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Industry Guide
Industry structure
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Overview
Who does what: the industry matrix
The railway industry consists of many organisations. Some run the trains or maintain the track. There are also government bodies and third party agencies of various kinds.
How do they all fit together?
Train operating companies [TOCs] are at the heart of the business.
One major sector is formed by the contracted passenger operators, which held franchises until 2020. They are profit-making companies and closely bound by detailed management contracts with the government to run specified services on named routes. Revenue is sent to the Department for Transport, which pays the operators’ costs and a management fee. Their contracts are limited-life, although they are sometimes extended. They manage most National Rail stations, which they lease from Network Rail. They are responsible for minor maintenance of the stations they manage. Some operators have been wholly renationalised, and are administered either by the Department for Transport’s Operator of Last Resort (see 3 below) or companies owned by the Scottish and Welsh Governments.
A few passenger operators are ‘open access’. They have no government contracts, but also lack the financial umbrella that contracts offer. They run comparatively few trains and do not manage stations.
Freight operators [FOCs] are separate, and nearly all are wholly in the private sector. There is one exception: Direct Rail Services was formed to carry nuclear fuel, and is owned by the public sector. It also carries other freight and hires out some of its trains.
Update
The Labour government elected on 4 July 2024 intends to renationalise the remaining contracted operators. Two changes to the law have been announced to achieve this. The first is the Passenger Railway Services (Public Ownership) Bill, which makes the renationalisation of an expiring contract the default, rather than the last resort. This Bill received its first reading in the House of Commons on 18 July. The second will be the Railways Bill, which has yet to be published. It will create the ‘directing mind’ Great British Railways, which will eventually run passenger trains on National Rail infrastructure, with the exceptions of open access, charter trains and other heritage services. Great British Railways will take over the ownership and management of infrastructure. It will also manage stations, which until now have been leased by operators or run directly by Network Rail. A public sector body which owns the main railway network (tracks, stations, signals and structures) and compiles the national timetable. Any operator needs permission to run on Network Rail infrastructure. Network Rail is not responsible for the Valley Lines in South Wales, London Underground, Docklands Light Railway, Tyne & Wear Metro, Glasgow Subway, Northern Ireland Railways, tramways or privately-owned railways, such as heritage lines.
Network Rail’s customers are train operators – not railway users. Network Rail owns all National Rail stations (except those on the Valley Lines), but most are leased to operators, except 20 which are managed directly by Network Rail. The Network Rail-managed stations are among the largest and busiest, such as London Euston or Glasgow Central.
(Some of these arrangements are due to change under
Great British Railways.)3. Department for Transport
Government department, responsible for railway policy (including fares), passenger contract awards and management, and supervision of Network Rail (shared with ORR; see 4 below). Owns the Operator of Last Resort (DOHL), which was created to take over as the operator when a private sector passenger franchise (or other contract) failed. Includes the Rail Accident Investigation Branch (see 5 below). (Some of these arrangements are due to change under Great British Railways.)
4. Office of Rail and Road
Non-departmental government body. Regulates the wider railway industry, particularly in respect of access rights (essentially, whether an operator can be permitted to serve an additional route or run more trains, or indeed to run at all). Also monitors Network Rail's budgets and performance and compiles railway statistics. HM Railway Inspectors, who form a division of the ORR, monitor safety on all railways in Britain and can bring prosecutions. HMRI’s former responsibility for compiling accident reports is now the task of the Rail Accident Investigation Branch (see 5 below). The ORR also sponsors the Rail Ombudsman (from 26 November 2023) (see 11a below).
5. Rail Accident Investigation Branch
Part of the Department for Transport (see 3 above). Compiles accident reports and makes recommendations to improve safety where necessary. Does not attempt to attribute responsibility or blame, and therefore does not prosecute for safety breaches, which is the responsibility of the ORR (see 4 above).
6. Rail Delivery Group
An industry-sponsored body which includes train operators and Network Rail. Co-ordinates and provides the public face of the industry, and merged with ATOC (see 17h below) on 24 October 2016. The RDG runs National Rail Enquiries.
7. Rail Freight Group
The Rail Freight Group is an industry sponsored body which campaigns on behalf of freight operators.
8. Rail Supply Group
Broadly the equivalent of the Rail Delivery Group for companies in the railway supply chain, which are not represented on the RDG.
9. National Skills Academy Rail
(NSAR)
Industry body set up in 2010 to encourage and co-ordinate training in the railway industry. It does not provide training itself, but links employers with specialist training providers.
10. RSSB
The Rail Safety and Standards Board was originally a division of Railtrack (see 17d below). The RSSB focuses on safety matters, carries out research and compiles Railway Group Standards, which lay down guidelines and requirements.
11. Transport Focus and London TravelWatch
Consumer bodies set up by Act of Parliament to represent transport users. London TravelWatch broadly covers Greater London, and Transport Focus deals with journeys in the rest of Britain. Neither body can consider a complaint until the operator involved has been given a chance to resolve any difficulty directly with the complainant.
11a. Rail Ombudsman
An independent, not-for-profit organisation which offers a free, expert service to deal with unresolved complaints about service providers within the rail industry. The Ombudsman is sponsored by the Office of Rail and Road (see 4 above).
12. Rolling Stock Leasing Companies (ROSCos)
Private sector finance houses which order, own and lease rolling stock to operators, usually for the duration of a passenger contract. Exceptionally one ROSCo, Train Fleet (2019) Limited, is owned by the Department for Transport’s Operator of Last Resort (DOHL) (see 3 above).
13. Integrated Transport Authorities and Passenger Transport Executives
Local government bodies created by the Transport Act 1968 (ITAs were originally Passenger Transport Authorities) to co-ordinate transport in large cities outside London. They have been replaced by other organisations. For example, the West Midlands ITA and PTE (Centro), were succeeded by the West Midlands Combined Authority and TfWM (Transport for West Midlands) in June 2016.
14. Industry supply chain
Several organisations have been created to represent members of the rail supply chain, including the Railway Industry Association, Rail Alliance and Rail Forum (previously Rail Forum East Midlands).
15. Community Rail Network
(previously the Association of Community Rail Partnerships)
Largely voluntary organisation which exists to encourage and develop local lines. It receives a DfT grant which supports a head office in West Yorkshire and a small number of salaried staff. Some local authorities fund a Rail Officer (or equivalent) to manage individual Community Rail Partnerships in their areas.
16. Other campaigning groups
These include the Campaign for Better Transport (originally Transport 2000) and Railfuture (previously the Railway Development Society). There are also many local rail users’ groups representing passengers on individual routes.
17. Former railway organisations
a. British Railways Board (state corporation managing the nationalised railway, 1963-1997). Later became BR (Residuary) Ltd and was wound up in 2013.
b. British Transport Commission (state corporation responsible for [most] railways and also canals, road haulage and docks from 1 January 1948 under the Transport Act 1947). Also owned many bus companies, partly because the Commission had taken over the railway shareholdings in them and also because some private groups voluntarily sold their interests to the BTC. It ran the railways via a subsidiary Railway Executive until 1953 and then took over direct management, after the Transport Act 1953 had changed the Commission’s structure and returned road haulage to the private sector. The Commission was wound up by the Transport Act 1962 and ceased functioning on 1 January 1963 when various boards took over, including the British Railways Board.
c. Office of Passenger Rail Franchising [OPRAF] (original manager of franchise awards: succeeded by Strategic Rail Authority in 2000).
d. Railtrack
(original infrastructure manager under privatisation: created 1994 and Stock Exchange listed from May 1996. Placed in Railway Administration 2001 and succeeded by Network Rail 2002).
e. Office of Rail Regulation (succeeded Office of the Rail Regulator 2004, became Office of Rail and Road 2014).
f. Office of the Rail Regulator (created to regulate the industry 1994; replaced by Office of Rail Regulation 2004).
g. Strategic Rail Authority (created in shadow form 1999 to manage franchises and prepare plans for developing the railway network. Became statutory body 2000, wound up 2006). Franchising functions were transferred to Department for Transport; long-term planning to Network Rail.
h. The Association of Train Operating Companies was the public face of the privatised train operators between 1995 and 2016. ATOC was created to represent the operators and also manage industry functions such as sharing out revenue between passenger operators, running National Rail Enquiries and issuing staff travel passes. The Rail Delivery Group (see 6 above) took over the media and public relations functions of ATOC in 2012 and its other responsibilities on 24 October 2016, when the title ATOC was no longer used for public purposes, although a company of that name still exists to carry out some internal functions.
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