Railfuture is clear that structural and governance changes must have specific objectives in mind. This article looks at how the rail industry sees these and states what Railfuture wants to see as the result of the review, in the context of the trend towards devolved strategic planning for rail in Britain. Image by Lensball Photography.



Transport for the South East - not a good start

TfSE logo As recently as Monday 26th October 2020, the Secretary of State made a significant and telling announcement regarding Transport for the South East’s transport strategy. He confirmed his support for the 30 year strategy to grow the South East’s economy, improve quality of life and hit net zero carbon emissions by 2050.

Hollow words.

The thirty year strategy, published in July and submitted to government, set out how, with the right investment, we can grow the South East’s economy, boost jobs and opportunity, improve quality of life and hit net-zero carbon emissions by 2050 at the latest. The strategy was submitted to government alongside a proposal for Transport for the South East to become a statutory sub national transport body with devolved powers over road and rail investment priorities.

Grant Shapps, Secretary of State for Transport, has written to the Chair of Transport for the South East confirming his support for sub-national transport bodies and the work of Transport for the South East in particular – but said “he does not want to take forward statutory status or to transfer powers at this time”.

Baroness Vere said she has “instructed the Department for Transport to have regard to the Transport for the South East’s Transport Policy when developing government policy.”

Transport for the South East has been sent away to write a strategic investment plan for 2022, presumably to file on the same shelf at the DfT. There is clearly no commitment by the government to devolution in the South East. This is surprising when seen against this background of moves towards devolution in other English Regions.

Transport for London

TfL Every journey matters Transport for London (TfL) has been acknowledged as capable of effectively delivering public transport (bus and rail) in recent years. In fact, the rail concession model was applied by TfL to its national rail services - the London Overground and will be to Crossrail - Elizabeth Line, when open. This follows earlier successful introduction when the Dockland Light Railway was ‘privatised’.

Involvement by one of our directors in these projects suggests that three essential criteria must be met for success. Firstly the ‘client side’ needs to be competent and adequately resourced, particularly for a concession, to know and express what it wants. Railways work best in an integrated transport setting as they cannot go everywhere geographically, so this requires a client planning capability and control of a coherent fares structure and the technology to go with it - Oyster in this case. The third condition is adequate funding. We say third, as a high level of funding does not mean success without meeting these other prerequisites as we have seen with some rail franchises.

The Mayor of London made a strategic blunder to get elected - a commitment to keep the fares down in London over an extended period. An earlier London Mayor, Ken Livingstone, did the same thing and when this came to a head in the form of a financial crisis, bus fares went up by a legendary 300% (from 20p to 80p flat fare). What works to get elected does not necessarily work as a transport investment strategy. This time round, the government seem to want to seek retribution against the Mayor ie Londoners, by a number of changes to increase fares particularly targeted at children and older people, as well as packing the TfL Board to ensure it becomes a pawn of government. So, TfL is the model for devolution of our railways, yet the government wants to make it hard going for TfL. Both this and the Transport for the South East approach is strategically out of line with the general approach to devolved control of rail development in the rest of Britain.

Prospects for devolution in Northern England and the West Midlands

TfN logo Both these regions have embryo strategic transport authorities with an interest in rail service and investment; Transport for the North and Transport for West Midlands. The northern situation is perhaps more difficult, given the political strength of city regions such as Greater Manchester, like London with an elected Mayor, when compared to the political punch of other cities and towns in the region.

Nevertheless Transport for the North has recently produced a very creditable strategic plan for the North. The starting point was meeting the needs of stakeholders in the North, so there is something in it for everyone, a startling contrast in approach to HS2 from a planning point of view as noted in our a article on Northern Powerhouse Rail.

TfWM logo Boundary issues always crop up, but the West Midlands, long conscious of its geographic position in the centre of England, has currently the best model in controlling a localised rail franchise, and implementing capital projects with partners, Network Rail, HS2 Ltd and for light rail, all set in the context of a national network.

Railfuture would encourage all such bodies to move in this direction in a cooperative way in order to provide integrated regional services within the context of an integrated rail network. This is not just about rail services, it is about ticketing, disabled assistance, bikes and an integrated transport mode approach. People go from A to B and don’t care who the operator is, but just want it to be seamless.

Despite the DfT refusing to budge on Transport for the SE, it is inevitable that further powers will devolve, probably in a staged way to regionally accountable bodies, so that fares, service levels and investment can be planned and integrated with the bus and cycle networks.

Scotland

Transport Scotland logo Scotland has long recognised that strategic planning, and investment in Transport is essential. Interestingly, this approach is also seen as strategically and politically important in low density parts of Scotland such as the Highlands and Islands where population is sparse and resources have to be carefully deployed including rail, ferries and air traffic. Scotland had a Passenger Transport Authority – Strathclyde PTE in Glasgow, which was well run and provided excellent rail services in the Strathclyde region around Glasgow. It was abolished when Transport was set up for the whole of Scotland for strategic reasons of geography, recognising that the Central Belt, ie Glasgow and Edinburgh, is a single economic region, as significant in economic terms as the Manchester and Leeds.

Glasgow has a long history of providing excellent rail based transport. Credit SPT
Glasgow has a long history of providing excellent rail based transport. Images by Strathclyde Partnership for Transport.

Transport Scotland set itself up with effective client side capability and funding, but weaning the DfT off Scotrail has been a slow process. Scotland remains an integrated part of Britain’s rail network and so remains committed to UK wide projects such as HS2 serving Scotland and the development of and assistance to rail freight services.

It is clear that the Scottish devolution model will continue to develop and will likely become a model for Northern England where much of the rail network extends beyond city or former PTE boundaries. Transport for the North is also starting to show in terms of expressing a strategic vision for the whole region, very much like Transport Scotland.

It is important to say here however, that Transport for the North is a partnership that includes the Department for Transport. This is probably the future model for England as funding comes from Central Government. Both Scotland and Wales have different funding arrangements as countries in themselves, within the UK.

Wales

TfW logo Wales currently has strategic rail links to key cities in England, particularly London, Birmingham and Manchester so a Scottish style model suggests itself with increased involvement in investment and service provision of internal services within Wales and the Borders.

Naturally Cardiff becomes a rail focus just as in Scotland with Glasgow. Like Scotland, the Welsh Government has gone for a specific carve out for core Welsh Valley services serving Cardiff. (NB Scotland moved on from this, seeing the Central Belt as a core region). This is not inconsistent unless we consider Newport, Cardiff and Swansea as the equivalent of the Central Belt in Scotland.

However the Welsh government, for reasons not abundantly clear, have gone for a different delivery governance model, although the overall principles are similar. The Welsh Government has gone for direct control of regional Transport for Wales services, which run over Network Rail, but have assigned the Welsh Valleys electrification and service upgrade to the existing private operator Keolis/Amey, an organisation well versed in projects. Although billed as ‘nationalisation’ the governance structure is not that different from the rest of Britain. As in Scotland, this should develop so that rail transport becomes an essential part of a more integrated transport system for the country. Railfuture supports this.

A clear pattern is emerging across Britain.

Strategic Regional Transport Bodies (STNBs)

In charting progress, and indeed government knock backs in England, it is noted that there are other STNBs covering England, such as Transport East and Western Gateway. These are not covered in this article as they are currently at the starting grid in terms of strategic rail planning for the regions concerned. Quite a lot of work is going on and we hope to see more of their plans for the regions concerned. The government’s approach to Transport for the South East might suggest that these will initially be strategic guidance rather than full blown transport authorities.

The Williams report – What Williams Report?

This review (williams) MUST make a difference This review MUST make a difference. Note the date of publication – January 2019! Image RAIL Magazine.

The Williams Rail Review was set up by government in September 2018 to recommend the most appropriate organisational and commercial frameworks to support delivery of the government’s vision for the railway. Led by Keith Williams, the Rail Review’s recommendations were to have been implemented in 2020. The group was comprised, mainly but not exclusively, of people without rail management experience, an approach, fortunately, not adopted by the governments Vaccine Task Force. They went for the most intelligent, qualified people and delivered in 10 months. We are still waiting.

The industry response

The self styled Rail Delivery Group (RDG), formerly the Association of Train Operating Companies (ATOC), welcomed the Review but stressed the need for the widest possible consultation with stakeholders, passengers and passenger groups - such as Railfuture. RDG also stressed that all options should be on the table.

RDG logo The RDG response focussed on six key principles with a view to shaping the national conversation, although there wasn’t a national conversation that we would recognise, as the Williams Review team invited individual submissions.

Only the briefest commentary is offered under each heading as members can draw their own conclusions.
  1. Customers at the heart: a reformed railway which unlocks a new generation of innovation and investment, where it makes sense, choice for customers. Most company business plans say this and the government always stress “choice” although the choice is really whether to use rail or not, not the colour of the train to Gatwick Airport, for example.
  2. Clear accountability: building a structure for the railway that creates confidence in its leadership, making it clear where the buck stops when things go wrong. I don’t think we can argue with this as an objective although achieving it with any of the structures under consideration is more difficult.
  3. Delivering value for money: avoiding a return to the days when running costs were deep in the red, lines were closed and stations were boarded up. This reads like a reference to the Beeching report years, over 50 years ago. It is not clear why this comment was added, almost as if another world followed. The cost control problem with our railways is still with us, partly as a direct output from the structure of the railways as implemented under the 1993 Railways Act. Nevertheless, cost control must be a key component of any review of our railways, especially where we want to see a developing railway, a key Railfuture objective.
  4. Driving economic growth: incentivising investment for the long term, expanding the network and growing and re-balancing Britain’s economy. This does suggest a change of approach in that a 7 year franchise is hardly designed to achieve long term investments although the governance around Network Rail is moving to a more long term investment approach. Any rail operation not covering its operational cost must be seen against its value to the economy, to social inclusion and the environment.
  5. Strengthening communities: ensuring towns and cities across the country get the maximum benefit from a vibrant, growing railway which is more responsive to, and designed around, the needs and aspirations of the areas it serves. This suggests that devolution of control of railways is in the equation, as it should be.
  6. Inspiring our people: enabling people who work in rail to have long, fulfilling careers, equipped with the skills to respond to future needs and sharing in the railway’s success. This appears to be copied from mission statements of many businesses. In our case, we should perhaps interpret it as the need for career based skill training, including apprenticeships, and a system of all industry progression for skilled employees. We would strongly welcome that.
Railfuture predicts that what will emerge, badged as the Williams Review, will be what the Department of Transport or National Government want to do. At the time of greater expectations from the review this was diagnosed as the need to move from franchising toward concessions with more precision as to what the sponsor wants from services and fares; some form of strategic leadership for the industry as apart from just elements of it, and a reluctant move towards devolution.

It will emerge, post pandemic. Here’s why.

The Covid-19 pandemic

This has been with us for a year. It has hit us all, in many cases tragically. In terms of its effect on our railways, or more particularly how government reacted to the pandemic, the results were dire. People were actively discouraged from travel by train.

The franchise system that depends on optimistic bidding to win a franchise bid, both on cost control and revenue growth, was already creaking with a worry that some franchise holders - train operating companies, would walk away from the contracts, as frequently happened with the revenue growth dependant, East Coast Main Line franchise. The onset of the pandemic where people were told not to travel killed franchising –stone dead in a single blow. Journeys went down to around 5% of normal volumes.

The train operators did not walk away from the franchise contracts because the government recognised the value of our railways and replaced the franchise contracts with new arrangements.

Almost immediately in March 2020, the government replaced the franchises with existing train operators with ‘Emergency Measures Agreements’ (EMAs). These were a dream ticket for the train operators in providing a no risk guaranteed rate of return of 2%, provided operational quality targets were met. These were seen as temporary initially but as we all know the pandemic continued. The EMA’s were reviewed in October 2020 and renamed ‘Emergency Recovery Measures Agreements’ (ERMAs). This was at a time when the pandemic was thought to be in decline so the previous arrangements were tightened up somewhat in terms of operational performance requirements and the rate of return reduced to 1½ %, still viewed by many as a dream ticket for rail operators who would have otherwise had to hand the franchise keys back to government.

In the circumstances, this worked quite well, the focus on operational performance and less trains on the network, albeit largely devoid of passengers, achieved high levels of performance. The industry, as a result, does not want to go back to levels of train frequency above 90% of pre-pandemic levels. Despite the anti rail publicity, the train operators and Network Rail actually did a fantastic job on making our trains and stations free of infection and educating passengers how to use the system safely. The other output from the loss of passenger traffic is the performance of the freight business which has demonstrated its true worth to Britain. Freight must, in future, operate within a structure that encourages efficient operation on a railway with capacity for freight growth.

The rail system is therefore in a good position to get back to business provided a governance and funding solution is put in place to replace the EMRAs. The question is what?

Railfuture’s position

Within Railfuture, we have discussed whether we should speculate what we think will happen or say clearly what we want to happen. We are opting for the latter because, as a campaigning organisation, we are clear that we want to see our railways resume a proper and growing role in meeting transport, economic, social and environmental objectives. We are also clear that funding of rail services should reflect the value rail service brings to these objectives at a National, Regional and, importantly, local level. These essential wider objectives remain in the longer term post the dramatic drop in passenger traffic during the pandemic. This therefore, must include effective ways of facilitating modal shift to rail, with an improved overall rail experience.

Concessions or franchises?

The concession approach more easily fits within such a framework and the experience described has validated the operators focus on continued safety and increasing quality of rail operations. There are varying views on what a concession is. The London model of a concession operates in an environment where bus services are regulated and fares are integrated with levels fixed for all modes by the Mayor. Away from London other transport modes are not deregulated so the likely definition of a concession under Williams is likely to be a compromise, more like a franchise with less revenue risk for the operator. An important consideration is whether concessions will make the equipment to run the service available to the concession holder. This is important in terms of cost control, as all the incentives are currently to buy new trains and throw away the old ones leading to massive surpluses of equipment, with little regard for the whole life value and the overall availability of rolling stock.

Railfuture advocates the concession model, designed to ensure the rail product meets customer and stakeholder needs and uses available capacity and rolling stock efficiently. Particularly in a deregulated world, as is the case away from London, incentives for revenue collection and growth, as apart from the total revenue risk need to be incorporated into these arrangements. Award of franchises should not be based on ‘who dares wins’ in terms of bidding revenue growth, but on demonstrated ability to deliver the specification of a quality, safe railway for customers.

A strategic rail body?

The strategic dimension suggests a body to plan investment in our railway and ensure that the operation makes use of it intelligently. It is not immediately obvious that this should be a new separate strategic body such as the former Strategic Rail Authority, although this is not ruled out. The question is – do we really need another rail body?

A model for devolution?

The experience described above describes the momentum in setting up strategic bodies at Regional level such as Transport for the North and at country level for Scotland and Wales through Transport Scotland and Transport for Wales. The emphasis is on regions, rather than cities only, with national government specifying long distance services, in some part avoiding issues with city boundaries.

Railfuture believes strongly that we need a national rail system, so the discussion must be on how this can be provided, yet meeting country wide, regional and local needs. A regional structure does not provide this, nor optimise long distance passenger or freight service planning.

The solution must be around making use of Network Rail as a country wide provider of infrastructure, adding more strategic objectives on how to invest in and optimise the system in partnership with these new bodies. These regional bodies, funded by central government should be genuine partnerships with central government working with Network Rail, as in Scotland to strategically plan and develop the rail network. This includes a body for the South East, hence including the failure to rise to this opportunity at the start of this article.

PHO:2021.03.14 - Overground train at Hackney Wick There has to be a balance between parochial needs and national strategy. Coventry to Birmingham and the Castlefield corridor are two prime examples, the North London Line is a third. Photo taken by the author at the rebuilt Hackney Wick station on the North London Line while waiting 8 minutes for a train. In that time two intermodal freight trains came through the station, to and from Felixstowe- a great example of combining frequent London Overground passenger service and strategic freight needs. Hackney Wick was rebuilt by TfL as part of an ex-industrial regeneration scheme.

Who should award the concession?

At one level it matters less if the proposed system works, aligning capacity, project development and transport needs through a sponsor, so meeting the accountability criterion. Currently franchises are let by the DfT with some consultation with regional stakeholders, except in Scotland and Wales where moves to devolve this activity have already been made, successfully in Scotland, too early to tell in Wales. The answer must be to replicate this with the English super regions, retaining TfL as a special and important case for Greater London. TfL accounts for over half the rail journeys in the UK. The model advocated is that these regional bodies in England should let concessions for rail operation in the context of their strategic plans. The DfT is part of these bodies, working closely with Network Rail.

Concessions for long distance passenger services would remain with DfT, obviously consulting with regional stakeholder bodies.

Freight, a success story in Britain is also a nationwide operation should continue on an open access basis. The change on freight advocated would be for regional strategic bodies to be mandated to directly incorporate freight demand and capacity requirements into their plans, so reflecting the value of rail freight to Britain.

Network Rail would have an enhanced role on project development. Strategic bodies should focus on specifying the ‘what’ output, with Network Rail specifying ‘how’ this output can be achieved. This of course must be taken forward in a cost effective way, with Network Rail acting as proactive agent for these strategic plans.

It is hoped that the paper provides Railfuture members and friends of the railway with an insight into the background to the Williams Review in the emerging context of the real, hopefully, post pandemic world which is likely to drive the future of our railways.

The paper does not cover nationalisation per se, nor continuing with EMRAs on the grounds that Network Rail and funding and franchise/concession letting are already public sector roles. These options are not included in the Williams Review remit, although politics regarding nationalisation are different in Scotland and Wales. Experience of letting the public sector bid for franchises has been generally positive and is therefore not excluded by these proposed arrangements focussed on governance rather than ownership.

Accountability for rail service provision is key to this but here the focus is on accountability to customer and stakeholder needs, rather than simply, who to blame when something goes wrong.

Railfuture will continue with active dialogue with stakeholders and rail service providers at National and Branch level. Members are encouraged to join in this dialogue.

Railfuture wants a railway that :
• is easy and safe to use, and fulfilling for staff to provide.
• is value for money, responsive to the needs of customers and stakeholders.
• is a growing railway attracting investment and increasingly contributing to Britain’s transport, economic, social and environmental needs.

BETTER JOURNEYS FOR BETTER LIVES



Articles on rail industry structure.