Making dual-track railway serve public
The Times: September 27, 2007
The Department for Transport presides over a railway industry divided between state-backed Network Rail, as owner of track and stations, and the companies that run the trains.
Travelling by train should be safer, faster and more reliable than going by road. Over long distances and on busy commuter routes, rail should be the transport of choice. However, for too many people, deterred by the cost and the prospect of delays and discomfort, it is not.
Other industries might envy the railway. Demand is strong and growing, capacity looks set to increase and prices are rising faster than inflation.
Yet all is not rosy. Peak-time trains are already full. Prices are rising, but the Government is footing less of the rail industry’s bills. More trains are promised, but passengers must wait till 2015 for the most significant deliveries.
Passenger fares brought the industry nearly £5 billion in the 2005-06 financial year and the Government provided support of more than £4 billion. By 2013-14 passenger fares will bring in £9 billion, but the Government’s contribution will fall below £3 billion.
The industry faces trying to meet rising demand within the restrictions of the current network. One problem, one rail executive says, is that the Government is too involved. “The Government has got to learn how to set policy and then empower people,” he says, arguing that the Department for Transport (DfT) has in recent years tended to “micromanage”, paying too much attention to details of running the network and restricting train operators’ ability to “get on with it”.
Where a train company runs a station ticket office, it must seek approval from the Government to change the opening hours. To alter the minimum number of services on a route, it must also seek approval. On a grander scale, the Government is selecting which trains to buy for a key InterCity order.
The reason for this intervention, the rail executive believes, is that civil servants crave control and want to “shut off risk to zero”. Another rail manager says that the DfT is “paranoid” in its need to illustrate that it is getting value, demanding monthly meetings.
Tom Harris, the Rail Minister, counters that it is reasonable that the DfT monitor progress, since so much taxpayers’ money supports the industry. He plays down the suggestion of control. “You may call it intervention, I’d call it a loving hug,” he says.
The latest redrawing of rail industry structure — prompted by the closure of the Strategic Rail Authority in 2006 — gave responsibility for rail franchising to the DfT. It had previously been handled by arm’s-length bodies.
The DfT previously sat at one end of the industry chain, subsidising the track owner — Network Rail — which served the train operators, which carried passengers. The Office of Rail Regulation (ORR) regulated Network Rail and the SRA handed franchises to train operating companies and kept them in check. The DfT now has a direct relationship with train operators, Network Rail and the ORR.
The latter relationship — inherited from integration of the SRA into the DfT in 2006 — requires the DfT to outline its long-term requirements for the railway and agree, with the ORR, how much money Network Rail will have to carry out its wishes.
That, according to rail executives, illustrates the closeness of Network Rail and the Government. It is an issue raising tensions amid concern as to who should be considered Network Rail’s customer. Some train operators lament that Network Rail does not see train operators as customers, despite supplying them with access to its track and stations. The rail infrastructure owner, maintainer and provider is said to be more concerned with the wants of the Government and the ORR.
The result, operators say, is that Network Rail puts more emphasis on meeting targets set by the ORR, such as on financial efficiency, asset condition and safety, than on helping the train groups to improve services or run more trains.
One rail boss says “95 per cent of my worries would disappear” if Network Rail were more interested in helping train operators. Another believes that a closer relationship would mean customers’ needs were better met. For example, Network Rail might more readily agree to train operators’ calls for more car parking spaces at stations.
Network Rail is said to be arrogant in dealings with train operators, telling them how they can use its track. Train operators say that a better relationship could make it easier for them to run more services or change timetables to match demand better.
Network Rail has in the past proposed that train operators increase the length of journeys in their timetables to help to improve punctuality rates.
Paul Plummer, director of planning and regulation for Network Rail, concedes that it needs to improve how it deals with train operating companies. “We want our people to treat [the train operators] as partners,” he says, but he adds that the company also has a duty to future rail passengers.
“Many of the decisions that we make have implications that last decades,” Mr Plummer says, noting that the ultimate customer is the passenger and the rail freight user. “While we need to take into account the perspective of train operators, in many cases we need to make decisions that go beyond the life of their franchises.” Network Rail also has to make decisions that affect rival franchisees.
Mr Plummer dismisses suggestions that the relationship between Network Rail and government is too close. “I don’t think it’s cosy,” he says. “We have some pretty robust discussions.”
One such discussion is thought to have taken place in recent months between the minister and Ian Coucher, Network Rail’s chief executive, over the number of delay minutes — the standard measure for cumulative train delays — caused by Network Rail.
Network Rail accounted for 10.5 million minutes of delays in the 2006-07 financial year, including delays caused by signalling problems, track defects and speed restrictions. That figure beat its regulatory target of 10.6 million minutes but was unchanged from last year and weaker than the 9.8 million minutes target it set for itself.
Train operators complain that while their delay minutes are falling, Network Rail’s performance is showing signs of plateauing. In addition, its delay minutes are still significantly above those reported by Railtrack before the fatal Hatfield crash in 2000.
Network Rail was responsible for 54.3 per cent of delay minutes in 2006-07, up from 45.7 per cent in 1999- 2000, when Railtrack ran the network.
Network Rail attributes the rise in delay minutes to running more trains on its network and factors beyond its control, including poor weather. Speed restrictions in the wake of Hatfield will also have harmed punctuality.
Another criticism of Network Rail, not least by the Commons Transport Select Committee, is lack of accountability. “Network Rail [is] a private company without any private sector disciplines, seemingly set up simply to keep the enormous costs of the railway infrastructure away from the Government’s balance sheet,” the MPs said in 2004.
Concerns centre on Network Rail’s board of members — more than 100 people representing companies with an interest in the industry, the public and the DfT. It is meant to provide the governance that shareholders would in a public company. However, the Transport Select Committee concluded, in its latest review, that the board was failing to exercise “effective control”.
The Adam Smith Institute has championed vertical integration of the network, to unite control of trains and track and improve communication.
Stagecoach, the transport group, has also favoured some form of integration, arguing in 2001 that the model that would ultimately be used to create Network Rail “may weaken the commercial and management motivation of the infrastructure owner”.
Mr Harris foresees no such change, saying: “Network Rail’s safety record is tremendously good. The idea of giving up maintenance of tracks to train operators is just bizarre.”
The network needs more capacity. The Government is taking longer-term decisions to achieve it, but short-term improvements are possible and needed.
The way to maximise capacity in the short term is to cut the volume of delays, freeing space on the network.
To achieve that, the network needs stability. That means Network Rail must stay a government-backed, not-for-dividend company. Its ability to raise funds on generous terms relies on its government guarantee. Government is right to monitor its spending, but there is scope to lessen its grip on operations while retaining oversight.
Were privatisation re-run, there would be a strong case for integrating track and train to remove barriers between different firms working separately to deliver a joined-up service.
Such a change now could put stability at risk. A more realistic move is extension of “virtual” integration, putting Network Rail people and train operator staff in the same control room.
Network Rail is right to follow the Government’s lead in planning beyond existing franchise agreements. But train operators are incentivised to increase the number of passengers using the railway. By focusing on operators’ needs, Network Rail should be able to achieve more for passengers.
* Have your say
If nationalised British Rail still existed, had it been able to spend on tracks and trains all the money which was wasted on privatising and franchising, and were it now to enjoy the current soaring demand which has occurred in spite of privatisation NOT because of it, then Britain would have a rail system fit for the changing times ahead.
Instead, it is a leaderless, dysfunctional shambles that is the joke of Europe. Well done Tories. Well done Labour. You've broken what used to be working and wasted billions.
David Bond, Wellington, New Zealand