ATOC

Proposals to extend the role of the rail regulator would not deliver for passengers or taxpayers

date 2 March 2012   source ATOC   type Press release

Proposals to extend the role of the Office of Rail Regulation (ORR) are ‘deeply flawed’ and would hinder the Government’s attempts to limit future fare rises, reduce taxpayer subsidy and sustain investment in the railways, train companies will say today.

Responding to a consultation on how the sector could be regulated in the future, the Association of Train Operating Companies (ATOC) says that proposals to shift the oversight of its members from the Department for Transport to the ORR would not deliver for passengers or taxpayers.
ATOC says that the move would confuse accountabilities, put upward pressure on cost and divert the ORR from its central task of regulating Network Rail. Operators argue that the proposals would:

- Increase industry costs: Over time there is a significant risk that the ORR would introduce regulation that would increase costs. Unlike the DfT, the ORR has no financial responsibility for franchises and would not be able to balance the needs of passengers and taxpayers. In addition, at the time of bidding for a franchise, operators would price the risk of future regulation into their bids. This would reduce the value of franchises to the Government and the taxpayer.
Increasing industry costs would limit ministers’ options when taking future decisions about the appropriate levels of and balance between subsidy, fares and investment.

o Detract from the regulator’s central role of overseeing Network Rail: Broadening the ORR’s role is not the right thing to do at a time when there remains much to do to ensure Network Rail becomes a more efficient and customer-focused organisation that works better with the rest of the industry.
o Lead to confusion over accountability: Although the ORR would oversee franchises, in practice ministers would still end up answering questions about the rail industry, leading to confusion about who is ‘in charge’. In addition, there would be a lengthy interim period during which some operators would be regulated by the ORR and some by the DfT. These arrangements would not be understood by passengers or politicians.

ATOC argues that the role of overseeing operators should remain with the body which acts as the franchising authority, currently the DfT. This is so that it is able to strike the appropriate balance between the interests of passengers and taxpayers. However, this should be done as part of less prescriptive franchises that allow operators more freedom to improve services and greater opportunity to drive down costs.

Michael Roberts, Chief Executive of ATOC said: “It is absolutely right that operators be held to account in providing passengers with the service that they expect and deserve. But the proposed extended role of the ORR will not help to deliver better services at a lower cost.

“The oversight of operators should remain with the franchising authority as part of longer, less prescriptive franchise agreements. The main challenge for the ORR is to focus on regulating the infrastructure provider at a time when Network Rail is changing significantly the way that it operates.
“We look forward to a constructive discussion with the rest of the industry to ensure that reform delivers better services at a price that can be afforded by passengers and taxpayers.”

Railnews Archive ::: 2012-03-02 ATO-001

search all fields