## The Office Of Rail And Road 160Th Board Meeting

21 MAY 2019, 08:30 - 15:00 
Grand Central Hotel, Glasgow, G1 3SF 

 
Non-executive members: Declan Collier (Chair), Stephen Glaister, Anne Heal, Bob Holland, 
Michael Luger, Graham Mather, Justin McCracken 
 
Executive members: John Larkinson (Chief Executive), Graham Richards (Director Railway Planning 
and Performance); Ian Prosser (Director Railway Safety). 
 
In attendance: Daniel Brown (Director Strategy and Policy & Railway Markets and Economics), Russell 
Grossman (Director of Communications), Tess Sanford (Board Secretary), Freya Guinness (Director Corporate Operations), Liz Thornhill, (Director Legal Services) Other ORR staff in attendance are shown in the text.  
 
Item 1           WELCOME AND APOLOGIES FOR ABSENCE 
 
1. 
The chair welcomed everyone to the meeting.  There were no apologies Item 2           DECLARATIONS OF INTEREST 
 
2. 
No new interests were declared. Item 3           APPROVAL OF PREVIOUS MINUTES AND MATTERS ARISING 
 
3. 
The board secretary read out some changes to the minute of the item on board 
reporting which were accepted. The remainder of the minutes of the previous board meeting were agreed and the Chair would sign an amended version [Action].   
4. 
The Board noted the report on the action points, including that item iii had been 
closed by the inclusion of the requested graphic in the May board papers 
Item 4: 
HEALTH AND SAFETY MONTHLY REPORT 
 
5. 
Ian Prosser introduced the monthly report and emerging headlines for his annual 
report on H&S in the industry.  He reported on rolling stock, particularly the authorisation of 800s and other issues with authorisations.  On Meridian Water, he explained that the DfT needed to supply a derogation to enable the station to 
be brought into use.   
6. 
Ian had attended NR's SHE committee and discussed their plans to improve 
trackworker safety by the removal of unassisted lookouts and unplanned red zone working by the end of CP6.  Serious near misses continued to be a concern 
and this would be an area of focus. 
7. 
The board discussed how the long term goal of safety improvement could be 
tracked without setting a target.  The aim of 'continuous improvement' allowed the potential for something currently not ALARP to become feasible as technology or costs changed.  The board noted that commentary which would be included in the quarterly report would give more context for trends and 
developments. 
8. 
The board discussed the improvement notice served on Eurotunnel and noted 
the proposed inspection would include culture and leadership capability.  IGC's 
request for additional resources was being discussed with the funder. 
9. 
The board discussed some particular issues for heritage railways including the 
need for cross-industry standards and shared learning, financial resource risk, 
challenges for a volunteer workforce and churn among board members, where understanding of legal duties and governance could quickly be eroded.  ORR 
had increased its resource in the sector in the current year.   
10. 
Ian described next steps in producing the Chief Inspector's Annual Report and 
themes he expected to identify as key messages.   More services on the network made maintaining safety even more reliant on good performance - capacity could only be maximised with a strong safety culture.  One example was SPADs where numbers were up and the cause was difficult to identify: it was possible that the number of incidents simply reflected the increase in traffic and the 
limitations of relying on human parts of the system.  
 
Item 5: 
EXECUTIVE DIRECTORS' HEADLINES AND REGULAR REPORTS 
 
Catherine Williams joined the meeting for this item 
11. 
Graham Richards reported that the morning's performance so far after the May 
timetable change was encouraging - tracking well above last year's figures.  He 
reminded the board that major issues took a few days to emerge in 2018. Catherine Williams introduced the report on December change preparations 
that had been circulated as an annex to the monthly performance report. The 
PMO would conduct a lessons learned exercise on May '19 promptly including Meridian Water and Class 442 issues.  Where DfT needed to act to mitigate a risk for December 2019 this had been made clear to them both by ORR and the PMO. The board asked for a commentary on progress to date set in the context of the Glaister review.  It was clear that some progress had been made in 
delivering straightforward changes, but the scope for success with more ambitious change was unclear.  [Action DB] 
12. 
On the performance report, the board queried whether performance stats and 
NR delay minute data could be reconciled and suggested that delay minute trends might also be useful. 
13. 
Dan Brown reported that in ensuring that ORR had not held up changes on 
which the May timetable depended, the authorisations team had worked to unreasonably shortened deadlines because of late submissions by dutyholders. There would be a letter to industry setting out the issue and seeking for it to be 
addressed.  He also reported on progress with the Williams Review, an open 
access application1, and the commencement of the spending review process in 
DfT where it appeared that OM funds for NR would be protected but renewals 
and enhancements would be subject to review. 
14. 
Russell Grossman reported on media issues over the past three weeks, 
including Which's recycling of ORR's statistics without crediting the Office and plans for the suite of annual publications that will be issued in July.   
15. 
Freya Guinness reported on that the new lease on Cabot Square had been signed and the impact of delay of final completion.  She also reported that HMT 
had written to begin the CSR process with ORR, setting out the timetable and 
next steps.  The work would take place based on the current scope of our 
functions. 
16. 
John Larkinson reported on discussions with NR on some specific commercial2 
risks, and his other meetings.  He would continue to robustly respond to public speculation about the implications of Williams Review for ORR. 
 
Item 6 
   
ANNUAL REPORT AND ACCOUNTS 
 
17. 
Freya Guinness reported that the NAO had issued an unqualified audit opinion, 
noting one misstatement of £14,000 as not material.  The Audit and Risk Committee had scrutinised the accounts and the internal auditors' reports.  The board made some small comments on the content of the report and 
recommended that the Accounting Officer should approve it. 
 
 
Item 7 
   
GTR PENALTY REPRESENTATIONS 
 
Stephanie Tobyn, Sam McClelland-Hodgson joined the meeting for this item 
with Ruth Luxford on the phone  
Paragraph 18 has been redacted from the published minute as legally privileged 

19. 
The board considered GTR's representations on the costs it had incurred as a 
result of the timetable failure, including additional compensation and the creation of a passenger fund, and noted that the company continued to argue that it was not in breach of its licence condition on passenger information.   
20. 
The board were content that their original decisions to find GTR in breach was 
lawful and correct.  The Board did not consider that GTR's representations on the contravention called into question the soundness of the contravention decision. 
21. 
The board considered carefully the argument that the costs incurred by GTR and 
the creation of the passenger fund could be taken as mitigation and result in a reduction of the penalty.  The board noted that the fund was subject to 
consultation and would not necessarily address improvements for passenger information.  They noted that compensation had not reached everyone who had been affected.  These sums were in relation to the failure to deliver franchise or 
passenger performance commitments and not to the specific duty imposed by 
the licence condition.  This was an important and legitimate distinction.  The board did not wish to blur the boundaries between the different regimes designed to protect passengers.   
22. 
The aim of imposing the penalty was to change the future behaviour of the 
licensee to better meet its obligations on passenger information.  The licensee continued to argue that it had not failed to meet its licence obligations and reducing the penalty at this point would undermine that original purpose. 
23. 
The board considered the other representations made by Transport Focus and 
DtT but these did not alter the facts on which the original decision was made.  
24. 
The Board carefully considered all of the representations received and took 
account of all the evidence, ORR's published economic enforcement policy, and its duties set out in section 4 of the Railways Act 1993 
25. 
The Board agreed that it:  
26. 
a. remained of the view that the imposition of a penalty is justified and 
proportionate, in accordance with the Macrory principles; and  
27. 
b. remained of the view that a penalty of £5 million was appropriate in this case. 
[Action] 
Item 8 
NR'S 100 DAY PLAN AND DRAFT OPINION UNDER THE MANAGING 
CHANGE POLICY Carl Hetherington and Sheona Mackenzie joined the meeting for this item 
28. 
John Larkinson reminded the board of the framework of the managing change 
policy and the framework for issuing an opinion.  This was the first time this had been done.  The opinion could be applied to the overall programme and Phase 1 specifically.  The board discussed risks associated with change programmes including: management distraction, unplanned cost, loss of stakeholder 
confidence and engagement.  Better financial information was needed in order to 
assess future financial performance against expectations from PR18.  The board 
particularly noted that the underpinning philosophy of PR18 was rooted in local stakeholder needs and accountability and that issues such as the role, operation and governance of route supervisory boards should be addressed as part of the move from routes to regions.   
29. 
The board noted that the onus was on NR to deliver its programme without 
affecting its business as usual activity and reiterated its concerns at the lack of 
transparency around likely costs and benefits expected.    
30. 
The board agreed that the opinion should be issued and delegated sign off to 
John Larkinson [Action].  The letter would be placed on the website shortly thereafter. 
Item 9  
RIS2 DRAFT STRATEGIC BUSINESS PLAN AND EFFICIENCY REVIEW Richard Coates joined the meeting for this item with David Hunt and Adam Spencer 
Bickle on the phone. 
 
31. 
David Hunt introduced the item, noting that supplementary information had been 
circulated with the papers following the board's last discussion.  He noted three key issues for the board: embedded efficiencies, measuring and proving that 
RIS2 is deliverable and savings on inflation. 
Paragraphs 32 and 33 have been redacted as relating to documents that were in draft and will be published in future.   
34. 
The board discussed issues around measuring HE's performance including the 
new passenger satisfaction survey, the importance of better unit cost data, increasing volumes of traffic.  
35. 
The board agreed the general view that the RIS2 SBP was better than RIS1 and 
reflected lessons learned but that with more cost, complexity and traffic to deal with there were serious risks to deliverability that needed to be recognised and managed.  The board delegated final sign off of the advice to John Larkinson and Graham Richards. [Action] Item 10  
PR19 
36. 
At a conference call on 13 May the Board had agreed an approach to a letter 
before action by Eurostar (ES) and delegated any urgent action to John 
Larkinson.  Liz Thornhill now updated the board on steps taken by ES since the 
board call.  They continued to pursue their application for JR despite the court's initial refusal to grant judicial review and refusal to expedite the matter.  ORR was continuing to oppose  the application, including on the ground that it is premature..  The board noted that ES was continuing to engage with HS1 on 
their draft 5YAMS. 
37. 
The board discussed the options for recovering costs incurred, including internal 
costs, noting that costs incurred by HS1 would be borne by their customers.  
Cost recovery should be pursued at the end of the process.[Action] 
Item 11 
HIGHWAYS ENGLAND - KEY MESSAGES ON 
PERFORMANCE 
Richard Coates joined the meeting for items 11-13) with Ian Ritchie on the phone for this item only. 
 
38. 
Richard Coates reported that six out of eight KPIs had been assessed as met, 
with the 'killed and seriously injured' numbers still to be received and customer satisfaction below the 90% target. There was still scope for improvement but 
overall the report was positive. 
39. 
The board discussed the objective standard which underpinned the KSI on 
pavement condition, and user satisfaction and its relationship to delay minutes. Richard Coates reported that HE have a credible plan to improve user satisfaction, but that the regular survey results would take time to reflect any 
improvement.  
40. 
The board discussed the reduction of c£650m between the initial portfolio of 
projects for RIS1 and the current plan and were assured that change control had been applied mostly to remove projects which were low priority or did not offer value for money, and to deliver better overall portfolio management.  It could be argued that this was a correction from initial over-programming.  It would be 
important to be able to report at the end of RIS1 what had been changed, what deferred and whether the actual spend had been efficient.  Transparency around 
these issues was a key public benefit of ORR's role as Highways Monitor.   
41. 
Overall the board recognised the progress HE had demonstrated in the past year 
in delivering good performance and that it had credible plans to continue its improvement into the beginning of RP2.  The board noted the continuing 
challenge for HE of improving financial data around unit costs. 
ITEM 12 
 NETWORK RAIL ANNUAL PERFORMANCE REPORT 
 
42. 
Graham Richards introduced the paper which reported on the final year of CP5.  
Network Rail performed poorly in a number of areas during CP5, which had been well documented in previous reports.  During 2018-19 ORR had taken action on NR's preparations for delivering efficiently and the company's performance 
planning capability.  The report would further evidence these actions and note the introduction of more intrusive monitoring in CP6. 
43. 
The board agreed the broad thrust of the report adding that challenges which 
persist should be highlighted: understanding and demonstrating financial efficiency, health and safety (planning and delivery of safe working), and capital 
project failures.  It was also noted that commentary on poor train performance 
should refer to operators' contribution. ITEM 13 
COMPARISON OF KEY MESSAGES FOR RAIL AND ROAD 
PERFORMANCE 
 
44. 
The paper reflected on the two annual reports of performance and the board 
welcomed the opportunity to discuss them.   It was important to seize opportunities for cross-sectoral learning.  The board noted subjects of particular interest where staff were reflecting on similarities and differences: procurement regimes, workforce safety, possession regimes. 
45. 
One key benefit of ORR's role in both regimes was the requirement to bring 
transparency and to root its decisions and advice to others in evidence. ITEM 14 
 
WILLIAMS REVIEW 
 
Stephanie Tobyn, Marcus Clements, Scott Hamilton joined the meeting for this item with Robert Cook and Matt Westlake on the phone 
46. 
Dan Brown introduced the discussion.  This was an opportunity to contribute 
evidence to an important policy review and the aim was to identify issues that could be addressed immediately and those which would take longer to solve. Evidence needed to be robust as there were multiple interest groups, which were not aligned. 
47. 
The submission to the Williams Review was due in early June, so it would refer 
to areas where more work was needed by ORR to develop more definitive advice. Compensation 
48. 
The board discussed the proposal to create rights and obligations on 
compensation through a licence condition.  The board noted the gap between those entitled to claim and those claiming and the apparent reasons for this gap.   
49. 
The board agreed that introducing a licence condition and code of conduct would 
incentivise TOCs to deliver punctual services and be an improvement for passengers.  The board noted the model of automatic, fixed rate compensation for delay which applies in aviation but agreed that the detail of what should be 
required of TOCs needed more work.  For example questions such as the purpose of compensation and what outcomes it should deliver for passengers would need to be tested.  The risk of perverse behaviour (such as 'padding' the 
timetable to minimise the risk of delay) would also need to be considered.  It was important to think about the resources such a system would need - both in TOCs 
and in the regulator. 
Accessibility 
50. 
The draft contained 16 separate policy recommendations with multiple options 
and built on ORR's work on DPPP and the new accessible travel policy work.  
There were three recommendations which the team wanted to draw the Board's attention to: 
 
Increased staffing at stations where that increase would make a station 
accessible for more passengers; 
 
Better information on access for passengers with limited mobility who are 
planning travel; 
 
A change in the governance of Access for All funding with different criteria and 
local control for longer term improvements. 
51. 
The board discussed the draft report.  While full access was the aspiration, this 
approach proposed better access to currently inaccessible stations and better information for passengers so they could plan with confidence.  The board 
discussed the staff resource and other financial implications for these proposals, and questions around value for money vs people's legitimate expectations of being able to access the network. There was no universal right of access to the network, but it could be granted.  The board favoured national standards on access at stations. Issues with accessible rolling stock would also need to be considered. 
52. 
More work would be done on possible funding models alongside other evidence 
gathering as the ATP work continued to develop.   
53. 
The board discussed the ways that support could be given to passengers and 
how it might be organised and funded, but were clear that such implementation 
details were for others to determine once the principle proposed was accepted. 
54. 
During 2018 the board had seen plans for an app to be developed to help 
passengers and the need for this continued to be urgent. 
55. 
The board asked that the final submission be signed off by John Larkinson with 
the chair. ITEM 15 
 
FEEDBACK FROM COMMITTEES 
 
56. 
Bob Holland reported on the ARC special meeting which had considered the 
annual accounts and reports from the internal and external auditors. 
57. 
Stephen Glaister reported on the Highways Committee meeting which had 
considered the papers at the board today.  He reported on the start of recruitment for the Highways expert panel and work in hand by HE and RAC Foundation to improve the evidence base for all lane running by post implementation reviews. ITEM 16 
REFLECTIONS ON REGIONAL VISIT 
58. 
The Board discussed the key themes they had heard from guests at the 
stakeholder dinner on 20 May.  Such opportunities to discuss local issues and 
understand how relationships with the executive were going were particularly important in Scotland.   
59. 
Options for a regional visit in the autumn were discussed. ITEM 17 
ANY OTHER BUSINESS 
60. 
The chair reported that the Secretary of State had agreed to the reappointment of 
three members whose terms otherwise would end this year. 
61. 
Recruitment of additional NEDs had now begun. 
62. 
The Board noted the below the line items. 
Meeting closed at 2.55pm