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Rail Privatisation
Regulation - why, who, how and when?
The system that was set up under privatisation is a vertically integrated one, with Railtrack running the track and infrastructure and the train operating companies operating the train services. There are 25 train operating companies and they are awarded their franchises by the Shadow Strategic Rail Authority (SSRA). They monitor the performance of the train operating companies.
Railtrack is regulated by the Office of the Rail Regulator (ORR). Railtrack has also had to set up a new non-profit making company called Railway Safety. The role of this company is to carry out independent safety audits and safety assessments.
All of the different groups involved in the railways are bound together by complex legal agreements setting out who is responsible for what, but with Railtrack sub-contracting much of its maintenance work a debate has arisen over exactly who is responsible for what. Even Gerald Corbett (the Railtrack boss) has gone on record suggesting that the structure of the railways was designed
more for maximising the proceeds to the Treasury than for running an efficient railway. He has suggested that simplification of the structure may help make a more efficient and safer railway.
The overall responsibility for regulating rail safety lies with the Health and Safety Commission and its operational arm the Health and Safety Executive. One concern that often arises with regulation is the possibility of regulatory capture. This is a situation where the firm and the regulator work so closely together that the regulator becomes influenced by the arguments of the firm
and may become increasingly convinced by them. This will mean that the regulator is less able to take an overview of the industry and may as a result be less effective. It is very difficult to judge the extent to which this has happened and measure any changes in regulatory stance.
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