Regulator announces Network Rail faces £3m penalty as it calls on the company to prioritise its customers

28 October 2010
ORR/32/10

Network Rail faces a £3 million penalty after it breached its licence for failing to run an effective and efficient timetabling process for Britain’s rail network, the Office of Rail Regulation (ORR) announced today.

The proposed financial penalty follows confirmation in September 2010 that Network Rail had breached its licence after problems arose from the introduction of the integrated train planning system (ITPS) for the May 2010 timetable. System faults left some operators temporarily unable to publish information or take bookings and reservations. Freight and passenger charter operators were some of the hardest hit as very late confirmation of services left them unable to plan their businesses properly, and facing revenue losses because of customer cancellations.

The regulator’s investigation into the introduction of ITPS found that, while Network Rail was right to replace old and inefficient timetabling systems and processes, its implementation of the new system failed to consider properly, mitigate, and communicate the risks of initial problems affecting its key customers - operators and passengers.

Commenting on the decision, Bill Emery ORR chief executive said:

“Network Rail has a duty to run an effective timetabling system – this is crucial to the operation of Britain’s rail network.
"Network Rail was right to replace old and inefficient timetabling systems and processes, and in time its new integrated train planning system should bring longer term benefits to the industry. But its introduction earlier this year created significant disruption for operators and passengers. The company has since taken positive steps to resolve problems that should have been avoided, and is developing plans to compensate operators.
“However, and not for the first time, Network Rail has breached its licence for failing to give sufficient emphasis to the needs of its customers. This substantial penalty sends a very clear message that the company must quickly take steps to ensure its processes prioritise its customers.
“It is imperative that Network Rail is fully aware of, and guided by, the interests of its customers in everything it does. We expect Network Rail to take forward the lessons it has learnt from this project and build on its progress in putting customers and rail users at the heart of its business."

Notes to editors

  1. To view the ITPS penalty letter in full visit: http://www.rail-reg.gov.uk/upload/pdf/itps-penalty-notice-letter-271010.pdf
  2. To view the ITPS penalty notice in full visit: http://www.rail-reg.gov.uk/upload/pdf/itps-penalty-notice-271010.pdf
  3. Network Rail introduced a new integrated train planning system (ITPS) to replace the current collection of legacy train planning software with a single modern system.
  4. The new system was introduced for setting the base timetable in September 2009 and short-term planning began in February 2010.  Problems began to emerge in early March 2010 when operators and Network Rail informed ORR that there was likely to be a delay in the publication of the national timetable. Further problems emerged, including trains disappearing from the base timetable, an inability to handle portion working, operators unable to import bids electronically, delays to the publication of the national rail timetable, and loss of services from the operators’ downstream reservations and customer information systems. These problems badly affected operators in terms of their own planning and resourcing, and to some extent revenue and reputation, and had an impact on passengers and freight users. 
  5. In May 2010 ORR informed stakeholders it would investigate the introduction of ITPS as a possible licence breach. ORR began its formal investigation in early June 2010. On 12 July 2010 ORR wrote to Network Rail stating it might be in breach of its licence. Network Rail responded on 26 July 2010. 
  6. The relevant licence provisions are conditions 1 and 2.
    • Under condition 1 Network Rail must run an efficient and effective process, reflecting best practice, for establishing a timetable and any changes to it; and where necessary and appropriate, initiate changes to relevant industry processes so as to enable persons providing railway services and other relevant persons to plan their businesses with a reasonable degree of assurance and to meet their obligations to railway users.
    • Condition 2 contains a general duty which obliges Network Rail to provide access to appropriate, accurate and timely information relating to planned movements of trains to enable passengers to plan their journeys. In particular, condition 2.3 states that, in order to comply with the general duty in condition 2.1, Network Rail should establish and maintain efficient and effective processes, appropriately reflecting best practice, and apply those processes to the greatest extent reasonably practicable, having regard to all relevant circumstances, so as to provide appropriate, accurate and timely information on relevant changes to holders of passenger licences so that the latter can in turn provide information to railway passengers on the planned movements of the trains concerned.
  7. ORR's decision to impose this penalty has been informed by its Penalties Statement. In deciding whether to impose a penalty the regulator must take account of six penalty principles (as set out in the Macrory report) - change behaviour; eliminate financial gain; appropriate to offence and regulatory issue; proportionate to offence and harm; restore harm; and deter future non-compliance.
  8. ORR must consult on any proposal to impose a penalty and give the licence holder 21 days to make representations before confirming it.

ORR press office

020 7282 2094/2007/2188