Allocation of rail regulation and safety monitoring costs

ORR proposals (24 pages, PDF) on the allocation of its costs to railway operators, following a consultation in August 2005.

The costs of economic regulation will now be recovered through track access charges or Government grants, with Network Rail making a single payment to ORR. The treatment of the 2006/2007 and 2007/2008 payments is not specified and ORR will "commit to assessing the impact of the additional [pre-2008/2009] costs on Network Rail's [post-2008/2009] revenue requirement". The allocation of these costs between freight and passenger operators is not discussed.

The costs of safety regulation will be recovered through a turnover-based levy, with subsidy included in turnover and no netting off of track access charges, subject to fixed rates for regulated businesses with a turnover below £5 million. No concession is offered to heritage railway who might derive much of their turnover from touristic activities and had been promised exemption when powers for a safety levy were introduced, although ORR "will want to discuss practicalities" with representatives. But for airport transit systems operated in airports without charge to passengers, ORR proposes to replace turnover with a deemed cost measure as the basis for the levy.

No reference is made to any successor for the Railway Charging Review Group currently established by HMRI to oversee charging for safety regulation. The HMRI website provides some background to the proposed safety levy. ORR will "review the funding structure in the light of experience in approximately two years time", i.e. before the implementation of the review of Network Rail track access charges.

For further information or advice please contact Franck Latrémolière.

Filed under ORR, Public transport.

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