behind our target for dealing with Freedom of Information and general enquiries, where the team have received an unusually high level of complex requests.
On dealing with Network Rail’s submissions for the Enhancement Cost Adjustment Mechanism (ECAM), broader issues and debate on the enhancements processes as a result of the industry changes referred to earlier have had an obvious and unavoidable impact on the speed that submissions can be processed.
I commend our staff here for very ably working around the significant disruption to operations at our London headquarters caused by the Kingsway fire – a major incident in central London in which electricity and gas mains caught fire in ducting immediately outside our building. This meant that we were without our main office accommodation office for nearly two weeks. This was a real test of ORR’s domestic resilience and contingency arrangements, and I am pleased to say that the organisation was able to continue to operate to a good level using remote working, effective IT and back-up locations. Nevertheless, and despite best efforts, the fire delayed the processing of a number of train driver licence applications, which consequently took longer than we would normally expect. We were able to catch up and clear the temporary backlog relatively quickly.
Rising to the challenge
Across the board, though, the organisation has risen to the extraordinary challenges of the latter half of 2015. I am proud that, throughout the business, staff are both working hard to meet these challenges, and delivering to a high standard.
Our internal business milestones remain in a very strong position, underpinning my view that ORR’s staff are continuing to deliver a consistently high quality, dedicated and professional service.
I can cite many examples of this. After assuming our responsibility for monitoring Highways England in April, our roads team have quickly established themselves and are building excellent relationships with the industry and developing insights into the network’s performance. They have delivered a clear Monitoring Framework and enforcement policy and most recently have published their first report on Highways England’s performance; a major achievement in just six months.
We’ve also published a major piece of guidance on how train operators handle complaints. This project was resumed from last year and is an important step in helping passengers understand how to make sure their concerns are registered. Our work to support consumers will continue in 2016 with a comprehensive report on how the industry meets customer expectations including compliance with consumer law, drawing out good practice and assessing performance across the industry, to help the industry to achieve continuous improvement in delivery for rail users. We welcome the constructive approach train operators and consumer groups have taken in working with us on this.
In the safety arena, we continue to meet our commitment to spend more than half our inspectors’ time on proactively identifying and dealing with issues. So far, inspectors have spent more than 41,000 hours working with the industry in this way. Safety is, and will remain, our top priority.
Looking forwards, there remains much to do. Our highways monitor function will continue to develop its analysis, working with Highways England on the robustness of data and on the shape of its investment plans. We will continue to contribute fully to the ongoing reviews of the rail sector. Our view is that it is the right time to look at the structure of the sector, and that it is crucial that the independent regulator’s view is registered.
As well as the reviews of the rail industry itself, there are now several other reviews across government of regulators, ‘arm’s-length bodies’ and other aspects of efficiency, delivery and governance, many of which include the ORR as well as other organisations. Whilst it is increasingly a challenge to keep track of all the reviews that are ongoing, we intend to play a full part in ensuring they reach findings which help to secure the best outcomes for consumers and rail and road users, and improve performance and efficiency. We will deploy ORR’s substantial expertise and insight to support that.
Next quarter sees the start of planning for the next five year review of Network Rail’s spending and delivery – the periodic review concluding in 2018 (PR18). Technical enabling work is already underway, and the New Year will see us begin work to develop the evidence base and engage fully with all interested parties.
We will want to ensure that PR18 draws much more than previous reviews on evidence to show both what rail users want (recognising that they pay around two-thirds of the cost of the railway) and the priorities of communities across Britain in terms of the contribution of the railway to economic growth and social connectivity. The contribution of people across the industry, national and local government, rail users and their representatives is crucial to informing and developing the framework of economic regulation and of Network Rail’s delivery for the future.
Finally, let me wish everyone well for the festive period. I hope you have a Happy Christmas and New Year.