ORR CEPA Rail Case Studies
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INFRASTRUCTURE MANAGEMENT: RAIL CASE STUDIES THE OFFICE OF RAIL AND ROAD (ORR) 3rd July 2015 Final Report PUBLIC VERSION Submitted by: Cambridge Economic Policy Associates (CEPA) Ltd CONTENTS 1. Introduction ........................................................................................................ 1 2. Background ......................................................................................................... 2 3. Methodology ....................................................................................................... 4 3.1. First phase: High level case studies .................................................................... 4 3.2. Second phase: Detailed case studies .................................................................. 6 3.3. Detailed case studies .......................................................................................... 8 4. Wessex ‘Deep Alliance’ ........................................................................................ 9 4.1. Summary ............................................................................................................. 9 4.2. Detailed discussion ........................................................................................... 10 5. ScotRail Paisley Canal Electrification .................................................................. 31 5.1. Summary ........................................................................................................... 31 5.2. Detailed discussion ........................................................................................... 32 6. Evergreen 2 & 3 ................................................................................................. 50 6.1. Summary ........................................................................................................... 50 6.2. Detailed discussion ........................................................................................... 51 7. Borders Railway ................................................................................................ 79 7.1. Summary ........................................................................................................... 79 7.2. Detailed discussion ........................................................................................... 80 8. Greater Anglia Station Transfer.......................................................................... 95 8.1. Summary ........................................................................................................... 95 8.2. Detailed discussion ........................................................................................... 96 9. Network Rail route devolution ......................................................................... 116 9.1. Summary ......................................................................................................... 116 9.2. Detailed description ........................................................................................ 117 10. London Underground: Organisational arrangements and devolution ............ 146 10.1. Summary ......................................................................................................... 146 10.2. Detailed discussion ......................................................................................... 148 11. Concluding remarks ..................................................................................... 165 Annex A – Table of stakeholder discussions ............................................................. 173 Annex B – ScotRail Deep Alliance ............................................................................ 175 Annex C – Project DIME........................................................................................... 179 Annex D – Merseytravel Devolution ........................................................................ 187 Annex E – Essex Thameside Station Transfer ........................................................... 194 Annex F – Sources of evidence ................................................................................ 200 Annex G – Additional information for London Underground case study ................... 210 Disclaimer: This report has been commissioned by the Office of Rail and Road (ORR). However, the views expressed are those of CEPA alone. CEPA accepts no liability for use of this note or any information contained therein by any third party. © All rights reserved by Cambridge Economic Policy Associates Ltd. 1. INTRODUCTION The Office of Rail and Road (ORR) has commissioned Cambridge Economic Policy Associates (CEPA) to undertake a review of particular infrastructure management arrangements and alternative management approaches adopted by Network Rail. The project is focused on a number of case studies where Network Rail has transferred or shared its usual management responsibilities with other parties. We have also considered London Underground in one case study as a point of comparison. For each case, ORR required us to assess the merits of the alternative arrangements and consider their potential applicability elsewhere across the network, highlighting key lessons learned. In the first phase of our work, we undertook a high level analysis of nine cases identified by ORR. In the second phase, we undertook a more detailed analysis of five of these case studies, as well as considering a further two studies (which had not been assessed in the first phase). This is our final report, which presents the results of our analysis across both phases of work. This report is structured as follows: • Section 2 discusses the background to this project; • Section 3 sets out the methodology for our analysis in each phase; • Sections 4 to 10 present the detailed case studies, with each study presented in its own section; • Section 11 provides our conclusions, taking all of the case studies into account; • Annex A provides a list by case study of the stakeholders with whom we have held discussions; • Annexes B, C, D and E contain the high level case studies which were not progressed to a detailed study; and • Annex F lists the sources of evidence for each case study. Efforts have been made to verify the accuracy of information via the use of multiple sources of information where available. However, the project has drawn upon a wide range of material both in the public domain and from stakeholders with whom we have held discussions and this information has not been verified. Stakeholders have provided their opinions and these are reported in the cases; they are not necessarily the opinions of CEPA. 1 2. BACKGROUND Network Rail is the infrastructure manager responsible for operating, maintaining, renewing and enhancing the mainline rail infrastructure network in GB, including track, signals and repair and renewal of the majority of its stations. Network Rail enters into collaborative multifunction framework agreements with suppliers for a large proportion of its work. These suppliers, via competitively tendered contracts, deliver renewals and enhancements on behalf of (and in collaboration with) Network Rail. Given Network Rail’s status as the monopoly infrastructure manager, its use of other suppliers – through contracting out in this way – is important because it introduces competition into the delivery of Network Rail’s work, thereby incentivising efficiency and effectiveness. Within this broad framework, there have been a number of cases where third parties have taken greater responsibility for infrastructure management, including changing the relationship between train operator and Network Rail. There have also been cases where there was serious intent for other parties to do so, but ultimately the responsibility was retained or subsequently handed back to Network Rail. Examples of alternative approaches include another party being responsible for delivery and / or operation of the infrastructure e.g. the Chiltern Evergreen Project, or where Network Rail has conducted its activities under a close relationship with a train operator, for example the Wessex Alliance. In the case of Merseyrail there was a clear intention for infrastructure management to transfer but ultimately the responsibility was retained by Network Rail. The aim of this project has been to prepare a report consisting of a series of case studies. In each case, functions that would ordinarily have been the responsibility of Network Rail were taken over by (or shared with) other parties, or were proposed to be taken over by other parties. The case studies consider: • the specific relationship between Network Rail and its partner which was established in each case and the way in which this is different from the status quo; • the pros and cons, and costs and benefits of proceeding in this manner; • the circumstances or conditions that made it effective or made it more difficult, and hence the potential for applying this approach more widely across Network Rail; and • the lessons learned in the process, including pitfalls to be avoided. 2 The project’s purpose has been to provide both quantitative and qualitative evidence to ORR regarding the merits of deploying these models of infrastructure management. Principally, ORR is interested in understanding whether and why an initiative was a success or failure, and any implications this has for how Network Rail is regulated. The work is intended to help inform ORR’s approach to the regulation of Network Rail in PR18. This project also comes in the