Developments in transport policy: The reform of rail transport in Great Britain

Journal of Transport Economics and Policy

Volumn 32, Issue 2, 1998, Pages 247-265

  Kain, Peter ^a  

^a NONE   (United Kingdom)

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EID: 0011114361     PISSN: 00225258     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (45)

1. Council Directive 91/440/EEC of 29 July 1991 on the development of the Community's Railways. Official Journal, L237, 24.8.91.
2. Directive 95/18.EC subsequently set out requirements on licensing; 95/19/EC sets out a framework for infrastructure charging and train path allocation. Directives had to be implemented by 27 June 1997.
3. COM(96)421.
4. See the UK White Paper New Opportunities for the Railways, which preceded this Act.
5. Railways that were not part of BR include London Underground, Tyne & Wear Metro, urban light railways, and heritage railways.
6. Estimates quoted in Hansard indicate that over £70 million was paid to law firms working on the company and agreement set-ups. Source: http://www.link.org.uksub6537.htm.
7. See ORR (1997): New Service Opportunities for Passengers. ORR, September.
8. Whatever action Railtrack decides upon, however, the approval of its actions and its justification for such actions may still require the Rail Regulator's approval.
9. Note that performance regimes are calibrated on the TOC's income and not on the related access charges.
10. PTE/PTA areas include Manchester, Birmingham, and Glasgow. Rail services in such areas are specified and financially supported by local authorities, headed by PTEs.
11. ATOC consists of the 25 franchise companies, the charter operator Rail Express Systems, and Eurostar.
12. ORR (1997): Regulatory Objectives for Passenger Train and Station Operators. ORR, June.
13. However, CGEA - which won the geographically adjacent South Eastern and South Central franchises - was awarded South Eastern on the understanding that it kept the managements separate, which, of course, reduces the opportunities for economies of scale and scope.
14. Clark, op cit,., p. 13.
15. See footnote 16 on financial improvements required by TOCs, and an article by R. Ford in Modern Railways, September 1997.
16. As the franchising of the passenger business proceeded, the franchise competition increased. Thus, the first seven franchises require an "average annual improvement" in bottom line performance of 3.3 per cent in the first six years (change in subsidy over the period/the number of years, relative to the 1996/97 turnover), whereas the last seven franchises were won with average annual improvements of 11.3 per cent. See Table 2.
17. This was aided by a new simplified track access charging structure agreed with Railtrack and approved by the Rail Regulator. The key criteria for the acceptance of such access agreements are that they must not unduly limit competition or create undue discrimination between track users.
18. Rail Professional, issue 8, August 1997, p. 19.
19. Rail Professional, Ibid, p. 19.
20. For example, Connex South Eastern is (currently) self-financing new rolling stock (rather than going through a ROSCO), and will have its stock maintained by the manufacturer (rather than the standard ex-BR heavy maintenance rolling stock suppliers). A more comprehensive approach is the "Juniper" (total train provision, manufacture-finance-maintain). These may be alternative ways for the market to develop, although it remains to be seen whether such market players' risk would extend to rolling stock after the end of current franchise periods.
21. Direct Rail Services (currently owned by government owned British Nuclear Fuels, although its services will be taken over by EW&S in 1998); National Power; and Mendip Rail (aggregate train services, owned by Yeoman and ARC).
22. Incumbents will only have protective rights over train paths that are in their existing access agreements.
23. The European Commission is also examining performance regimes. See Communication from the Commission to the European Paarliament, The Economic and Social Committee, the Committee of the Regions and the Council, Trans European Rail Freight Freeways, dated 29 May 1997, which states (p.15): "The Commission believes that it is desirable for [rail] Freeways to be established incorporating quality and reliability criteria."
24. For instance, Railtrack has identified early opportunities to make modest investments (in track circuits, point motors, and point heaters) for significant improvements in performance, generating good returns on investment.
25. For the "RTIB' track renewal contracts.
26. For the "RTIA" infrastructure maintenance contracts.
27. Regarding the Punctuality Incentive Payment in 1996/97, for example, OPRAF paid £24 million to TOCs and received £5 million from the TOCs.
28. Computerised timetable software currently used virtually eliminates the errors that occur with reading from paper-based tables, especially when there is a choice of routes or connections. Errors occur because of engineering work alterations to timetables, which are not incorporated within the software database. ATOC members have threfore been encouraged to establish a database of all engineering work in the forthcoming 12 weeks, to link with the main timetable, enabling a "one-look-up" inquiry to proved accurate information.
29. Swift, J. (1997): Regulating the Railway in the Public Interest. Office of the Rail Regulator, June.
30. Also note the relevant European Commission Directorates-General, DGIV (Competition) and DGVII (Transport). Studies and communication at the European level suggest that a number of Britain's railway regulations may well be supplanted by European regulations.
31. Note that under the Labour government it is proposed that the rail industry functions of the Franchising Director and the Department of the Environment, Transport and the Regions be brought under a "Strategic Rail Authority".
32. Local Transport Today, 21 November 1996, p. 13.
33. Roger Salmon, Modern Railways, March 1996, p. 154.
34. The initial level is roughly double the level that prevailed in the last full year of BR ownership.
35. House of Commons debate suggests that only 21 to 25 per cent of fares (measured in terms of volume of tickets) are capped. Commons Hansard, 15 November 1996, Column 611.
36. All "Saver" tickets (unrestricted Standard Returns where no Saver exists) and Standard Weekly Season Tickets are pegged at or below inflation until 2002. However, from 1998 London operators will be able to increase their fares by up to 2%, or be price-capped by a further 2%, depending on their performance.
37. Christian Wolmar, Rail, 10-23 September 1997, p.25.
38. A specific consideration must be the government's proposal for reviving an Integrated Transport Policy in the first Transport White Paper for 20 years (February, 1998). See Department of Environment, Transport and the Regions (1997): Developing an Integrated Transport Policy (preliminary paper).
39. Both their unit costs and their output level.
40. Swift, J. (1997), op. cit.
41. The appropriate infrastructure renewal is defined as replacement of infrastructure in "Modern Equivalent Asset Form" (MEA).
42. The 1994/95 aggregate (system-wide) Railtrack access charges were set to cover operating costs, current cost depreciation, and a return on capital. This was abandoned: basing track access charges on (long-run) current cost depreciation, and not on the actual expenditure, could encourage Railtrack to increase its profits simply by reducing expenditure on asset maintenance below that needed for MEA. Rather than take a view on a particular capital value and cost of capital, the Regulator has instead considered the profile of charges that seems to him to balance all his stewardship responsibilities.
43. As the Regulator states: "Train and funding authorities have the right to expect that when they pay for a railway in modern equivalent form - the basis on which Railtrack charges for access - they get investment of an amount and a type which delivers that." Swift, J. (1997), op. cit.
44. The document submitted by Railtrack to the Regulator is the "Network Management Statement". The Statement is the focus for the Regulator's concerns; he seeks something "more bankable than the expression of intentions or the short-term pressures to meet contractual obligations". (J. Swift, quoted in Rail Professional, September 1997, p.9.)
45. To facilitate stability of planning, the access charges are to be reviewed only infrequently. Railtrack's Network Licence requires the company to provide information on its capital programme and accounting information. It is only at the review of charges - due for implementation in 2002 - that the Regulator can reduce charges and compensate TOCs for any failure by Railtrack to deliver capital investment. The Regulator has stated that Railtrack's access contracts "are not, in my opinion, sufficient for the effective regulation of Railtrack's investment and stewardship duties" (Modern Railways, August 1997, p.489). Note that the future level of access charges will be set through approval of individual access agreements, and not through a price control provision in the Network Licence, as is the case for other regulated utilities.