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The Hansford Review has landed on the desks of Network Rail’s top brass - more than seven months after Professor Peter Hansford, former chief construction adviser to the UK Government, was asked to lead a team examining how much competition there was in the rail industry. In particular, the panel was asked to establish how straightforward it was for third parties to invest in and deliver infrastructure.
Given it was commissioned by Network Rail’s board, publicly announced by Chief Executive Mark Carne and the consultation championed by Chairman Sir Peter Hendy, one might speculate that the author was already leaning on an open door. However, his name joins a list of those who have subjected the industry to forensic analysis in recent years and many of its 60 pages will have made for tough reading.
The McNulty Report of 2011 considered the costs and efficiency of Britain’s railways. Four years later Dame Colette Bowe, the former telecoms and financial services regulator, made recommendations on governance and the roles of the Department for Transport and Network Rail in planning and delivery as budgets and timescales for projects in Control Period 5 began to overrun.
On his appointment to Network Rail, Hendy had his own review to see what could be delivered affordably. Then HS1 Chief Executive Nicola Shaw examined the future shape and financing of Network Rail in March 2016. The year closed with the National Audit Office saying planning failures at DfT and weaknesses in Network Rail’s management of the infrastructure programme led to more than a billion pounds being added to the cost of electrifying the Great Western Main Line.
Hansford acknowledges those who have gone before him in the introduction of his review, aiming to build on them. Formally titled Unlocking rail investment - building confidence, reducing costs, his aim is evolution not revolution, aligning his recommendations with transformation work already underway as a result of studies gone before. The stall is set out early on in the document. “The underlying tenet of the review is that a more contestable market for rail projects would create pressure on Network Rail and its suppliers to be more innovative, to improve cost performance, deliver projects more competitively and predictably and therefore offer better value for money,” he states. “In addition, it would provide more opportunities for third parties to fund and deliver projects.”
“Visible progress has been made,” says Hansford, but he adds: “There is much more to be done to truly unlock the market. I believe that the potential ‘size of the prize’ is significant and that this prize is within reach.”
There were eight members of the review team, their expertise drawn from not only the rail sector but engineering, transport strategy and finance. A key assumption is ‘The overwhelming majority of new rail infrastructure on the national rail network is delivered and financed by Network Rail.’ More than 150 organisations were consulted, including people who supply the rail industry, financiers, legal professionals and government organisations.
It considered case studies of projects both completed, like the Borders Railway (where a private finance initiative deal was abandoned, although this threat of competition appears to have forced Network Rail to reduce its price for delivering the project) and those in an early stage such as preparing Leeds station for the arrival of High Speed 2 (where HS2 and Leeds City Council have signed a collaboration agreement).
Among the respondents to the call for evidence was the Urban Transport Group. This combines the largest transport authorities for the biggest conurbations, covering well over 20 million people. That’s Transport for London and the equivalents for the other big city regions, Transport for Greater Manchester, Nexus (The Tyne and Wear Passenger Transport Executive), South Yorkshire PTE and Merseytravel. Its director Jonathan Bray explains: “We are the professional network for these authorities, bringing them together to learn from each other; we also represent them around common issues on transport schemes, which often boils down to funding and governance.”
When asked by the Hansford Review how well the current system of infrastructure delivery works, on a scale of one to ten where one was “very poorly” and ten was “exceptionally well” the responses from members ranged between two and six.
“The unit costs of infrastructure projects on the national rail network appear to be higher than those in comparable industries. Our members have, as a rule, experienced significant cost escalation across a wide range of local projects. Much of the asset information held by Network Rail has proven unreliable and this helps explain some of the delays and cost escalation experienced,” says the UTG, adding: “Network Rail processes are overly complex, inflexible, opaque and time-consuming. Rail standards are, in general, overly prescriptive, expensive to meet and Network Rail is too rigid in their application.”
Bray is clear why the Hansford Review was needed. “I think the confidence in Network Rail and the railways more generally to deliver projects in a cost-effective and timely way - or in the way they are promised to be delivered, is low,” he says. “I think that’s for a number of reasons, the main one being practical experience of schemes that are priced high to start with and then get higher over time.”
So far this is in line with the thoughts members of UTG offered in evidence. Bray goes further though, into the culture of the rail industry. “The railways are quite insular. They start by looking at themselves and working outwards. If you are in a city, railways are part of a wider transport provision which in turn is one part of trying to get the cities people want. Cities that are growing but also tackling issues such as social exclusion in a sustainable way to deliver these outcomes,” he says.
“Getting rail schemes delivered is important to the wider mission because they can get people off the roads and provide rapid access for commuters to growing city centres and provide links between cities. Rail is important, but if the sector isn’t delivering then the danger is that the available funding goes elsewhere, perhaps to other transport sectors like road building.”
Urban Transport Group also responded to the Shaw review with examples of projects where members had experienced issues with Network Rail processes and delivery. West Yorkshire Combined Authority signed “Emerging Cost Design Services and Implementation Agreements” with Network Rail in 2013-14 to deliver two new stations, one at Kirkstall Forge, the other at Apperley Bridge. In August 2015, the authority was told of a cost increase of around 40% due to issues which emerged during construction that hadn’t been anticipated at the design stage. Besides time and cost overruns, the authority said it was concerned by the lack of timely communication on the part of Network Rail. Meanwhile at Formby station on Merseyside, Network Rail quoted £2.92m (in 2009 prices) to install two new lifts. Merseyrail took a different design approach and delivered the lifts for £1.54m in August 2015.
Concluding its consultation response to the Shaw report, UTG says: “From the evidence presented, you could argue that NR’s long list of projects is not always the best place to design schemes of local importance. It is understandable that NR has a large number of schemes under its control and has to prioritise resource and budget appropriately. We would argue that some of these schemes are of relatively greater local importance (to the Transport Authority) than to Network Rail.”
It’s a theme Bray returns to for the Hansford Review. “The problem for our members is that schemes which are of importance for city region economies are not always as important to the railways or Network Rail, so how are we going to get them delivered? I’m talking about increases in capacity in the urban rail network, or line re-openings,” he says.
“For example, look around Newcastle. There are places that should be on the rail network, like Washington, where they are on the network in as much as there is a freight line over a track bed. When is that going to happen? The deal seems to be you pour money into what is a monopoly provider and then they may say, sorry, it’s delayed for three years or the costs have doubled.”
It is also, according to the UTG, time to allow schemes to be developed in the regions they will benefit.
“Network Rail and Government tend to be focused on what’s coming in and out of London,” says Bray. “Schemes that are not about that don’t always get the management attention they deserve... the sorry tale of Tram-Train for example.”
The pioneering UK Tram-Train project in South Yorkshire was recently subjected to a National Audit Office report. Two-and-a-half years late, the costs of electrifying a short section of the national rail network has risen from an estimated £18m to an expected £75m on completion. The project was almost pulled twice but saved because, as a pilot, it may deliver learnings for others who seek to use the technology.
