“And London Bridge shows the industry’s hopeless ability to do big upgrades in a manner which does not irritate the customer. When the minister effectively has to put herself in charge of the project, you know things are bad.
“You have to give passengers a better voice, you have to give better value for money. You can’t just treat passengers as cash cows.”
Stephen Joseph of CBT largely agreed: “By 2020 the train operators in England and Wales will be producing £2 billion a year surplus to the Government. You could call that a passenger rail tax. People will want to know what is done with that.
“The ticketing story is just dire. We are not even labelling ticket machines to tell people that other ticket machines on the same station are available and can give cheaper prices for the same journey. This is a nonsense.
“We have to find a way that makes all people on the railway think passengers (and freight users) come first. We have to find a way in which the industry can innovate, without going at the pace of the slowest.”
Anthony Smith: “There is a basic trust issue. The average passenger does not think the rail industry is on his or her side. It is out to get you, out to cheat you. You feel like a victim, not a customer.”
Andrew Meaney, from Oxera, argued that this is further illustration of the lack of accountability. Oxera advises and lobbies on economic issues connected with competition, finance and regulation. Its customers include the Department for Transport.
“The DfT doesn’t have a rail budget, it just has a budget. That £2bn surplus comes mainly from the South. It’s not used to reduce rail fares in the South, and it’s not used to make services in the South better. It’s used elsewhere - to prop up services in the North.
“The customer is now the main funder, rather than the decision-maker. The decision-making is getting further away from the main source of revenue, not closer. And the customer has no engagement with the regulator either. How do you engage the customer when what they are paying for is not the service they are actually being given? They are paying for somewhere else in the country. There must be a better way to do this than taking money from London commuters and then spending that money elsewhere.”
Nick Gallop, Managing Director of rail freight consultant Intermodality, gave a warning: “Be careful what you ask for. If passengers dictated policy you would not have ended up with Javelins travelling to east Kent. Passengers would not have chosen to pay extra for that service.
“But the Javelins delighted passengers, once they found they could get into London in not much more than half an hour. If you just use an airline yield management system to dictate what passengers pay, it’s not enough to bring about change.”
Len Porter related the issue of passenger revenue to the reliability of the whole rail system: “Other nationalised railways think whole-life, whole-cost. Because they can. Our railway doesn’t. Therefore we build at low cost, and build either unreliability, or reliability for a short life, into the rolling stock. Combine that with a lack of reliability modelling in the infrastructure and you get an unreliable system. That’s why the passenger feels the pain.
“The solution is about system risk and reliability. It’s about delivering highly reliable infrastructure and highly reliable trains. We are not geared up for that… by a long way. We have to go back to first principles.”
On freight, Nick Gallop from Intermodality took the lead. The consistent theme with the rest of the railway was clear.
“Information is a problem. The information that retailers, suppliers and distributors need to choose rail should be out there. It isn’t. It seems daft that large companies should have to go ferreting about to find a website that a student from the University of Southampton has built in his spare time, to see where every freight service is and how it is performing [http://www.realtimetrains.co.uk].
“If the outside world knew what freight is running by rail - its customers, origins, destinations and timekeeping - a lot more people would use rail as a matter of course. But the lack of information means they come up against a brick wall. Whereas they can just order a lorry, know what it will cost and when it will arrive.
“Beyond that is the question of access. A lot of Tesco and other traffic is covered by Government grant. This says a lot about the freight operating companies - they know what the road price is, they know what the grant would be, and unsurprisingly the cost of the rail service they quote comes out as the price of the road service plus the grant. So the freight operators are scooping up a grant they probably don’t need.
“There is an issue about the cost of physically connecting into the rail network. It should not take £5 million to put in a set of points. We have seen some major projects that would inject dozens of trains a day scared away because the engineers and quantity surveyors have put in contingencies, risk and optimisation bias, then come up with a price which bears no relation to what actually gets delivered at ground level.
“Network Rail’s processes frighten off hundreds of millions of pounds of work. The customers hire some lorries instead. We need to look at different methods of funding this. A new entrant should not just pay the £50,000 a year track fee, but agree a long-term contract that includes an element of the capital cost of new access, a bit like a mortgage. That would get a lot more people onto the network.
“If there is an elephant in the room it is luggage - the freight component of the passenger business. We are driving out all the spaces to put it.”
Gallop pointed to improvements on the strategic freight network as a huge achievement. In particular, he highlighted gauge clearance for larger containers through the Southampton tunnel, which is critical for port access.
Now, he said, a new generation of secondary routes for freight must be in place, so that more freight does not interfere with the increasingly stressed passenger network.
Anthony Smith: “This is again about predictability. Freight operators are actually quite passive users compared with passengers. The only thing they really must have is predictability. If they know in advance about engineering work or speed restrictions they can work around it.”
Chris Fenton: “Look at the attempt to get freight back into Euston, ten years after the mail trains left. You wouldn’t believe the amount of resistance from Network Rail. There are very few incentives for Network Rail to get freight in there. Freight is never a priority for route MDs.”
Len Porter: “It’s back to risk. Understand the asset, increase certainty, reduce risk. It’s not rocket science.”
Achieving all of these objectives allows for the most important issue to be resolved, and it was a subject that came up often in the debate:
Wider transport strategy
Andrew Meaney leads the team of transport economists at Oxera. His views back up the operational perspectives from passenger and freight operators, and the long experience of Len Porter from RSSB, who now sits on the boards of various rail companies.
“In other sectors we have seen a move away from five-year financial Control Periods to a system where the infrastructure providers are required to get customer engagement on a long-term vision for their assets,” said Meaney. “This is the case for water and energy. It reflects the nature of the assets - for example, the need to build additional reservoirs.
“We’ve talked about supply chain and skills uncertainties. In other industries suppliers are able to respond to long-term certainty by reflecting that in their prices.
“A long-term vision presents a set of trade-offs. Then you get a political and customer reaction to that set of trade-offs, from which politicians choose the one which best suits their needs. But today people like ORR have to take the policy decisions, and they don’t consult customers.
“It’s not a Stalinist thing. It’s the industry coming forward with its stakeholders and saying where it is heading. The money that comes in will determine how far it gets in that direction.
“The Sunday Times has been reporting that the Government intends to curtail Network Rail expenditure within the current five-year structure. That would be such a retrograde step, going right back to the British Rail era. Highways England now has a five-year funding structure - at least on capital spend. Rail has had that for 20 years and benefited massively from it.
“With that in mind we need to know from Government what the long-term balance is to be between passenger funding and taxpayer funding. Is it 75%-25%, 60%-40%, or is the aim to reach zero from the taxpayer? That kind of clarity has disappeared. We have only an indication that fares will not go up in real terms.”
Len Porter: “This gets right to the heart of everything, I feel. In the Department for Transport, our rail people are only thinking about rail. If we don’t start thinking properly, electrically powered driverless cars will be here before we have thought fundamentally about what we want rail to achieve. We cannot just plan for rail in isolation. We just don’t get it right.”
Chris Fenton: “The question is: who does that thinking? Coming into the industry from outside, I see too little leadership. And at the same time, too much ineffective leadership. When anybody proposes a long-term choice, you have either 20 people offering leadership or none at all. I don’t see any coherent view being put together.”
Stephen Joseph: “DfT is hopeless at long-term strategic planning. It is busy assessing the idea of a road tunnel under the Pennines independently from HS3. The strategy for the A14 road does not even consider the Felixstowe to Nuneaton railway line. As a bare minimum there should be a joining-up of the roads strategy and the High Level Output Specification in the railway.”
Anthony Smith: “Stephen Hammond’s open letter is talking about radical change. That’s very different from our discussions today. He says Network Rail should be broken up. I’ve not heard a call for radical change from any of you.”
Len Porter: “He’s saying Network Rail should be made better by breaking it up, rather than making it better by getting it to do things differently.
“There are some superb people in rail. But they are not on the Network Rail board. The people with great management, leadership and technical skills are not at the heart of the railway, they are working for other companies. The people who could do a great job at the top of Network Rail are not currently in Network Rail. Many of them would not want to be there - that is the problem.”
Conclusions
The clock struck midday. As the panel packed their bags and headed off to their next meetings, the murmured discussions in twos and threes were all about how much consensus had been found. This seemed to surprise them.
The message for Sir Peter Hendy and Patrick McLoughlin has, at its core, the need for more authoritative leadership and a clear chain of command. Appointed as a servant of the Government, creating that is not in Hendy’s remit. Nor is dictating a secure long-term vision for the entire industry, although he can influence it.
There was no appetite for radical overhaul of the structure of the industry. But there was agreement that it is opaque and disjointed, lacking clarity and vision, and that this is constricting rail’s development. Not just in terms of passenger or freight growth, but in terms of its central role in both regional transport systems and the wider national economy. Other countries, it was felt, do this better.
But some more immediate changes are within Hendy’s grasp: getting effective railway leaders into the most important posts at Network Rail; fixing staff training for the long term; reforming a fragile procurement process to cut costs, increase efficiency and improve safety.
In short: listen to the customers, then lead the way to a long-term vision for the rail industry and its place in our society, dragging in your wake some indecisive politicians, process-driven civil servants and those in the industry with deeply entrenched views.
That’s a tall order. No pressure then.
