ROGS market study

We carried out a research study in autumn 2009 into the application of The Railways and Other Guided Transport Systems (Safety) Regulations 2006 (ROGS) as part of the wider review of ROGS implementation conducted by independent consultants Noble Denton Associates for ORR.

The scope of the study was to:

• assess whether the requirement to obtain safety authorisation or certification could be a barrier to entry into Great Britain's market(s) for the provision of mainline passenger and freight transport following the implementation of ROGS; and
• recommend any steps we could take to further reduce any safety barriers that may exist, including, for example, amending our own approach, improving access to information about how to obtain authorisation or certification or other actions.

The study examined the experience of applicants for new safety certificates and authorisations, in terms of costs, duration and ease of the process. We focused on mainline passenger and freight train operators for which safety certification is required. We also touched upon the safety authorisation process for infrastructure managers because franchised train operators also act as infrastructure managers of stations.

We assessed data available from the reports produced by Noble Denton Associates, our own records, the safety certification/authorisation process, the guidance available and interviewed a small sample of applicants.

None of the recent or potential new entrants that we spoke to perceived the safety certification or authorisation process to be a barrier to entry. Comments reported by Noble Denton Associates support this view. There is a general consensus that obtaining safety certification and or authorisation under ROGS is faster and less bureaucratic than gaining approval under the previous safety case system.

The overall cost of obtaining safety certification or authorisation (adding in a figure for time spent) typically varied significantly between applications. The average cost was around £20,000, with costs ranging from under £10,000 to over £40,000. One applicant experienced higher costs which it attributed to applying both under the safety case system and the ROGS system, as this situation is unlikely to recur we treated this as an outlier and did not include it in the average.

The turnover of mainline train operators ranges from £1m for smaller new open access or freight operations up to over £500 m for larger franchises, which sets this average cost of obtaining safety certification or authorisation in context.

In terms of timescales, we have always met the statutory deadline in ROGS on making a decision on an application for certification or authorisation within four months of receiving all of the necessary information. Furthermore, most applicants provide all of the information we need promptly enough for us to make a decision in less than four months from the date we receive their initial application.

Our findings support the conclusion that ROGS implementation in GB has been successful in speeding up the accreditation process and streamlining requirements across member states while maintaining and improving health and safety standards.

We found no evidence to suggest that obtaining new certification and/or authorisation is a barrier to entry, on the contrary we found that ROGS appears to improve the conditions of entry, consistent with the aims of facilitating an open market for rail transport.

On the basis of our findings no further market study work is required at this time.

Our findings will inform the concurrent broader evaluation of the impact of ROGS and will feed into our review of the ROGS guidance taking place during 2010-11.

We will consider a number of small additions to our guidance to improve information transparency by, for example, including a first point of contact for ROGS into our guidance for new entrants as well as giving more guidance to applicants as to who are the interested parties to whom they should send copies of their applications.