The futuristic station at Reading, 25 June 2013. Fraser Pithie
BUILDING A RAILWAY
FOR THE FUTURE
Peter Wilkinson, Director of Rail Franchising, told the
RSA that partnership is the key to a successful future
Partnership
I would like to hear less talk of contracts and
franchising, and more about engagement and
partnership. As part of this, I want the supply chain
to be energised. There are a few big companies
at the top of the chain, such as Balfour Beatty and
74
Modern Railways January 2014
Carillion, but many hundreds further down: I want
some of those lower down to rise up and become
big players.
For me, all players are valid ones. Some people
talk about tension between franchising and open
access. But I think companies such as Hull Trains,
Grand Central and Heathrow Express are offering
a good service which provides value for money
in the eyes of their customers – so there must be
something right with that model.
In the same way, the freight operating
companies (FOCs) offer a valuable service. They eat
what they kill and could be considered the most
truly private part of the railway. We must ensure
Challenges
People talk a lot about capacity constraints in our
industry. I would say that the railway is not yet full –
it is becoming full, but we have some leeway still.
As for punctuality, on which there was
understandably so much attention because of
the post-Hatfield performance shambles, I think
now we are in the ballpark of where we need to
be. I don’t think Government should be in the
business of buying a lot more improvement in the
punctuality and performance of railways that are
CAR OWNERSHIP DEMOGRAPHIC
70
60
Percentage proportion of
households without a car
F
ranchising has changed the face of Britain’s
railways. As we consider the character of
franchising going forward, it is important
to be clear about what it has, and hasn’t,
achieved.
The railways have enjoyed a lengthy period
of passenger growth since privatisation in the
mid 1990s. But I don’t put this entirely down
to privatisation – rather, it is a reflection of the
sharper market focus provided by privately run
train operating companies (TOCs) leveraging
the benefits provided by a period of sustained
economic boom between 1998 and 2008.
But what we have also seen in that period is a
large increase in levels of passenger satisfaction –
and I believe that is down to franchising. I think the
TOCs should be complimented for what they have
achieved in customer service.
The growth in demand has brought challenges
about how we accommodate all the extra people
who want to travel by train. We have witnessed
investment rise in the railways as a response.
Is that a result of franchising? Not really.
Franchises have largely been treated as facilities
in which capital has played the lesser part –
something which is not the fault of the TOCs, but is
a reflection on the design of the franchising model.
This is one of the flaws that I would like to correct.
that policies for the passenger railway don’t mean
the FOCs wither on the vine – they are a vital part
of the industry.
As for Government, I want to see clarity in what
we are trying to procure and efficiency in our
procurement methods.
50
40
30
20
10
0
Working-age
couples with
children
Working-age
couples without
children
Pensioner
couples
Working-age
singles without
children
Working-age
singles with
children
Single
pensioner
www.modern-railways.com
FUNDING BRITAIN’S RAILWAYS
Net cost to Government
per passenger mile (p)
Ratio of taxpayer to
farepayer funding (%)
Long distance
7.3p
25 : 75
London and South East
4.8
19 : 81
Regional
31.1
61 : 39
www.modern-railways.com
Speed
I am an apostle for speed. The rail industry seems
to have lost its way on this. Think: how often do
you sit at junctions or wait to get into stations?
We need to achieve far greater efficiency in the
timetable and speed has a part to play in this.
I want the agenda to return to speed, as it
provides for ambition. Also, speed means capacity.
Speed everything up and you turn the trains round
more quickly and get another diagram in.
So on our great inter-city main lines, the Great
Western, West and East Coasts, I want to see
lots of 125mph running. And why not on other
routes too, such as the Midland main line, the
Southampton line and trans-Pennine? There is a
commercial rationale for it.
In 2017 we shall start receiving Inter-city
Express Programme trains – they will be capable of
140mph. We should aim to exploit that capability.
I also want to see the speeding up of regional
trains, there is a real case for this. Imagine if it didn’t
take you five hours to get from Peterborough to
Liverpool by train!
Timetable
We need a re-think about the timing of Britain’s
railways to benefit existing passengers and attract
new markets onto rail, in particular the cardominated non-central-London market. We need:
n reduced journey times, from improved
connections and new fast long distance
expresses timed to maximise the potential of
the existing infrastructure;
n increased frequencies, especially at busier times;
This will mean some investment in infrastructure,
driven by the requirements of the timetable, to
allow cross-platform interchange to take place at
stations where the existing track layout does not
allow this.
Imagine if we rethought our approach to the
timetable, so that the Public Performance Measure
documented not only arrival times, as it does now,
but also efficiency of connections. This would
change the game – we could aim for a Swiss-style
timetable, with cross-platform connections. A
standardised, repeatable and symmetric timetable
is what is needed.
Network Rail and DfT will be working with
operators to examine the opportunities that such
a re-think might provide and we could pilot this
through a forthcoming franchise competition.
Funding
Since privatisation, there has been revenue growth
of £2.3billion (mostly from increased passenger
numbers rather than higher fares). This increase has
been more than offset by three factors:
n a £1.7billion increase in train operating costs,
which have grown in tandem with the growth of
passenger numbers;
n £1.5billion extra cost associated with funding
Network Rail’s regulatory asset base (its
borrowing to finance capital projects); and
n £0.5billion in additional rolling stock charges,
again reflecting increased demand.
We have, however, reached the point where
the operating railway is paying for itself. It is
infrastructure provision that requires subsidy – and
RAIL SUBSIDY (2011/12 PRICES)
7.48
8
7
4.16
3.9
2010-11
2011-12
4.79
2004-05
5.09
5.67
4.73
3.46
2.51
2.03
1.68
2.3
3.25
1996-97
2.73
3.55
3.3
1995-96
1.6
2.18
2
2.74
2.79
3
1994-95
3.71
4
2003-04
5
1
5.76
6
6
2009-10
2008-09
2007-08
2006-07
2005-06
2002-03
2001-02
2000-01
1999-00
1998-99
1997-98
1993-94
1992-93
1991-92
1990-91
0
1989-90
Growth
We can expect further growth in both freight and
passenger traffic.
Anyone who suggests capacity should be
reserved for passengers should remember that if we
constrain rail freight artificially, freight will end up
on the roads and we will notice the difference with
extra traffic congestion.
Big companies such as Amazon, e-Bay and Tesco
are already worried about congestion and looking
to reserve land next to railway lines in preparation
for a shift to rail distribution.
Remember parcel bays? We might need them
again. Some logistics companies are looking at ways
of flattening seats in passenger vehicles so that
they could carry merchandise in the off peak. It is an
interesting idea. I want the railway industry to get
ahead of the curve and use the available passenger
train capacity in the off-peak to innovate and
contemplate serving the same day and overnight
parcels market, using stations and infrastructure
where sensible to achieve this.
Passenger traffic too can be expected to go
on growing. The last few years have witnessed a
divorce between GDP and passenger demand: the
economy has been in trouble, but the line on the
passenger graph has kept going up.
Why is that? One factor is that people in their
twenties and thirties are moving to metropolitan
areas and not buying cars – they are planning
their lives around public transport. We don’t see
that happening to the same extent in Continental
Europe, where the cities are often not as dense as
those in the UK and where people may be keen to
support domestic car manufacturers.
Another factor is the high cost of housing in
the UK. People are prepared to commute long
distances by train in order to be able to buy
cheaper houses.
£ Billions
already achieving exemplary levels of performance.
Rather we should target investment on those
areas that need to reach these levels, including the
infrastructure– we really do need to stop the wires
falling down. But on the operating side we have
largely achieved our goals.
Incidentally, I have no problem with companies
making sensible profits out of running the railway.
Profits are what motivate firms and it is through
profits we create the capacity to employ people and
invest. There should not be super-profits but make
no mistake, sensible profit is good for rail, good for
passengers, good for government and taxpayers. I
want to see sensible earnings, rewarding effort.
Another important question concerns the skill
base. In the next five to ten years, most of the exBritish Rail trained technical and engineering people
will have left the industry. We have to have a plan on
where we are going to get skills commensurate with
our future needs.
We have to keep up investment, recognising the
role the railways play in powering our economy.
We have to keep abreast of technological
developments and foster innovation. And we have
to play our part in building a sustainable economy
that respects the environment.
n an opportunity to take a fresh look at overlooked
markets that could be served by rail such as
non-London routes where current road flows are
strong;
n greater flexibility to tailor supply to demand,
thereby avoiding unnecessary costs by providing
a consistent, regular and symmetric service
pattern, seven days a week, from start to finish of
service;
n improved service recovery;
n opportunities to expand the freight market;
n increased access to the infrastructure for
maintenance and a reduced need for disruptive
engineering work.
Financial Year
January 2014 Modern Railways
75
Will we see the railways playing a larger role in small consignment freight delivery? Just over a year ago, a trial night service ran into London using the former Great Western
motorail vans. Here No 86701 is seen at the head of working 4Z86 from Rugby to Euston after arrival at its destination on 1 November 2012. Guy Houston
that is right and proper, as this is providing for the
nation’s future transport needs.
The rail industry received £1.3billion of ‘other
income’ in 2011-12, an increase of 5.1% compared
to 2010-11:
ntrain operators received £0.7billion from car
parking, property rental, catering and other sales.
nNetwork Rail received £0.6billion from its stations
and property portfolio, and charges to freight and
open access train operators.
There has been a big increase in the amount that
the passenger is putting into the railway vis à vis the
taxpayer, as a result of a policy of above inflation
fare rises. Now passengers are funding 60% of the
industry’s costs.
Sustainability
I firmly believe sustainability is fundamental to
rail’s long term success. It must be embedded
throughout the industry: it’s a core requirement, not
an optional extra.
We want ambitious, innovative proposals
in bids coming into the Department to deliver
environmental improvements, support economic
growth and bring communities together.
WHERE THE MONEY GOES
PASSENGERS
GOVERNMENT
OTHER
Fare income: £7.2bn (58%)
Net funding: £4.0bn (32%)
Other income: £1.3bn (10%)
Community Rail Partnerships are worthy of
mention. CRPs are not of marginal importance:
they are providing real service and deserve to be
supported.
There are today over 50 CRPs putting real money,
real people-power and real innovation into rail. CRPs
have re-opened local rail services and transformed
long decaying assets into vital community
resources.
Take Accrington station for instance: a superb
station rebuilding project that has used local
materials to produce a truly ‘green’ building. Or
the work at Huddersfield, where a solar panel has
been installed on the roof of the old water tower,
providing power for the station. I want more of this
GOVERNMENT FUNDING AS PERCENTAG
32%
GB total
INDUSTRY INCOME AND SUBSIDY: £12.5BN
England
INDUSTRY EXPENDITURE: £11.6BN
Scotland
-3%
FRANCHISED RAIL INDUSTRY
31%
Network Rail + franchised train operators
NETWORK INFRASTRUCTURE
Operating costs
Financing costs
Amortisation of capex
76
£2.5bn
£1.5bn
£1.7bn
£5.7bn (49%)
Modern Railways January 2014
Wales
TRAIN OPERATORS
Staff costs
Rolling stock costs
Other costs
£2.2bn
£1.5bn
£2.2bn
£5.9bn (51%)
24%
-10
18%
0
10
20
Government funding as a
www.modern-railways.com
Reshaping the Government’s approach
When we look at the current system of franchising,
we have to ask, where is the passenger in all this? Or
the workforce? We have tended to think that one
franchising model fits all, there has been little sense
of ‘partnership’.
Government all too often over-specified the
railway: there has been lots of ‘tell’, with little ‘ask’
and an air of ‘we know best’. The franchising system
has been unable to react to changing markets and
has not created conditions that foster innovation or
investment. There has been little sense of ‘local’, with
too much detail specification from the centre.
We must change all this. The passenger must
be at the centre of every aspect of design and the
workforce properly supported.
I want less ‘tell’ and more ‘ask’.
We need contractual relationships fit for the
specific railway circumstances. Real innovation
needs to be properly recognised in bids. There is
scope for new alliances and partnerships and we
need to localise the railway.
Thinking out of the box
We need a far more pro-active approach to
innovation. For example, instead of the barriers
being shut until your ticket opens them, why not
have them open and only close if you don’t present
your ticket? Such a system already works in Japan.
Are there other approaches to Revenue
Protection we could take which don’t get in the
way of people encumbered with luggage and small
children?
Partnership
We need a new kind of partnership – at all levels,
across all interfaces – between workforce and
passengers, DfT and the industry, industry and the
supply chain.
The workforce has a big part to play in moving
the industry forward, and that includes the trade
unions. I celebrate the fact that we have characters
like Bob Crow of the RMT union on the railway, you
need people like him to challenge the conventional
wisdom – they are not always wrong. What the
GE OF TOTAL INCOME
RAIL FARES HAVE INCREASED BY MORE THAN INFLATION
160
–– All other tickets
–– Season ticket
–– Inflation (RPI)
140
Amount (£)
sort of thing: I don’t believe the big companies have
all the answers.
120
100
2004
2005
2006
2007
2008
unions have to do is recognise that the world is
changing, and they should be thinking ahead to
where we will be in 20 years’ time. I am in favour of
setting up company stakeholder boards, with union
representatives on those boards, as they have in
Germany and elsewhere.
I also want an end to ‘them’ and ‘us’. With the TOCs
and Network Rail, it often seems as if one side is
competing with the other to get one over the other
lot. Delay attribution has become a mini-industry in
its own right. Delay attribution has a place (I think
we could do with a bit more delay attribution in the
operation of airports to incentivise people) but there
are limits. That is why I am in favour of partnership
developments such as the Wessex alliance.
I also would like to say a word on behalf of the
civil servants in the Department, who I think are
often unfairly lambasted. Civil servants have put
in a lot of work to move this industry forward: for
2009
2010
2011
2012
example in March this year we published an eightyear programme of franchising that features high
levels of investment. This investment is justified by
business cases developed by civil servants in the
Department.
People across all facets of the industry have much
to offer. If we all pull together we can make a success
of the railways.
Details of Association Membership
can be found on page 14. Hear the
speakers, ask the questions and then
read all about it in Modern Railways
WHERE THE MONEY COMES FROM
GOVERNMENT FUNDING
OF INFRASTRUCTURE
£3.9BN
PASSENGER INCOME
£7.2BN
32%
28%
37%
61%
NET GOVERNMENT FUNDING
OF TRAIN OPERATORS
£0.1BN
39%
30
57%
40
50
60
a percentage of total income
www.modern-railways.com OTHER NETWORK RAIL INCOME
(STATIONS, PROPERTY ETC)
£0.6BN
70
OTHER TRAIN OPERATORS INCOME
(CAR PARKING, PROPERTY RENTAL, CATERING ETC)
£0.7BN
January 2014 Modern Railways
77