R A I LT R AC K - The Railways Archive

executive summary
This is the industry
vision, outstanding
service quality,
punctuality, clean,
modern rolling stock
and station facilities
10
Wider incentives framework
The current incentives framework for the industry involves strong commercial growth incentives for train operators but much
weaker incentives for Railtrack, with a system of access charges under which 91% of its passenger franchise income is fixed.
Work has been under way to review the current system of charging for use of the network,and the Rail Regulator will
be publishing a paper on charging options in the spring.Our proposals include a larger variable component of charges,perhaps
in the order of 30%,reflecting more accurately the costs incurred by running additional trains on the network, together with
a volume incentive, so that we and the train operators share the benefit of traffic growth.
Such a regime would extend the principle of revenue sharing,as agreed between Virgin Trains and Railtrack for the West
Coast Main Line, to the whole network. Getting the right charging structure is important in providing the right economic
signals, aligning growth incentives between Railtrack and train operators, while making it easier to finance necessary
enhancement. One option would be to strengthen these incentives through Strategic Rail Authority top-up payments in
respect of the additional social benefits which accrue from traffic growth.
A further change to incentives is required on performance. There may be scope for mechanisms to recycle a
proportion of Railtrack efficiency gains back to train operators based on their performance.Together with a volume incentive,
this would mean the industry sharing the benefits of growth and improved efficiency, to the benefit of rail users.
Having the investment plans needed to provide for growth in use of the network is only the first step.The delivery
mechanism is a revised economic architecture which aligns the interests of the parties, forces collaborative working,transfers
risk to those best able to bear it, and so enables the investment to get funded. It represents a new approach.Anything less
radical will not deliver the scale of the changes now required.
Industry vision
‘This is the industry vision: outstanding service quality, punctuality, clean, modern rolling stock and station
facilities, the renaissance achieved, the growth we forecast realised, an incentives framework which
enables and encourages it, a host of new projects, the Government objectives of a safer network –
commercially funded – and the Deputy Prime Minister’s policy of truly integrated transport realised.’ –
Gerald Corbett, National Rail Summit, February 1999.