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2003-11-20 ORR-001
Office of the Rail Regulator

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Getting to grips with Network Rail's costs -- the Regulator’s role


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Office of the Rail Regulator

Getting to grips with Network Rail's costs -- the Regulator’s role
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related documents


ORR railway industry money flows (chart)

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date
20 November 2003
source Office of the Rail Regulator
type Press release

note ORR/20/03


The Rail Regulator Tom Winsor today told the Rail magazine conference on reducing infrastructure costs that it is the Regulator alone who determines the track access charges that Network Rail may charge, after a rigorous assessment of what an efficient and economic provider of network infrastructure needs to spend. Tom Winsor said:

"It is the Regulator, and the Regulator alone, who determines the track access charges which Network Rail, acting as an efficient and economic provider of the infrastructure, may charge its train operator customers. That decision, together with enhancements which are specified and funded by the Strategic Rail Authority, will determine the size, the quality and the real cost of the network. The decision the Regulator has to make in this respect is a complex one, and in making it he must accommodate and balance a number of factors. Parliament has established critical checks and balances in the system to ensure an optimal outcome from any access charges review by the Regulator.

"This is not the same as - and so many commentators get this wrong - an access charges review being financially capped by the Treasury. It is not relevant what the Treasury wishes to pay. If it were, there would be state control of the finances of the railway and a negation of an important protection for the railway industry's private sector participants.

"It is possible that in the remaining weeks of this review interesting, innovative and creative financing ideas which will defer the need to raise charges from 2004 will be devised and put into sufficiently concrete form. If that does not happen, it is likely that access charges will go up from 1 April 2004. That will engage the SRA's indemnities.

"If access charges rise on 1 April 2004, passenger train operators will start receiving larger bills from Network Rail. They will have to pay them. But by virtue of clause 18 of the franchise agreements, an increase in access charges arising from an access charges review is non-discretionary expenditure for which they have an indemnity from the state. They will expect the state to honour the contracts that it has entered into. It is a simple matter of obligation. It is a simple matter of debt."

Notes for editors:

[The full text of the Rail Regulator's speech is available here]

A chart showing the railway industry money flows is available here

Press enquiries ORR Press Office: 020 7282 2002/2007
Out of hours pager 07659


Railhub Archive ::: 2003-11-20 ORR-001





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