2001-10-10 Statement by Stephen Byers on Railtrack shareholder compensation (Department of Transport, Local Government and the Regions)

2001-10-09 Suspension of shares: Government appointment of administrator to Railtrack plc (Railtrack plc)

2001-10-08 Notice of temporary suspension of the official listing on a Stock Exchange (London Stock Exchange)

2001-10-07 Suspension of shares: Government appointment of administrator to Railtrack plc (Railtrack Group PLC)

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date 10 February 2000
source Office of the Rail Regulator
type Press release

note ORR/00/04

The Rail Regulator, Tom Winsor, has given a cautious reception to the publication of codes of practice by the three railway rolling stock leasing companies (ROSCOs), HSBC Rail Ltd, Angel Train Contracts Ltd, and Porterbrook Leasing Co Ltd. In January 1998 the Deputy Prime Minister asked the then Regulator (John Swift QC) to review the operation of the rolling stock market, following concerns that unregulated ROSCOs could abuse their market position.

In February 1998 the Regulator issued a consultation document ‘Review of the Rolling Stock Market’, and in May 1998 published his Review of the Rolling Stock Leasing Market. In that review the Regulator concluded that there were occasions when the ROSCOs would have potential market power, especially at the time of re-franchising and during 2003-2004 when the majority of existing rolling stock comes off lease. The Regulator recommended that potential abuse of such market power could best be dealt with by a code of practice, using his expected new Competition Act powers as a means of enforcement.

Commenting on the new codes of practice, Tom Winsor said:

"These codes of practice represent a clear commitment by the rolling stock leasing companies to play their part in the development of a safe, efficient, and reliable network, and I expect their commercial behaviour to reflect the spirit as well as the letter of these codes. That much is essential."

The core elements of the codes of practice cover availability of rolling stock, non-discrimination between existing and potential customers, flexible leases, sub-leasing, handbacks and early termination of leases, transfers of rolling stock, mixed stock train sets, maintenance, modifications, pricing, spare parts, re-franchising, and insurance.



Notes for editors:

The core elements of each code of practice are as follows:

1. Fairness and non-discrimination: The code of practice states that the ROSCO will not discriminate between existing and potential customers. This is especially important in the case where a customer may be owned in whole or in part or be controlled by the ROSCO, or by a company that owns or controls the ROSCO. The code of practice specifically states that the ROSCO will not give any preference to such customers.

2. Flexible periods: The length of proposed leases is a factor that influences the lease charge – the shorter the lease period or the more uncertainty there is about the lease, the higher the charge. The code identifies criteria relevant when considering the impact of specific lease periods on the lease charge.

3. Sub-leasing: The code states that requests to sub-lease rolling stock by customers will be considered favourably subject to certain safeguards.

4. Handbacks and early termination: The code of practice states that the ROSCO will use its best endeavours to find alternative uses for rolling stock that has been handed back early under agreed lease terms. Where a lessee does not have the benefit of such terms (and would therefore normally be responsible for the rolling stock for the duration of the lease, irrespective of use), the code includes a commitment from the ROSCO to consider any proposals for alternative arrangements for the use of the rolling stock. This commitment is expected to include exploring some release of the lessee’s obligations.

5, Facilitating cascades between customers: The code of practice states that the ROSCO will consider all reasonable requests for cascades (the transfer of rolling stock to enable train operating companies to take advantage of newer stock as it becomes available for leasing) and will bring any opportunities for cascades to the attention of both present and potential customers.

6, Mixing of stock within train sets: The code of practice states that the ROSCO would not expect to place any restriction on a customer combining vehicles that have been leased individually, or in multiple units, subject to certain safeguards, including those relating to safety standards. Where fixed formation trains have been leased, then they will consider any reasonable proposals. Where the ROSCO and another supplier own spare vehicles which, in combination, could allow a complete train or multiple unit to be created, then the ROSCO will negotiate a pooling arrangement or a purchase/sale price.

7. Maintenance: The code of practice secures commitments from the ROSCO regarding the inclusion of performance regimes within maintenance agreements and the effective supply of scarce spares. The code of practice states that the ROSCO will seek to develop and promote maintenance arrangements which have regard to the interests of passengers and the specific requirements of the customer. The criteria for determining maintenance charges, depending on the requirements of the customer, are also set out.

8. Modifications: The code of practice states that the ROSCO will consider any reasonable requests for rolling stock modifications (subject to specific factors) and will agree to share the cost of agreed modifications where these will add value to the stock after the expiry of the existing lease.

9. Prices: The code of practice describes the factors which will be taken into account when calculating a lease price. It also gives a commitment that the ROSCO will seek to agree prices that are reasonable, having regard to the economics of rolling stock, the terms of the proposed contract, and broader market conditions.

10. Availability of rolling stock: The code of practice includes a commitment by the ROSCO to make available to all operators and to the Rail Regulator a list of stock which is available for lease, and to respond promptly to enquiries about the leasing of such stock. The list will also include details of rolling stock that the ROSCO proposes to dispose of by scrapping or by sale outside Great Britain. The code states that no rolling stock will be disposed of until this intention has appeared on a published list for at least three months and the Franchising Director’s condition relating to such disposal has been complied with.

11. Rolling stock spares: The ROSCO may reserve stock at a prudent level for use as donor vehicles whose parts can be used as spares for other rolling stock, or as rolling stock available to be substituted for other rolling stock on lease (subject to certain conditions). The code of practice states that the ROSCO will provide the Rail Regulator with a list of stock withheld as donor vehicles, and specifies criteria which will be used to decide which rolling stock can be reserved as a donor vehicle.

12. Re-leasing and future franchising rounds: The code of practice includes a commitment to assist the Franchising Director, or any successor, during the re-franchising process. The ROSCO commits to endeavouring to enter into a contract in respect of a lease in good time before the new franchise period is due to commence.

13. Insurance: The code of practice states that the ROSCO will continue to make rolling stock property insurance available to customers.

Full copies of codes of practice are available from Angel Trains website at www.angeltrain.co.uk, from Sanjay Mistry, Public Relations Manager, HSBC (Rail)UK Ltd at 0121 455 3139, and from the Porterbrook website at www.porterbrook.co.uk

Railhub Archive ::: 2000-02-10 ORR-001