1.1 In the mid-1990s the government privatised the UK's railways and let franchises for passenger rail services to private sector companies for a specified length of time following a competitive procurement process. Following the abolition of the Strategic Rail Authority in 2006, the Department for Transport (the Department) has been responsible for awarding and overseeing rail franchises in England and Wales.4 Figure 1 sets out the roles and responsibilities of the main organisations in the UK rail system.
Figure 1 Functions and responsibilities of the main organisations in the rail system | |
Organisation | Functions and responsibilities |
Department for Transport | Sets overall rail policy and strategic objectives. |
| Lets and manages passenger rail franchises; pays subsidies to loss-making rail franchises and receives premia payments from profit-making franchises. |
| Acts as 'operator of last resort' to step in to keep rail services running in the event of operator failure. |
| Provides grant funding and oversees Network Rail. |
| Develops and sponsors major rail projects such as Crossrail and High Speed 2. |
Network Rail | Owns, operates and maintains the UK's railway infrastructure. |
| Carries out upgrades and improvement projects. |
| Charges franchise operators to access the railway to run services. |
Train Operating Companies | Operate passenger rail services. |
| Pay Network Rail to access track to run services. |
| Lease trains from owners usually Rolling Stock Leasing Companies (ROSCOs). |
Office of Rail and Road | Regulates the efficiency of Network Rail's spending on maintaining and improving infrastructure. |
| Grants licences to train operating companies to run passenger rail services. |
| Monitors and enforces compliance with health and safety law on the railway. |
| Considers applications from train operating companies to run 'open access' services to use up available capacity on the rail network. |
Source: National Audit Office |
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1.2 The Department is currently responsible for 15 franchises in England and Wales. Devolved transport authorities such as Transport Scotland and Transport for London are responsible for awarding some contracts such as ScotRail and the London Overground. In 2013-14, train operating companies raised around £8.5 billion in revenues and in 2014-15 returned around £1.2 billion (net) to the Department. Appendix Four sets out the flows of money in the rail system.
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4 Under the Railways Act 2005.