The Office of Rail and Road (ORR) announced yesterday, Wednesday, 30th September, that the cost for third parties and investors to invest in railway infrastructure and rolling stock will be reduced.
The new rates have been introduced by the rail regulator as an incentive to boost economic growth.
There is always a risk whenever a third party funds or delivers work on the railway network, and to cover itself against that risk, Network Rail charges a fee to the third party.
After an intensive review, the ORR found that the fees charged could be reduced so that they were closer to the break-even level. There are currently 11 relevant industry agreement types, and for nine of them the chargeable fees are being reduced.
Such an agreement is a basic asset protection agreement which uses the Network Rail Fee Fund. This is a situation where the work on the railway delivered by a customer will be straightforward with a low risk.
For this type of agreement, Network Rail’s fee is being reduced from 5.0% to 2.4%. Another type of agreement is a development services agreement, where third parties will now pay one tenth of the current fee of 0.1% for development and design work undertaken by Network Rail for a customer.
The Government Actuary Department carried out an independent actuarial review of the fees being charged, and the Office of Rail and Road found that if relevant investment levels remain at their current 2025/26 levels, it estimates that third parties could save £2 to £3 million per year.
The new fees will be effective from Sunday, 1st November.
The Office of Rail and Road is involved in many aspects of running Britain’s railways, including a decision to allow Virgin Trains to run international services from London to Paris, Brussels, and Amsterdam, and investigating proposals for a fairer redress system when passenger assistance is not available.
“These cuts to fees will have a tangible, positive impact on investment decision-making into Great Britain’s rail network. This is a core example of how smart regulation can boost growth by making investment more attractive, while ensuring a good deal for the taxpayer.”
Graham Richards, Director, Planning and Performance
Responses
I think a key question has to be why does everything cost so much with UK rail ? Might it just be something to do with the cost of employing so many Senior Managers and Directors in Network Rail ? That is where a good prune out of costs should come ..