Final report for the Office of Rail Regulation

1.1 The existing structure of rail access charges in Britain, as in most countries, leads to a low marginal charge for the operation of additional trains, despite the introduction of a capacity charge based on congestion costs at the last periodic review. In cases where capacity is scarce, and there are demands on the system which cannot be met, this marginal charge fails to reflect the opportunity cost of forcing other traffic to travel by a less favoured route, at a less favoured time or not to use rail at all. The argument in favour of scarcity charges is that introducing a scarcity charge to cover this opportunity cost would help either in ensuring that slots were allocated more efficiently in the short run, or in terms of the longer term planning of services. Such charges are permitted under European Directive 2001/14, which recognises that they should take the form of reservation fees, paid whether the capacity is actually used or not. It is a condition of such charges that plans to enhance capacity are prepared and proceed unless a cost-benefit analysis shows they are not worthwhile.