Third parties investing in Britain’s rail network will face lower fees from November after the Office of Rail and Road (ORR) concluded that a number of Network Rail’s risk charges could be reduced.
Fees will fall across nine of the 11 relevant industry agreement types, potentially saving investors between £2m and £3m a year if investment remains at 2025/26 levels, according to an independent actuarial assessment commissioned by ORR.
The changes could benefit local authorities, developers, freight operators, ports, airports, train operators and private-sector organisations seeking to fund or deliver improvements to railway infrastructure.
For the rail supply chain, the significance is the potential to reduce some of the costs associated with bringing externally funded projects onto the operational network – from station and accessibility schemes to freight infrastructure, depots and regeneration projects.
Basic asset protection fee more than halved
Network Rail charges risk fees where third parties fund or deliver work affecting the railway, providing funds to cover the risks it takes on through those arrangements.
Following a detailed review of the Rail Network Investment Framework, ORR concluded there was scope to bring the funds closer to a break-even position while continuing to manage the risks to Network Rail and taxpayers.
One of the largest changes affects basic asset protection agreements using the Network Rail Fee Fund. These agreements apply where a customer leads relatively straightforward, low-risk work affecting the railway.
The fee will fall from 5% to 2.4%.
Development services agreements, covering development and design work undertaken by Network Rail on behalf of a customer, will see the Network Rail Fee Fund charge fall from 1% to 0.1%.
Other reductions include the Network Rail Fee Fund rate for basic implementation agreements falling from 2.5% to 0.3%, while basic services agreements will reduce from 1% to 0.2%.
Changes are also being made to the Industry Risk Fund, including reductions for asset protection, basic asset protection, basic implementation, development services and implementation agreements.
The revised rates take effect from 1 November 2026.
Potential £2m-£3m annual saving
The Government Actuary’s Department carried out an independent actuarial review of the funds for ORR.
Its assessment indicates that, if relevant investment remains at 2025/26 levels, the changes could collectively save third parties between £2m and £3m each year.
While that represents a relatively modest saving when considered against total railway expenditure, individual reductions could be more significant for organisations assessing the viability of smaller externally funded projects.
Graham Richards, ORR’s Director, Planning and Performance, said: “These cuts to fees will have a tangible, positive impact on investment decision making into Great Britain’s rail network. This is a core example of how smart regulation can boost growth by making investment more attractive, while ensuring a good deal for the taxpayer.”
Third-party investment supports range of rail projects
Third-party investment has become an important route for delivering railway enhancements that are connected to wider commercial, housing, transport and regeneration schemes.
Projects supported through the Rail Network Investment Framework can include station improvements, accessibility schemes, freight facilities, depots and wider connectivity and regeneration projects.
For developers and local authorities in particular, railway-related costs can form one element of a much larger business case. Reducing charges associated with engaging Network Rail therefore has the potential to improve the economics of schemes where rail infrastructure needs to be altered or enhanced.
The changes also have relevance for freight, where investment from ports, terminal operators and other private organisations can be important in developing new or expanded facilities.
Reducing the friction around external investment
The fee reductions form part of ORR’s wider work on the Rail Network Investment Framework and its examination of how the railway can better support external investment.
The regulator says its work has sought to improve service standards and the treatment of risk while supporting investors and ensuring value for money.
For the industry, reducing risk fees will not by itself unlock every third-party rail scheme. Projects must still navigate the technical, operational, commercial and assurance requirements associated with making changes to a live railway.
But the reductions remove some of the cost attached to that process. For smaller schemes in particular, where development costs can have a disproportionate impact on the business case, lowering those barriers could help make more projects viable.
With external investment capable of supporting everything from freight terminals and stations to housing-led regeneration and accessibility improvements, the practical test will be whether the new rates help translate greater private and local investment appetite into projects reaching the railway.
