Prescott's choice for regulator was Tom Winsor, a lawyer and partner in a leading City of London law firm who had shown his impatience with the poor performance of Railtrack, the owner and operator of the national railway infrastructure.
This was because, to encourage and maintain private investment in the railway industry, it was essential that decisions by the regulator were taken on objective economic criteria, free of undue political influence or considerations.
Although successfully resisted, on 15 July 2004 the government announced a legislative intention to restrict the jurisdiction of the Office of Rail Regulation.
During the final Parliamentary stages of the passage of the Railways Act 2005, the Government sustained a defeat in the House of Lords over an amendment which would have protected passenger and train operators against a diminution of infrastructure quality or performance, or being held rigidly to their contracts for the provision of railway services which assumed no such diminution, if the Secretary of State for Transport restricted funds available to Network Rail.
Critics regarded this as an unjustified interference in an inter-dependent contractual matrix, contrary to the legitimate expectations of private investors in the railway.