Ben Webster, Transport Correspondent
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Network Rail faces losing its monopoly over Britain’s rail infrastructure if it fails to meet tough new targets to improve punctuality and reduce costs, according to the rail regulator.
Bill Emery, chief executive of the Office of Rail Regulation (ORR), told The Times that at least one rival infrastructure company was needed to gauge Network Rail’s performance.
Network Rail was created by the Government in 2002 to replace Railtrack. It is technically a private company, but it has no shareholders and is dependent on public subsidy.
The ORR will announce on Thursday how much income Network Rail will receive between 2009 and 2014. It is expected to give Network Rail £1 billion a year less by 2014 than the company claims it needs, a 25 per cent cut in its running costs. The Government has set an industry target of 92.6 per cent of trains to run on time by 2014, up from 90 per cent at present.
Network Rail has made steady progress in reducing costs, but it has failed to meet its own targets for cutting delays and still consumes three times as much subsidy as British Rail did. It is also less efficient than several publicly owned networks on the Continent, according to ORR research. The ORR has fined Network Rail twice in the past year for overrunning engineering works that have affected hundreds of thousands of passengers.
Mr Emery said that Network Rail had one last chance to prove that the current industry structure could work. Referring to the punctuality and efficiency targets, he said: “If they don’t rise to these challenges, then there is a real, legitimate question as to whether the structure is right.”
He criticised Network Rail for jealously protecting its monopoly and refusing a proposal from Merseytravel, the public transport authority on Merseyside, to run its own tracks. Merseytravel wanted to combine track and train operations for the first time since privatisation. The change could have saved up to £30million a year and delivered better performance.
Mr Emery said: “It would have tested whether working closely together as a vertically integrated piece of railway would lead to a better performance and lower costs.”
He said that a better structure could be to reintegrate tracks and trains into “city regions”, giving local authorities greater powers to improve services. Mr Emery, the former chief engineer of Ofwat, the water regulator, added that the railways could learn from the water industry, which is split into regional monopolies. Ofwat measures the companies’ performances against each other when setting their targets. While the ORR does not have direct power to alter the structure of the industry, it can put financial pressure on Network Rail to reform itself.
Mr Emery said that the ORR could decide to reduce Network Rail’s income to the lower level that might be needed by more efficient regional track companies. The Conservatives are considering how the rail industry could be restructured and are looking closely at the idea of splitting up Network Rail into a number of regional integrated track and train companies.
The danger signals
May 2008 Thousands of travellers to London were delayed or forced to abandon their journey when signals near Milton Keynes failed a few days after May Bank Holiday improvement work. Many trains into London Euston were cancelled
March 2008 Commuters experienced long delays when engineering works scheduled for the Easter Bank Holiday overran in East Anglia. Many trains into London Liverpool Street, which had been closed over the holiday, were cancelled and more were delayed
February 2008Network Rail apologised after thousands of football fans travelling to the FA Cup Final at the Millennium Stadium in Cardiff missed the kick-off and then spent hours queueing for trains home after a fault with signals
December 2007 to January 2008 Network Rail was fined £14 million by the Rail Regulator after work on tracks near Rugby went on four days longer than planned, causing major disruption and bringing many services to a standstill
Sources: agencies; Times archive
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The political classes truly messed this one up. Either privatise it so that an 'EasyTrain' can come along with knock-down prices (we'd probably have to stand--oh whoops, we do anyway), or else renationalise it, get some decent management and cut costs. Britain's trains are a joke.
Andrew Baker, Oxford, UK
In what world should we expect market forces to provide efficiency for a protected, subsidised monopoly??? It is madness. Either have it as a government department OR a free market. This halfway house that we have now just encourages the worst of both worlds.
Ricardo, Cambridge, UK
Subsidies three times that of BR? Less effcient than the continent? Take away the monoply instead of giving them fines.
14 million could hire a lot of good people at the top and bottom. Are all or part of the staff formerly BR?. This is like having BT run our phone & broad band lines!
pauline russell, honslow , uk
I think the service is appalling! It now costs over £100 to go down to London for the day and it's impossible to get a train at the weekends as the lines are closed and will be every weekend until Christmas. We have a 3rd world service at scandalous prices!!
Phil, Rugby, England
I still fail to understand the purpose of the ORR. Network Rail fails to perform with the subsidy it is given from the taxpayer, so the ORR "fines" it, effectively reducing the subsidy. It's an accounting scam for the Treasury which probably costs a fortune to administer and results in no benefit!
Stuart Tunstead, Plymouth, Devon
I think we should stop the fining of a public funded company by privately ownd train operators, (who you'll notice never pass the money on to the customer!) and let them get on with their job. As for cutting their funding people need to realise a world class network costs world class money.
Anon, Somewhere,
Network Rail is improving rapidly, every train user knows that as well as the government. The company is very close to matching (or beating) targets, but now that's not enough? The ORR are thinking of reducing the level of spending to a level that will definately reverse all the work done so far?
Zachary Naylor, Nottingham, UK
Lets not forget that whye BR was privatised by the the Con's all these smaller companies fleeced railtrack and continue to fleece NWR to carry out the vast engineering works that have taken place and the more frequent maintenace. Remeber your last road journey and think how much that actually costs!
G Jones, Crewe,
What it doesnt say is that when it comes to delay minutes, bad weather, flooding, lightening etc all gets thrown into the equation!!! This then affects the overall Network Preformance figures...thats also not including the unfortunate events of a death on the tracks by suicide or at level crossings
Richard, Halifax, United Kingdom
A company with no share holders requiring government subsidy and is failing, sounds like Royal Mail. The railways were privatised in haste and it was done badly and shouldnt have been done at all. Our transport infrastructure is a joke seemingly bankrupt of ideas as well as cash.
mike gee, bournemouth, uk
British Rail should never have been privatised. money should have been invested to the level of the rest europe to give us a rail system to at least equal the French, German and Spanish.
This government is dangerous all it wants to do is cut, cut, cut, raise prices and tax us into penury. I despair.
Ian Fairclough, Knebworth, UK
And so it should. This has nothing to do with subsidies and everything to do with their shocking timing and inability to complete anything on time. Every Saturday in August they are planning engineering works - what is the matter with these people? have they never heard of holidays?
Liz, London,
Good, maybe that will encourage them to actually provide a half decent service to its customers and all the people who pay a fortune to get screwed over with an appalling service every day.
Dom, Leeds,
Why does The Times write about Network Rail receiving a 'subsidy', but the Highways Agency making 'investments'? Both use tax payers money to maintain and develop their systems. The reason we spend 3x the Brit Rail amount is because of the structure of the whole rail industry - not just NR.
John Henderson, St. Neots, UK
Network Rail is inefficient and expensive by comparison with BR and other European operators, but how on earth to remedy the situation without investing billions more into the system? Cutting the network up into regions without sufficient funding will not improve matters. Bring back the SRA!
John Buckeridge, Harrow, EU
Let me get this straight. Network Rail has no competitors to fight for market share? No shareholders facing wealth or poverty by the company's actions? Not even a political appointee or Cabinet Minister to be sacked by irate voters?
Michael, Pueblo, Colorado, US
Of course, the question is why were the once mighty rail networks ever privatised. Profits shouldn't be going to shareholders but to the the upgrading, etc of the rail system. Private companies are always going to skint on maintenance and service, when they have the shareholdres to look after.
Rex Shore, Kathmandu, Nepal
Many, including your (then) columnist Simon Jenkins, foresaw at the outset that privatisation which divorced management of tracks and signalling from that of trains wouldn't work. Surely it's time to hand back the tracks to the majority train company in each area - or at least adopt Mr Emery's idea.
Barry, Wallington, UK
The Government should leave Network Rail to get on with the job of putting right what decades of neglect unde BR and Railtrack had done to the rail infrastructure. Regular travellers can see the improvements being made, and at a time when the volume of passenger traffic is increasing dramatically.
Alan Marsden, Altrincham, UK
Jason, the EU requires members to separate infrastructure from passenger and freight operation. In most countries they retain the same names e.g. SNCF, Deutsche Bahn, but it is possible to compare how efficient similar infrastructure operators.
GC, Leeds,
When you have a monopoly of track and train you have high prices as we do in the South West with First (Last) Great Western. People in the Midlands and North have competition and much lower fares and better time keeping.
Richard, Newton Abbot,
OfWAT - what a throroughly effective regulator that was... Delivered massive consumer savings, investment and shareholder returns hasn't it? Did ORR count the massive de facto subisidies via brand new high speed lines that many Eurporean countries now have in his calculations?
C Wall, Camridge, UK
In the last three years the cost of power ,the cost of track maintenance and the weight of trains have all roughly doubled .Cut the train weights back to where they were and both fares and subsidy could come down.
g.p.edlin, london,
British rail was one of the few state owned companies that actually worked. Why then seek to compartmentalise the railways further? Do you remember Beecham? He cut costs very effectively, but was too short sighted to see the long term effects which were rather unfortunate.
gmac, Kassel, Germany
When comparing network rail to other state owned railway networks someone seems o forgotten that those other networks also receive the full income from fares with no stripping off of profits to private companies. Not exctly a fair comparison.
Jason Hurst, Dereham, UK