Press Release - Ensuring that Railtrack maintain and renew the
railway network
12 April 2000
Sir John Bourn, head of the National Audit Office, told
Parliament today that the Office of the Rail Regulator (ORR) have
made improvements to their regulation of the stewardship by
Railtrack plc of the national railway network, but that much still
needs to be done to provide a fully effective regulatory regime for
the future. The ORR recognise the need for change. They are seeking
to address it through a review currently underway to set the level
of Railtrack’s charges to train operators for the period 2001-06
and by plans to amend Railtrack’s network licence.
The National Audit Office examined the work of the ORR in
regulating Railtrack’s maintenance and renewal of the network.
Railtrack are spending more on maintenance and renewal, currently
£1.7 billion a year, than forecast either when the prices they
are currently allowed to charge train operators were set in 1995,
or at the time of Railtrack’s privatisation in 1996. The report
covers the period since the ORR were set up in 1994, and
particularly since the privatisation of Railtrack. The present Rail
Regulator, Mr Tom Winsor, took up post in July 1999.
The National Audit Office found, however, that the ORR have had
difficulty in establishing how far Railtrack have discharged their
obligation to maintain and renew the railway network properly. The
ORR did not agree with Railtrack from the outset what work
Railtrack would do in the period 1995-2001, or what would be
achieved as a result of it, in terms, for example, of improved
performance or asset condition. As a result, the ORR have been
unable to measure what Railtrack have actually done against any
agreed baseline. ORR have announced that they intend to set out
with greater precision what improvements Railtrack will be expected
to deliver over the period 2001-06.
The information available to the ORR on the condition of
Railtrack's assets remains incomplete. The ORR have found it
difficult to establish whether Railtrack have carried out
sufficient maintenance and renewal, and the concept of renewal that
the ORR expected Railtrack to apply has lacked definition and been
difficult to apply, making it unclear at times what standard of
renewal train operators have paid for. The ORR are seeking to
obtain improved information.
The National Audit Office also found that:
- railtrack are responsible for nearly half of all delays to
passenger trains - an average of around 70 seconds per train – and
most of these delays are the result of maintenance and renewal
problems. Since 1995-96 passenger train delays caused by
Railtrack’s maintenance and renewal of the network have fallen by
26 per cent, despite a 27 per cent growth in passenger
traffic. Because of the reduction in delays, Railtrack have
received bonuses every year under their contracts with train
operators, approved in 1995 by the ORR. In 1998-99 the bonuses
totalled £25 million; and
- following amendment of Railtrack’s licence by the ORR in 1997,
Railtrack have set annual targets for reducing delays. Railtrack
did not achieve the first such target, which was for a 7.5 per
cent reduction in 1998-99 in passenger train delays from caused by
them. The ORR told Railtrack that they must reduce delays in
1999-2000 by at least 12.7 per cent, and that if they miss
this target the ORR will impose a financial penalty on them of
£4 million per percentage point. Railtrack are appealing
against the size of the proposed penalty.
The ORR recognise the need for change and are seeking to address
it. The National Audit Office recommend that the
ORR should:
- set out more clearly what they expect Railtrack to deliver from
maintenance and renewal;
- set and keep to a timetable for removing deficiencies in their
information on the condition of Railtrack's assets;
- ensure that the key elements of the monitoring information that
the ORR receive from Railtrack are independently verified; and
- continue to develop appropriate targets and clearly predictable
incentives for Railtrack to improve their performance on
punctuality, cancellations and track condition.
Sir John Bourn said today:
"The Rail Regulator needs to overcome the difficulties
experienced up to now in monitoring Railtrack’s performance and
setting effective incentives. I therefore welcome the action he is
taking to secure that Railtrack maintain, renew and improve the
national railway network on which the public and industry
depend."
Notes for Editors
The ORR are headed by the Rail Regulator, Mr Tom Winsor, who
took up office on 5 July 1999. He is responsible for
regulating Railtrack, including amending and enforcing their
licence. Prime responsibility for regulating railway safety rests
with the Health and Safety Commission and the Health and Safety
Executive. The ORR have a statutory duty to take into account both
the need for safety and the Executive's advice.
The railway network owned by Railtrack consists of some 20,000
miles of track and 2,500 stations, plus depots, signals,
electrification equipment, bridges and tunnels. The network was
transferred to Railtrack from British Rail in 1994. Railtrack were
privatised in May 1996 through a stock market flotation.
Railtrack receive the bulk of their income from access charges
(£2.3 billion in 1998-99). These charges are paid by train
operators from fares, freight charges and public subsidies, and
were set in 1995 by the ORR for the period to March 2001. The ORR
plan to make a final decision in July 2000 on the level of access
charges for the period from April 2001 to March 2006.
The National Audit Office are on the Internet. Press notices and
reports are available from the date of publication. These can be
accessed through the NAO home page at www.nao.org.uk
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office employing some 750 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 26/00
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