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SoFA, HLOS, CP5. ORR - what they mean for rail passengers

Former campaigner's picture

12 June 2013: The process of confirming the next round of investment for the railways is complex and drawn out but today sees another step forward.

The Office of Rail Regulation (ORR) today published its Draft Determination on Network Rail's strategic plan. The draft determination is the latest stage in the process of deciding how much gets invested in rail from 2014. Rail investment is allocated for periods of five years, each known as a control period. Next year sees the end of control period 4 (CP4) and the start of the 2014-19 control period 5 (CP5). 

To decide how much gets invested and what it gets spent on, the rail industry (Network Rail, train companies and freight companies) produce a bid to the UK and Scottish governments. The DfT and Scottish Government then responded last July with their high level output specification (HLOS) setting out what they want and a statement of funds available (SoFA) saying how much money there is to pay for this. Network Rail then produce a strategic plan on how they will deliver this.

Today's draft determination from ORR is the next stage, which sets out what ORR intends Network Rail to actually deliver based on their assessment of the Network Rail business plan. They'll now consult on that and then in October there'll be a final determination from ORR telling Network Rail what they're allowed to do.

Still with me?

This is a complex process but I've spent this morning reading through the 815 pages of the draft determination (well, a lot of the pages) to see what it means for passengers.

First of all, today's draft determination doesn't cover rail fares, which is the one issue all passengers care about. Documents from regulators are always couched in very careful language and the ORR doesn't have a say over fares (it's the DfT that decide most regulated fares) but the ORR clearly thinks that the £2bn extra savings they've identified give space for movement on fares. They say:

24.13 In terms of what this means for passenger fares, we do not regulate these. Network Rail's revenue requirement is funded through access charges paid by train operators and network grant paid direct by the governments. It is for DfT and Transport Scotland, as the franchising authorities, to decide the balance between fares and taxpayer subsidy and to regulate fares for franchised train operators (open access passenger operators set their own fare structure).

24.14 However, Network Rail‟s revenue requirement is reducing compared to PR08 [the last time that ORR conducted this kind of assessment] which means that access charges and network grant will be lower. In terms of the like-for-like costs of operating, maintaining and renewing the existing network (including support costs), there will be a reduction of around £2bn compared to PR08. The Government have promised to act to end above inflation fare rises when costs were coming down. ORR are clearly saying that time is now.

Other key things in the draft determination include:

 

  • Stronger passenger representation when it comes to decisions about which schemes get prioritised (though ORR suggest some of this passenger input will be through train operating companies – not necessarily everyone’s first thought as passenger champions)
  • Developing an indicator to measure what’s happening to reduce journey times, so that journey times are not sacrificed to avoid missing other targets, for instance slowing timetabled journey times to ensure that trains arrive at the final destination on time, and introducing a specific fund for journey time improvements
  • Continuing to push Network Rail and train companies on delays with a base target for all train companies to ensure 90% of trains aren’t technically late
  • Reducing significant disruption to passengers by 2019 (though the heavy programme of enhancements and renewals mean that could be more disruption at beginning of the five year period)
  • More transparency about what the rail industry is costing farepayers and taxpayers on individual routes
  • Confirmation of investment plans, eg electrifying much of the network, the Northern Hub project, Thameslink and Crossrail in London, and the reinstated East West and Borders lines
  • Looking at making it easier for open access operators to enter the market by reducing the requirement that they have to prove that they wouldn’t take many passengers away from existing services in return for higher track access charges
  • Incentives to increase volume, ie to provide the extra capacity needed to meet rising demand
  • Changing the compensation package for train operating companies when engineering works take place so that they look for other ways to deal with disruption rather than simply arrange replacement bus services which currently have generous compensation terms

All this does represent good news for passengers - but only if the Government acts to end above inflation fare rises.

 

Today's draft determination gives us more evidence that the Government doesn't need above inflation fare rises to finance the railway. We just need to show the depth of feeling on this issue so do please sign our petition to make fares fair.

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