ORR sets out its views on Network Rail’s plans for Scotland

The Office of Rail and Road (ORR) has today published its assessment of Network Rail’s plans to spend £4bn in Scotland over the next five years (known as Control Period 6 or CP6).

In its assessment of the five year plans (known as the Draft Determination), ORR found Network Rail has set out more clearly than before what each part of its business will deliver for Scotland and has improved its justification of how and where it will invest in Scotland.

The plans reflect the requirements which the Scottish Government set for Network Rail in the High Level Output Specification (HLOS). These include passenger and freight train performance, rail freight market growth and reduction of carbon emissions. The regulator has set out what Network Rail will be expected to deliver for each HLOS requirement. In some areas ORR has said more work will be needed to finalise the requirement and any possible costs.

ORR’s assessment of what Network Rail plans to spend to operate maintain and renew the railway in Scotland, shows it could further improve its efficiency by around £70m and should also reduce its planned spend on research and development because this is not fully justified. Together with other changes, this would release around £150m, which Transport Scotland could spend in other areas. It has also set out that the punctuality target for the first year of CP6 should be increased from 91.5% to 92.5%, in line with Scottish Ministers’ HLOS.

ORR has set out the need for Network Rail to strengthen the monitoring and financial controls of its national System Operator function, which manages the timetabling process for the industry, to support the substantial increase in spend which is designed to deliver a step change improvement in CP6.

The regulator is setting up a stronger framework to hold Network Rail to account in Scotland. As part of this, ORR will:

  • Publish a scorecard tracking how the Scotland HLOS is being delivered
  • Improve the monitoring of whether efficiency improvements are likely to be delivered
  • Restructure Network Rail’s licence to make each part of the business more clearly accountable for what it does
  • Make more public comparison between how the Scotland route is delivering compared against other routes
  • Change the approach to enforcement, including the potential use of public hearings

In addition, ORR has today set out that:

  • Variable access charge increases for freight and charter operators are to be capped.
  • Freight services carrying biomass for the electricity supply industry will be subject to charges which recover some of Network Rail’s fixed costs in CP6.
  • New open access operators will pay charges that recover some of fixed network costs, where the demand is sufficiently strong that the operator is able to pay, and the terms on which they can access the network will change accordingly.

Joanna Whittington, Chief Executive, ORR, said:

“We are pleased that each part of Network Rail has more clearly set out and justified what it will deliver in Scotland. This demonstrates the benefit of increasing devolution across the whole of Network Rail.

“But more work is needed to confirm exactly how Network Rail will meet each of the Scottish Ministers’ published requirements, and there is scope to make further cost savings.

“We will also be strengthening our monitoring of Network Rail, with a published tracker showing its delivery against each requirement, and more comparisons of how Network Rail in Scotland compares to routes in England and Wales.”

Network Rail’s plans for Scotland form part of an overall strategy to spend over £34bn throughout Britain in the next five years to 2024 (£30bn in England and Wales and £4bn in Scotland).