Rail Industry Focus

01.07.15

The ORR's new highway role: An opportunity not a distraction

Source: RTM Jun/Jul 15

Anna Walker, chair of the Office of Rail and Road, explains the opportunities its new role to monitor Highways England will bring.

As RTM went to press the newly named Office of Rail and Road (ORR) was closing a consultation on the proposed monitoring approach it should adopt for Highways England.

During the recent Annual Rail Freight Group conference, Anna Walker, chair of the ORR, stated that the regulator’s key objective is to “secure improved performance and value for money from the strategic road network”, which carries a third of all traffic and two-thirds of all freight in England.

Although Highways England is a government-owned company, with a £15bn roads investment strategy for 2015-21, it was felt that a monitor was needed to advise the government. The primary role of the ORR is advisory, noted Walker, but it has ended up with a power to fine Highways England for breaching its licence.

“Our role is different to the one we have had with Network Rail,” she said. “But there is no doubt in the ORR’s board’s mind that a residual ability to fine, in terms of raising the stakes and reputation, can be important. However, the success measure is to have it and not use it.”

The primary focus of monitoring will be on efficient delivery of outcomes, measured through delivery against KPIs. Risks to delivery need to be clearly understood and managed. Financial monitoring will be developed to underpin efficiency analysis and more information will be published on the strategic road network, with the first annual report due in June 2016.

Walker said the ORR has core skills it can build on for its road function, developing a better understanding of both sectors – similarities, differences and competition between them – and therefore being able to advise government better.

“My strong view is that this is an opportunity for ORR and I believe it is an opportunity for the strategic transport networks in this country,” she said.

Graham Dalton, chief executive of Highways England, discussed how £7.7bn of capital investment will improve the strategic roads network with £4 of benefits expected to the economy for every £1 spent. In total, the government-owned company is delivering 112 major improvements, which includes 280 extra miles of capacity through further upgrades to ‘smart motorways’.

However, he also noted that, going forward, his organisation will be working with specific schemes to integrate with local road development, existing and emerging rail links, ports and airports.

Speaking to RTM, Dalton said: “When I worked in the rail industry you tend to think in terms of competition. When you are running a road network you don’t. We aren’t competing against anyone. It is the effort to make what we have work better.”

Although predominantly discussing the ORR’s new role, Walker did note how rail freight is supported by both government and the regulator.

She was also pleased to see the continued improvement in the rail freight market, with future growth predicted at 4% a year. “As you will know, we have had problems on performance under the first year of CP5 on rail generally. But, actually, one of the success areas is freight.

“I want to ensure you that we understand the challenges facing the sector. We understand the issues about growth, costs, complexity and long-term investment, the need for the sector to have stability of charges generally and fair treatment with rail and other road users.”

Walker said the ORR is now starting to consider its periodic review for CP6, with its first consultation document for CP6 planned for early 2016.

This will include more comparative route-based information on Network Rail; proposals for a new charging regime; incentives on how to encourage closer working across the sector; and providing a regulatory package that delivers clarity of output that takes into account innovation.

“There are some very big issues that we are seeking to move forward in the next price control,” said Walker, adding: “ORR’s new role on Highways is an opportunity. We remain very committed to promoting rail freight now and for the next price control period, and what’s in that price control is already under active discussion.”

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