Ian provides a useful summary of where we have reached in rail regulation - from a single person-led economic regulator primarily controlling access to the rail network to the more complex entity that we now have in the Office of Rail and Road.
With the continued growth of the ORR - from a small economic regulator to a behemoth with responsibility for safety regulation and the strategic highway, as well as economic regulation - for some people it has grown too big. This is even before the additional responsibilities being laid upon it following the Fourth Railway Package and the CMA proposals on overlapping franchises.
While the recent reports from both Bowe and Shaw, as well as the CMA proposals, seem to indicate a need for additional economic regulation, it is not clear exactly in what direction this growth needs to be aimed. Clear guidance from government is now required.
Where a regulator has a number of functions, there is a greater possibility of those functions conflicting or competing for resources. And if they do (particularly with an expansion in economic regulation), who makes the decision on which takes priority? This is not just in respect of outcomes - if there is a limited budget available, which parts of the organisation take the lion’s share and which have to start reducing headcount? Unless there are strong controls on its functions and outputs, such an organisation can become unwieldy, expensive and lose focus.
The transfer of the safety function for the railways from the Health and Safety Executive to the ORR means the UK continues to maintain one of the safest railways in Europe. Having the safety expertise in one place works well, and the industry levy ensures that the funding goes to the right place. However, it could be argued that the safety regulatory function itself has not changed significantly from when HMRI was at the HSE, and moving to the ORR has been more of an administrative than a functional change.
Where the UK ends up on overlapping franchises is likely to be a key issue. This is likely to be a much bigger battleground than potential open access routes, with the opportunity for more on-track competition rather than just deciding who gets a seven to ten-year near monopoly.
But is regulation always a good thing? It depends on whether there is a “one size fits all” approach or whether the system can be finessed. Indeed, the light rail industry is keen to remain free from much of the regulatory impact of the ORR, such as looking to manage its own safety regulation through its own body (UK Tram). The intention here is for the solutions offered to be more attuned to the light rail sector, rather than importing more expensive (and sometimes inappropriate) heavy rail solutions.
One question that the article does not really address is the funding for the regulator. Any wider remit (or one continuing at the same level) is likely to require significant funding - and is the industry prepared to pay for that? If the industry is to be required to contribute more to support the ORR, to what extent does the regulator need to be regulated itself to ensure that it is being economic and efficient with its own resources and funding? Quis custodiet ipsos custodies - Who watches the watcher?
