Group writes to ORR over plans to rebalance cost allocation



Concerns about “cost dumping”  on urban and regional rail networks have been raised by the Urban Transport Group.

Ben Still, lead board member on rail issues for the group, wrote last month to Joanna Whittington, the chief executive of the Office of Rail and Road Regulation. His letter expresses concerns about industry processes that “could further shift the balance of the railways’ infrastructure costs on to regional rail services in a way which could damage their future prospects”. He points out that regional rail trains are generally lighter, slower and cause less impact on infrastructure
than inter-city trains.

The moves to allocate more of the network’s overall costs to regional rail services have come in a series of recent industry consultations by ORR and infrastructure controller Network Rail. A recently concluded consultation by Network Rail on fixed cost allocation could see the allocation of the network’s fixed costs attributed to Northern Rail increase by 50%, whilst the largely self-contained Merseyrail network would see its allocation go up by 66%. Meanwhile, Virgin West Coast would see its allocation go down by 58% and Virgin East Coast would go down by 58%.

UTG’s letter to the regulator says: “…to adopt a construct for rail costs which is to the benefit of the operators whose trains have some of the largest impacts on the cost of infrastructure provision in a way which creates artificial profits, whilst at the same time loading costs on to operators whose trains cause the least impact and which damages their future prospects, is not something that we believe is either justifiable or sensible”.

A report published by the group in 2014 found that the allocation of maintenance and renewal costs largely treats every passenger train in the same way even though inter-city trains are estimated to produce 20 times the amount of track damage as the most basic lightweight regional trains. It argues that a system that allocates costs more fairly would result in regional rail going from taking an estimated 58% share of total government support for the railways to 28%.

This… will make regional railway services look far more expensive than they actually are

‘‘We are concerned that running through a series of highly technical consultation papers there is a risk that more of the burden of the industry’s overall costs on to services that don’t create the majority of that burden in the first place and which are least able to bear it,” said Still. “This in turn will make regional railway services look far more expensive than they actually are generating public subsidy per trip figures that are misleading but which can be used to undermine the case for continuing to support and invest in regional rail services.”


This article appears in the latest issue of Passenger Transport.

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