Rail infrastructure risk charges in the UK are set to fall under an ORR measure covering third-party and private investors that fund or deliver works on the rail network. The change is part of a wider set of measures designed to make direct private investment in UK rail infrastructure easier to pursue.

ORR plan cuts rail infrastructure risk charges
Photo: Network Rail

Network Rail collects the charges as the rail infrastructure manager and uses the fees to cover risks linked to third-party-funded works. Potential investors can include local authorities, property developers, freight companies, ports, airports, rail operators and other private organisations seeking to support improvements to the network.

The move follows a detailed review of the Rail Network Investment Framework⁠, or RNIF. This framework sets out how third-party investment can be brought into rail projects. ORR carried out the review at the request of the UK Treasury as part of work to support more direct private investment in infrastructure.

Rail infrastructure risk charges and break-even costs

In its letter to the Treasury⁠, ORR states that the contributions currently paid to Network Rail by third parties are higher than needed to cover break-even costs. The regulator says the risk funds are generally more than sufficient, although the position varies across the main mechanisms assessed.

The review covered the Industry Risk Fund and the Network Rail Fee Fund. Both sit within the RNIF and are used to create a consistent approach to risk sharing and liability coverage for projects financed by third parties.

ORR also asked the UK government’s actuarial department to carry out an independent assessment of the funds. That work was intended to test earlier technical findings and improve the operation of the risk mechanisms, with the aim of keeping them credible, proportionate and supportive of long-term investment in the rail network.

ORR plans autumn 2026 adjustments with Network Rail

ORR will work with Network Rail to reduce the charges and move them closer to the break-even level. The adjustments will vary by contract type, and further details are due to be set out in autumn 2026.

The regulator is not recommending any change to the GBP50 million threshold currently used under the RNIF. According to the analysis, there is limited evidence for revising the threshold, because only four agreements in the CP7 control period exceed that level.

ORR also decided not to introduce strict ring-fencing of funds or interest accrual for risk funds. The assessment found that the financial case for these steps is limited, while the administrative burden would be too high.

RNIF projects include stations, freight and depots

Projects financed through the RNIF⁠ can cover station upgrades, urban regeneration schemes, rail freight infrastructure, depots, accessibility improvements and wider connectivity works.

ORR says the planned fee reduction belongs to a broader package of changes intended to make the system clearer, fairer and more proportionate, while preserving the protections needed for the rail sector and taxpayers.

Graham Richards, Director of Planning and Performance at ORR, said:

“We recognize the importance of third-party and private investment in the railways for growth, and we are proud of our regulatory work to facilitate this,”

He added:

“Our recommendation to reduce risk charges for third parties and private investors is part of our broader work to make investment in the British rail network clearer, fairer, and based on proportionate rules, to protect the industry and taxpayers,”

Framework guidance for private rail investors

The RNIF review was carried out in several stages. During the first phase, ORR collected feedback from investors and rail industry stakeholders. That process pointed to the need for clearer guidance on how investment works and what financing options are available for different types of rail projects.

The second phase focused on a technical review of the main investment mechanisms. It examined venture capital funds, the risk allocation matrix, contractual models and the value thresholds that determine how those mechanisms are used. ORR also notes that minor updates were made to keep the system accurate and relevant.