Is it therefore now more like Highways England, where the proper level of regulatory involvement is limited to monitoring, advice and review? If so, is ORR’s current core role of ‘holding Network Rail to account’ (which it largely does through the Network Licence) still appropriate?
Clearly Network Rail is only part of the industry, and it is still more independent of government than Highways England. It is also subject to European law, which requires an independent regulator to control appeals from access, manage charging, allocation and competition issues.
The ‘minimum’ role of a rail regulator (within the European framework) is consequently more than ORR’s highways role, but less than its current UK Railways Act activities. Is it right to confine the regulator to that minimum role? And if not, which additional activities is it right for ORR to discharge?
The scope and powers of regulators across Europe (and elsewhere) already varies quite significantly. In France and Germany (and most of Eastern Europe), where the majority of services are not franchised to the private sector, the regulator does little more than the minimum European law requirements - potentially collecting data and advising government.
In Italy, the regulator exercises powers across different transport modes, but does not have (for example) the investment approval powers of ORR. In Sweden, the transport regulator oversees safety, licensing, approvals and the allocation and charging role. Further afield, in Japan (a vertically integrated structure), the regulator manages competition between different operators on performance.
Essentially, there is no one model for rail regulation, although ORR currently has perhaps one of the widest roles. That might be said to be a reflection of the fact that the UK’s market is one of the most liberal and its train operations almost entirely privately run.
Does that mean there is scope for reducing ORR’s role and powers, and perhaps - at least in respect of Network Rail - taking more of the economic role back into government? This may depend upon the future direction of industry development.
Nicola Shaw’s recommendations would mean a more regionalised Network Rail, with development work being proposed and approved in combination with local bodies and subject to Route-based regulatory settlements. While Shaw noted a public sense that the regulator was not sufficiently accountable, her recommendations appear to be based on (if anything) a more intensive economic role for the regulator, including close involvement in ensuring consistency within Network Rail’s projects.
At the same time, the CMA proposals for greater open access and overlapping franchises strongly suggests an ever greater need for economic regulation, and a credible body able to take and impose independent decisions on the ‘right’ option at the interface between operators.
Neither of these proposals would suggest ORR undertaking a lesser role in future. Furthermore, add the need for charging and allocation review in the Channel Tunnel, and future economic oversight of High Speed Rail (including the integration of operations with the classic network).
