New ORR consultation on the ‘Holding Network Rail to Account’ policy for Control Period 7

Introduction

The Office of Rail and Road (“ORR”) has recently published a consultation on updating the ‘Holding Network Rail to Account’ policy (the “Policy”) for Control Period 7 (“CP7”). The Policy sets out how the ORR will hold Network Rail to account against the network licence and the ORR’s final determination of its 2023 Periodic Review (“PR23”). The Policy outlines how the ORR will monitor performance, investigate issues and enforce obligations where necessary.

Having confirmed in December 2022 that it would refresh and update the Policy, the ORR is now seeking stakeholders’ views on its proposed changes by 9 June 2023.

Updates to the Policy

The updated Policy focusses on the monitoring of Network Rail, with a view to securing the best outcomes for passengers, freight end-users and taxpayers.

In particular, the ORR is seeking stakeholders’ views on the following three updates to the Policy:

Outcomes framework

The ORR has introduced a new tiered outcomes framework which sets out the key success measures and requirements that Network Rail is required to deliver for the funding it receives in CP7. This has been introduced to assist with public reporting on Network Rail’s performance and will allow the ORR to report comparisons between regions and business functions. The outcomes framework is split into the following tiers:

1. Tier 1: Success measures – headline indicators used to publicly hold Network Rail to account
2. Tier 2: Supporting measures – basket of supporting measures to provide a more holistic view of performance
3. Tier 3: Additional assurance – other information the ORR will use to hold Network Rail to account

Through the introduction of the new outcomes framework, the ORR has indicated that there will be a reduced focus and reliance on the scorecard measures and targets which have been used in Control Period 6.

Non-exhaustive indicative criteria (the “Criteria”)

The Criteria have been subject to minor amendment following their initial presentation as part of the ORR’s July 2022 policy framework consultation, and will be used by the ORR when assessing Network Rail’s performance against the outcomes framework and when deciding whether to increase monitoring and/or investigate performance-related issues.

The Criteria are designed to be transparent and provide a non-exhaustive list of the factors that the ORR may initially take into consideration before taking regulatory action against Network Rail. The ORR recognises that Network Rail’s performance may fluctuate around baseline trajectories and intends to only take action where a decline in performance is significant or persistent.

The ORR has provided the following list of the types of factors which it may take into consideration under the Criteria:

1. Sustained decline in performance over time
2. An outlier in performance (e.g. performance in one region is particularly poor relative to others)
3. Exceptionally poor performance (even if only for a short period of time)
4. Performance consistently below expectations

General structure and wording

The ORR has updated the Policy throughout to amend terminology and streamline the language with the aim of improving clarity.

PR23 progress and upcoming milestones

The ORR is currently assessing Network Rail’s Strategic Business Plans for CP7 which it received in February 2023. This assessment will establish Network Rail’s PR23 commitments, charges, incentives and the financial framework for CP7.

In anticipation of this, the ORR has provided the following upcoming milestones in its consultation paper:

• June 2023 – the ORR will publish its draft determination for PR23 following its assessment of Network Rail’s Strategic Business Plans
• 9 June 2023 – deadline for stakeholder feedback and responses on the Policy
• 31 October 2023 – the ORR will publish its final determination for PR23 which will determine Network Rail’s deliverables in order to secure funding for CP7
• After October 2023 – a revised Policy will be published after feedback has been received and publication of the final determination

Conclusion

The ORR considers that much of its approach to the Policy will be appropriate for Great British Railways (GBR) once it is established, but has still committed to review and update the Policy if necessary to reflect the new system and any legislative or regulatory changes.

It will be interesting to see how the Policy develops and we will continue to monitor the development of this area through to the commencement of CP7 in April 2024.