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Sunday 5 Nov 2006

TRANSPORT SELECT COMMITTEE REPORT: PASSENGER RAIL FRANCHISING - NETWORK RAIL RESPONDS

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Speaking in response to the Transport Select Committee's Report, which recommends pilot vertical integration schemes in self-contained parts of the rail network, Chief Executive of Network Rail, John Armitt, said: “We note the conclusions of the committee – particularly its view that vertical integration across the entire network would be ‘a retrograde step’. “We do not agree, however, that there is merit in piloting vertical integration in self-contained areas, such as Merseyside.  We believe the benefits of vertical integration can be realised without the transfer of assets or operational control from Network Rail to train operators.  Closer working relationships and dedicated managers – a model known as virtual integration – emulates the positive aspects of vertical integration, while leaving the rail network in the ownership and control of Network Rail, benefiting from the company’s strong performance, consistent safety standards, rigorous inspection regimes, and weighty purchasing power. “We have demonstrated the success of this model through our virtual integration with Merseytravel.  This is something we began after extensive discussion of the vertical integration proposals in the Government's 2005 White Paper The future of Rail. “We firmly believe that Network Rail – as the single, national infrastructure operator – offers stability and leadership to the rail industry, and the best possible future for Britain’s rail network.  We also recognise that the best future requires increased integration within the rail industry.  We have worked with the train and freight operating companies, to introduce integrated control centres, to produce joint performance improvements plans and to develop utilisation strategies for each route.  And we are committed to working closely with them, as partners, in the future.”