Will ORR actions on Network Rail change the company’s behaviour?
RFG welcomes the ORR Report published yesterday (28 Feb) on Network Rail’s New Year possession overruns.
These were serious for freight as well as for passenger services, and were not confined to the West Coast Main Line. The overruns were compounded by the lack for proper advance warning when it must have been clear much earlier that the routes would not reopen on time.
RFG supports the ORR Statement that ‘ it is quite clear from our thorough investigation that Network Rail is failing to manage major engineering work as consistently well as it should. This is due particularly to weaknesses in the company’s planning, risk assessment and site management of projects as well as to failures of communication within the company and with train operators. We have published a draft Order directing them to address these failings and thus reduce the risk of similar events in the future.’
However, we have doubts about whether the actions demanded by the ORR will in themselves be sufficient to change Network Rail’s behaviour. What freight needs is a reduction in the number and length of time taken by possessions unless alternative routes to the same capability are planned and provided in advance. As we said in our submission on this subject (www.rfg.org.uk/policy) to the ORR, this is critical to the delivery of the Strategic Freight Network.
We welcome Network Rail Chief Executive’s statement that the company is committed to providing a 24/7 railway, but the suggested completion date of 2030 is of no use to the present rail freight industry. On some routes it could be provided very soon and, where single line working is signalled but not used, this could be now!
In order to avoid further problems on the WCML possessions, we understand that Network Rail may be seeking more and longer possessions for the remainder of the year than was already proposed. This will have serious implications for freight since there are no diversionary routes for some types of traffic.
Rail freight users have committed significant resources to developing freight services and have legitimate rights to expect reasonable access to the rail network. This includes the WCML, one of the heaviest routes for freight in volume terms, and we suggest that the only practicable solution to achieve this is to extend the completion date of the project into 2009.
Finally, the ORR’s fine of £12m on Network Rail may seem exemplary but may be compared with a fine imposed by OFGEM on National Grid of £42m for anti-competitive actions on meter installations, and of £15m on TRANSCO for a system failure at a gas site in Scotland . Regulators use fines as a means of changing the behaviour of companies that they regulate; in competition issues, they can fine companies up to 10% of their turnover. For Network Rail, this is the second fine, the first being over £2 m for delays in completing the Portsmouth resignalling project.
RFG Chairman Tony Berkeley commented ‘Clearly the ORR considers that Network Rail had not changed its behaviour after the Portsmouth incident. So we believe that even fines of this level are insufficient to achieve the necessary change of behaviour. Network Rail, in seeking to deliver a world class railway, must change its behaviour to focus much more strongly on the needs of its customers to whom it should ultimately be accountable.
‘As we have already proposed, this accountability can best be achieved by changing the company’s corporate governance by the creation of a separate supervisory board or council independently elected or appointed from its stakeholders. It would appoint the chairman and approve other board appointments, set senior executive emoluments, approve the company’s strategic plan and ensure compliance with its aims and objectives. Any such supervisory board would surely have strong views on whether it was in the company’s interests to be fined twice for such serious failures of management whilst at the same time leaving its customers in disarray.’
Further information RFG chairman Tony Berkeley 07710 431 542
RFG Director General Alan Bennett 07904 342400
