Rail regulator ‘must drive cost reductions’

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The Rail Freight Group say they supporte the findings of the Parliamentary Account Committee’s (PAC) report, which has concluded that the Office of Rail Regulation (ORR) must take a much firmer role in driving efficiencies at Network Rail.

In a report ‘critical’ of ORR and Government, the Committee concluded:

‘Overall we do not believe that the Regulator exerted sufficient pressure on Network Rail to improve its efficiency, and that there is an absence of effective sanctions for underperformance in the system’.

Commenting on Network Rail’s structure, the Committee went on to note, ‘We welcome the Department’s commitments to improve the governance and transparency of Network Rail, and to clarify roles in the rail industry more widely.

‘We nevertheless would have expected the Department to have a clearer idea of the priorities and issues to be addressed at this stage.’

Tony Berkeley, Rail Freight Group Chairman said:

“We fully support the Regulator holding Network Rail to account on cost reduction. The new Chief Executive of the Office of Rail Regulation, Richard Price, must stamp his authority on the process of achieving a Periodic Review settlement of Network Rail’s access charges for the next five years which puts real pressure on the company to reduce costs, increase efficiencies and performance.

“He must also grasp the nettle of an incentive scheme that rewards success rather than failure.

“This must be the priority for the ORR work in the next 3 years, ahead of more arcane changes to the structure of charges.

“We have long campaigned for Network Rail’s governance to be reformed, and the conclusions of this report must add weight to the case for change. There should now be urgent action to improve accountability.

“The DfT must also now move with urgency to demonstrate how it will contribute to cost savings, particularly in the structure of franchises.

“Controlling as it does 90% of the trains on the network (all except freight and open access passenger operators) it is time that the DfT demonstrates how it is going to play its part in the necessary cost reductions by reducing its micromanagement of both passenger services and rolling stock.”

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