Executive SummaryExecutive

Changing Track Proposals for a more customer- focussed, joined-up and accountable railway

26 March 2019 1 Contents

Foreword 4

Executive summary 6

Rail’s purpose over the next 25 years 14

Our principles for change 18

Challenges and opportunities 20

Looking outwards for answers 28

Our plan 36

Point one: Deliver easier fares for all 40

Point two: Put a new independent organising body in charge of the whole industry 46

Point three: Introduce responsive, customer-focussed public service contracts replacing the current franchising system 52

Point four: Giving customers more choice of operators on some long-distance routes 58

Point five: Make sure track and train are all working to the same customer-focussed goals 64

Point six: Bring decisions about local services closer to home 70

Point seven: Enhance freight’s central role in delivering for Britain’s economy 74

Point eight: Invest in our people to deliver positive long-term change for our customers 78

Conclusion - the time for change is now 82

This document is produced and distributed by Rail Delivery Group. All material is property of Rail Delivery Group Ltd.

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Changing Track Contents 3 Now is a time for fundamental change, not Foreword Foreword tinkering around the edges Foreword or, worse, inaction. We need to configure the railway around its customers and set it up for a successful future.

Paul Plummer, Chief Executive, Rail Delivery Group

There is a real and widespread desire We must design a railway where passengers for change on Britain’s railways. People understand where the buck stops, and who is and businesses want change that gives responsible for making the whole system work them confidence that the railway shares together for them to deliver value for money, and values their priorities: value for punctuality and the best possible service. money, punctuality, customer service and The eight proposals for change we set out accountability. here are the foundations on which we believe We believe our proposals provide a clear way we can deliver passengers’ priorities and forward to deliver that change. They have been help rebuild trust. Implementing them as a designed to deliver against those priorities: package would mean we could seize the once- there should be easier fares for all; there in-a-generation opportunity we have to shape must be much more effective partnership our future around passengers and make their working to deliver the best possible service for priorities the railway’s priorities. everyone; the whole railway must be capable Borrowing from some of the most successful of responding and changing much more railways across the world, and on the principle quickly when it needs to; and passengers must that a modern nation needs to take the gain the sense of control that comes from best ideas unconstrained by ideology, our understanding clearly who is in charge. proposals would harness the best of the Now is a time for fundamental change, not public and private sectors working together. tinkering around the edges or, worse, inaction. How we reform the railway really does matter. Rail has a real opportunity to be part of the Now is the time to design a system for the solution to many of the most fundamental future that is focussed on delivering for economic, social and environmental challenges passengers today and tomorrow, and to move Britain will face in the decades to come, forward with the certainty of one vision and but it must demonstrate it can deliver for one long-term plan. its customers first. We need to configure the railway around them and set it up for a These proposals are made by the Rail Delivery successful future. Group (RDG) on behalf of all its members, who are working together for change and We want passengers to have confidence they recognise that reform is essential. In any will always get the best fare for their journey. organisation as broad as the RDG a range We want a railway where the companies of views is inevitable and not all members running it are set up to succeed in a true agree on the detail of all individual elements. partnership of the public and private sectors, Nevertheless, there is support for the focussed above everything else on delivering principles outlined and a shared view that the what passengers really value. package of proposals would provide a positive way forward in delivering lasting change for We need a railway that takes into account customers, communities, the economy and that not all passengers want exactly the same our workforce. thing; their priorities will evolve over time and we must be able to reflect those different priorities and adapt better and faster when they change.

4 Changing Track Foreword 5 Executive

Executive summaryExecutive summary summaryExecutive

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The Williams Review comes at a crucial Our principles for change These achievements include: Working together for change now moment. As Britain grapples with some In approaching this work, and with these • Safety: Following a spate of tragic In addition, the industry is continuing to do of the biggest issues facing any nation, challenges in mind, we defined the ‘tests’ accidents at the turn of the century, our what it can to improve services for customers it is vital that our economy, and the we believe Britain’s railway needs to pass passengers and our people now travel today. This includes practical, tangible infrastructure that underpins it, meets to set Britain up for success for the next 25 and work on one of the safest railways in measures such as the introduction of 7000 its full potential not just for today but for years and beyond, which we judge our own Europe. new carriages by the early 2020s, meaning generations to come. proposals against. These tests are enshrined half the existing fleet will be replaced new-for- • Passenger growth: After decades of in our six principles for change, which align old, and the overall number of carriages will decline, Britain’s railway has seen 25 years closely with the themes set out in the increase by 20%. Along with more seats, that Rail’s purpose over the next 25 years of sustained growth. Passenger journeys Williams review: means improvements like air-conditioning, have doubled, growing more than twice Looking over the next two or three decades, plug-sockets and Wi-Fi, boosting productivity. • The railway must put customers at the as fast as UK GDP. We’re moving more it is clear there are five overarching strategic heart; people and goods and better connecting Other improvements include the: challenges confronting all sectors of the communities across the country to new economy. In turn, these each present • Reform must create clear accountability; • Introduction of the 26-30 railcard: Since opportunities. opportunities for rail to be integral to the going on sale in January, the railcard has • The railway must deliver value for money; nation’s response. They are: • Private sector investment in rail: In the saved more than 200,000 passengers over • The railway must drive economic growth; past decade, private investment has £10.5 million. • The health of the economy as an increased by 63.5%, with investment in overriding governmental priority, • The railway must strengthen • Launch of the Access Map: Introduced rolling stock up by 90%. combined with the need to address the communities; and as part of the industry’s plan to increase productivity gap and regional disparities We are running 28% more access to the railway, this new interactive • Reform must inspire our people. • More services: that hold UK PLC back; services since 1997, and the frequency on map makes it easy for disabled passengers We consider these to be the right priorities for many long-distance routes has doubled. to, at a glance, identify whether any • The need to reduce carbon emissions and a modern railway. station in the country is accessible so they improve air quality; • The nation has shared in the proceeds of can plan according to their needs. Challenges and opportunities growth: The railway’s finances have been • The affordability and sustainability of transformed, with an annual operating • Roll out of digital ticketing: Passengers public services; The rail industry undoubtedly faces some fundamental questions, but those questions deficit of £2 billion cut by three quarters, all over Britain are now able to travel • The increased availability of digital are balanced by opportunities. Bold reform saving taxpayers £1.5 billion a year and paperless. Very soon, we expect nine technology and the seismic implications is essential, as it can remove the barriers freeing up money for other vital public in 10 tickets to be available for sale to that will have for travel patterns and our that exist today enabling us to reconfigure services. The combination of public and customers as smart tickets. wider social behaviour; and private investment going into the railway the railway around the needs and aspirations • Introduction of delay-repay will boost the UK’s economy by almost • Expected population growth to 77 million of the people and businesses who rely on it, compensation: A number of operators £85bn over the next decade. by 2050, with all the implications that will driving improvements for their benefit. have introduced Delay Repay 15, so that have on housing and other policy areas, However, while big change is essential, we rail passengers can claim compensation including rail. should take care not to lose what has worked if their train is more than 15 minutes late. Compensation is often paid regardless of The Williams Review provides the whole too. Much has been achieved over the last the cause and train companies are making industry with the imperative to help meet 25 years, and the partnership of public and it easier to claim. these challenges by looking afresh at what private sectors continue to work hard to we do, asking again what our purpose is, and improve the daily experience for passengers. inviting scrutiny and appraisal.

8 Changing Track Executive summary 9 Executive summaryExecutive summaryExecutive

• Introduction of the Rail Ombudsman: All system which is shaped by regulations written • A complex fares system and outdated evidence-based understanding of the way train operators have signed up voluntarily in the 90s, remain stuck in the analogue age. regulations have led to a lack of trust that ahead. to a new, impartial ombudsman which has customers will always get the best fare, Everyone agrees the system needs to change. Our plan for a joined up, accountable and the power to make binding decisions on and a system which has not kept pace with But it must do so in a way that is lasting and customer-focussed railway them and award compensation. changes in lifestyle and working practices. sustainable. Change must make the railway In this document, we evaluate the proposals We also recently launched proposals to fit for future generations, delivering the best Looking outward for answers we make against the principles we have set modernise Britain’s outdated fares and deal for our customers, holding the industry In developing our proposals we have listened to out. ticketing system, all founded on the results to account and creating a railway that customers and businesses around the country of the biggest ever consultation into what communities and businesses across Britain and consulted with them to understand what passengers want from the fares system. We will rely on to thrive in the future. they want and expect from their railway. are already working towards a series of real- It is in recognition of this need for change that They are clear, they want more accountability world trials to bring to life what is possible, the industry called for a rail review. With its and a more reliable, punctual service. They and with changes to regulation, we can work broad scope and reach, the independently expect greater local control in the interests with government to deliver up-to-date rail chaired Williams Review creates the of economic development and a system that fares that better match the way people live opportunity to deliver a once-in-a-generation delivers value for money. They want choice and work today. shake-up of the rules that govern Britain’s wherever possible, and a system which works We face challenges and we must be honest railway. for the way they live and work today. about those Its success depends on lasting, long-term We have also looked out to rail systems While we continue to work hard to deliver reform. Previous reviews have not lived up around the world – from Sweden to Japan, improvements, it is a fact that the system to their promise – not looking at the whole Germany and France, to take what works is no longer delivering the consistently high system, or providing solutions which have only and bring it back to the UK. While the British standard that customers have a right to been implemented in part. As a consequence, system is unique, we see that there are lessons expect. We welcome the fact that passenger the industry and its customers now face a to be learned from elsewhere: in Sweden, numbers have doubled but understand set of issues which must be prioritised and where the balance of public service contracts that this piles pressure on the system. The addressed. These include: and commercial open access is considered smallest delay has a vast ripple effect across positive; in Japan, where vertical integration • Misaligned targets, incentives and the railway. Since surveys began in 1999, our has heralded both success and trade-offs, business models which make it difficult for overall customer satisfaction has increased for example limited freight; and in France, the industry to collaborate. from 76% to 83%, but in autumn 2018 it where the nationalised system has seen some dropped to 79%. That is a worrying drop in • A franchise model which has not success, but also increases in debt which have support. encouraged long-term behaviours by led to a major review of the system. operators. And while we have seen seismic advances While it is paramount to look outwards to see in digital technology in other areas of life, • It is often problematic for the DfT to what works around the world, our proposals creating new ways to shop, connect and work, act as a systems integrator for England are anchored in our own experiences, so many of our processes, such as the fares and Wales with understandably limited structures and culture. We have gained an capacity and capability.

10 Changing Track Executive summary 11 Executive summaryExecutive summaryExecutive

And we propose a clear, eight-point plan to Give customers more choice of operators on Invest in our people to deliver positive long- • Moving quickly to establish an deliver a new system for our customers and some long-distance routes: For some long- term change for our customers: Develop a independent organising body in shadow the communities we serve: distance routes, having more rail companies new approach to working with the unions, form. competing for passengers means they could governments and the industry which provides Deliver easier fares for all: Update decades • Reforming public service contracts and be offered a range of different services based our people with the skills, resources and of regulation to enable a fares system which re-starting the process of awarding on what they want. Whether it’s quicker rewards they need to deliver generational is much easier for passengers to use and contracts. more comfortable journeys or faster Wi-Fi, change in the railway. better value for money, introducing pay as demand would shape the market; meaning • Ensuring alignment of objectives, targets you go with a price cap across commuter 4 8Delivered in full, this plan opens the door to rail companies would have to adapt to the and incentives across the industry. markets, and reducing overcrowding on some TfL-style concessions in more cities across the needs of passengers if they want to keep their of the busiest long-distance services while country, with services on other parts of the • Devolving funding and specification of business. encouraging more people to use the network network contracted against tough passenger- rail services to the most appropriate 1at different times of day. This fully reformed centric targets. These services would be democratically elected bodies. Make sure track and train are all working system would be backed up for the first time complemented by some long-distance routes to the same customer-focussed goals: • Harnessing the benefits of Network Rail’s by an industry ‘best fare guarantee’. Introduce a single thread of consistent targets offering more competition to customers. In transformation programme. and incentives running through the whole all cases our plan would be underpinned by a Put a new independent organising body in industry, from CEOs to frontline teams and modernised, easier to use fares system with It is essential we make swift and sustained charge of the whole industry: Form a new between the track and the train, so that all tap in tap out and a price cap in urban areas, progress towards a reformed railway that independent organising body which removes parts of the railway pull together – ending the matching the way people live and work today. is focussed on delivering for customers. the politics from the running of the railway as blame game. The White Paper developed as a result of far as possible and acts as the glue that binds The new system would be overseen by a single 5 the Williams Review should be a clear and it together, joining up decisions, making sure organising body, independent of government Bring decisions about local services closer unambiguous plan for change overseen customer needs are prioritised and holding Where appropriate, for example and industry, ensuring decisions about trains, to home: by a board including representatives from the industry to account with penalties where in larger city regions which serve commuter infrastructure and services are joined up and 2 government, customer bodies, employees and it falls short. markets, customers would benefit from local all players are held to account. the wider industry. transport bodies being given more power to Introduce responsive, customer-focussed All of this would be run by a skilled, diverse design and specify local services, bringing We know we may not always have got ‘public service contracts’, replacing the workforce working in partnership to deliver a decisions about the railway closer to the everything right, but the time to make the current franchising system: Create a new singular focus on the customer. communities it serves. changes which will secure the future of the system of contracts that would be more 6 Conclusion – the time for change is now railway is now. It is time to deliver the world- responsive to what our customers are asking Enhance freight’s central role in delivering class service Britain demands and deserves for. Our new ‘public service contracts’ system We want to work Through the process we have gone through for Britain’s economy: and achieve real, lasting change. would be made up of TfL-style single branded with government to develop a clear national to develop these proposals, married with our ‘concessions’ where usually an integrated framework to put freight at the core of the own experience, we have vital insight into 3transport body effectively runs the service, or government’s business, environmental, how to ensure the railway is fit for purpose new ‘customer outcome-based’ contracts, in and transport strategic policy making. It is now and in the years to come. We believe place of today’s tightly specified inputs-based important that freight obtains the access the following should be priorities for reform, model, which better incentivise the private 7it needs to the whole rail network to keep setting up a new system which delivers sector to innovate to improve, while only supermarket shelves stacked, the lights improvements for the customer and for rewarding good performance. on and the economy moving in a global Britain in the years to come: marketplace. • Implementing the ‘Easier fares for all’ proposals in full, to deliver the modern, up to date system our customers are crying out for.

12 Changing Track Executive summary 13 Rail’s purpose

Executive SummaryExecutive over the next

Rail’s purpose over the next purpose years over 25 Rail’s 25 years the next purpose years over 25 Rail’s

14 15 Rail must support the wider economy and social outcomes.

Vernon Everitt, Managing Director, Customers, Communication and Rail’s purpose over the next purpose years over 25 Rail’s Technology, Transport for London the next purpose years over 25 Rail’s

As we look over the next two or three We believe rail is critical to meeting all five businesses that rely on it to trade both within Population projections indicate that growth decades, it is clear there are five overarching challenges, but recognise they present direct the UK and outwards as part of an ever more will be strongest in those geographical areas strategic challenges confronting all sectors challenges to the industry. global economy. already extensively served by rail, but in which of the economy which rail must rise to in housing supply is even now at a premium. Reform must deliver a railway well-placed An affordable, value for money railway response. As we take decisions today about This is just one key factor in the predicted to not just respond to these challenges, but which encourages more people to travel the future of our railway, taking these growth in rail passengers of up to a further to set Britain up for success over the next by train frees up more money for capital challenges into account is essential. 40% by 2040. generation. For example, the capacity and investment in growing the network, enabling The health of the economy will continue to connectivity the railway can bring as part of a more effective increase in capacity, There has been a softening of growth in be an overriding priority, combined with the the wider transport network will be vital in boosting our whole economy and freeing up London and the South East of England – and ever more pressing need to address poor helping address the endemic differences in more money to invest in other vital public we must not take that growth for granted. productivity, reducing the regional disparities economic performance between London and services. However, these decisions on capital However, both long-distance and regional rail that drive the geographic imbalance that holds the wider South East on the one hand and the investment must be made in a way that travel, especially to and from the larger towns the whole of the UK back. At the same time remaining parts of the UK on the other. enables and enhances every part of Britain, and cities outside London and the South with clear objectives for rail within the context East, have continued to see demand increase. the question of international connectivity and In our major cities and towns, increased rail of the transport networks in Scotland, Wales Meeting the projected growth in demand trade will be ever more important, particularly capacity can facilitate sustainable growth and the English regions. from passengers will require an increase in as the country leaves the European Union. and support not only a better environment the number of trains on our railway – with a in terms of both air quality and reduced We know that over the coming years The whole economy will need to work within medium range projection of a 50% increase emissions, but also the high-density technology will change our society in ways government environmental commitments by 2047. This expected growth in passenger development that, through the creation that today may be hard to imagine; helping on improving air quality and reducing carbon demand is a significant challenge to the sector of a clustering effect, can boost economic make rail faster, cheaper and adding vital new emissions. in itself, but must also be seen alongside a performance and alleviate constraints in the capacity. There is a clear potential impact predicted growth in demand to move freight housing market. from the growth of shared autonomous The affordability of public services and their by rail of a similar scale, and demand for an vehicles on our transport system as a long-term financial sustainability will continue Targeting available capital investment to integrated transport offer. whole: we want rail to play its full part in to be crucial, with more limited budgets improve the reliability and resilience of the the multi-modal system that develops. It We believe strongly that rail is fundamental making it essential that capital investment is system as a whole can enable businesses must complement and enhance that system to helping the UK meet these challenges and targeted where it can best help meet wider to connect better with each other and their through an integrated approach to addressing succeed, but we know we must demonstrate economic challenges. supply chains, boosting both productivity and the future of mobility within our society – a that rail is capable of not just responding wider economic performance. The increased availability of digital technology future in which people will access public and to, but shaping that future. This is why the will have seismic implications for the wider Rail can also make a vital contribution to a private transportation providers through a decisions today are so vital – creating a economy, for behaviour change in travel and low-carbon economy in the context of the unified gateway that creates and manages system not just fit for today, but for the next our social and personal behaviour; and for the UK target of reducing carbon emissions by the trip. generation and beyond. design and operation of the rail system. at least 80% of 1990 levels by 2050. This We can expect that we will all be more relates both to meeting the changes in connected and demand more from those Finally, it is imperative to acknowledge the demand driven by rail’s good environmental providing us with services of any kind. In a expected growth in the UK population to case but also to a focus on reducing our new and highly competitive and connected 77 million by 2050 – predicted to be largely own emissions as a sector. Enabling the marketplace, the successful systems which focussed in London, the wider South East of long-term sustainable growth of the freight not just survive but thrive are those designed England and our major cities – with all the sector can help in terms of both cutting around their customers. This change in implications this growth will have on housing emissions but also improving air quality by people’s expectations is a clear challenge to and other policy areas, including rail. reducing congestion in our major cities and rail, one which the industry must be able to towns, addressing its environmental and respond to effectively. social impacts while being a catalyst for the

16 Changing Track Rail’s purpose over the next 25 years 17 The Williams Review provides the whole industry with the opportunity to look afresh at what we do, ask again what our purpose is, and to invite scrutiny and challenge. In approaching this work, we defined the ‘tests’ we believe Britain’s railway needs to pass to set Britain up for success for the next 25 years and beyond, which we judge our own proposals through. Our principles These tests are enshrined in our six principles for change:

The railway must put customers at the heart: A genuinely reformed railway must unlock a new generation of innovation and investment and, where it makes sense, choice for customers. This is key to ensuring every passenger gets a safe, reliable service, at a price they Our principles for change for Our principles for change change for Our principles consider fair, in comfort and safety, from the station to the platform to the carriage. Customers come first – that must be the first outcome of the review.

Reform must create clear accountability: Building a structure for the railway that creates confidence in its leadership and makes it clear where the buck stops when things go wrong. The public must know who is responsible for what and, crucially, know who to complain to if things go awry. If customers feel their voices disappear into the void then trust will evaporate.

We must deliver value for money: Managing costs for passengers, freight customers and taxpayers. Nobody wants to see a return to the days when the railway was underfunded, lines were closed, stations were boarded up and the network was in a state of managed decline. A time when our rail infrastructure had to compete for politicians’ attention, and directly with schools, health and policing for funding.

The railway must drive economic growth: The railway is more than a treasured public service, it is a vital piece of national infrastructure that connects businesses to each other and their employees to their places of work. That is why it is vital that the right model for the railway also incentivises investment for the long-term, expanding our network and growing and rebalancing Britain’s economy.

The railway must strengthen communities: We bring people together not just physically but as part of our shared memories and shared culture, from our first time on a train, to our visits to friends and family, to trips to the seaside, to seeing new cities. So the railway must be modern, efficient and designed around the needs and aspirations of the communities it serves.

Reform must inspire our people: Enabling those that work on the railway to have long-term, fulfilling careers, equipped with the skills to respond to future needs, sharing the success with everyone working in the railway. We want everyone working in rail to feel a sense of fulfilment and belonging. We want to develop challenging and rewarding career paths, to attract the brightest and the best talent from diverse backgrounds, and to continue to create apprenticeships and jobs in every part of the country.

Six outcomes – putting customers first, clear lines of accountability, value for money, driving economic growth, stronger communities, and inspiring our workforce. We consider these to be the right priorities for a modern railway. The right approach for the generations to come.

18 19 Challenges and opportunities Challenges and opportunities Challenges and opportunities Challenges

20 21 Challenges and opportunities Challenges and opportunities Challenges

The rail industry undoubtedly faces • Private sector investment in rail. This • Better facilities. Billions of pounds of • Access Map. The rail industry has some fundamental challenges, but those is at its highest level since first being investment from the public and private launched a new interactive map which will challenges are balanced by opportunities. measured and private sector capital sectors in new stations like Corby in make it easy for disabled passengers to, Bold reform is essential, as it can remove has meant the taxpayer has not been Northamptonshire, in infrastructure like at a glance, identify whether any station the barriers that exist today – some of burdened with the cost of innovation. a new line from Oxford to London - the in the country is accessible so they can which result from a failure to implement Private investment has increased 63.5% first between a major British city and the plan according to their needs and have recommendations from previous reviews since 2007-08 driven by investment in capital in 100 years - and in thousands of smoother and more reliable journeys. This – and help us to reconfigure the railway rolling stock, which is up over 90% (£767m new, more comfortable carriages is one part of the industry’s long-term around the needs and aspirations of the in 2016-17). Compared to 1996-97, there plan to increase access to the railway, This transformation has been delivered people and businesses who rely on it, driving are 2,500 more carriages on the railway, supporting more people to travel by by a partnership of the public and private improvements for their benefit. a 25% increase. Rail companies are train. The rail industry is also trialling a sectors. The private sector has played an introducing 7,200 new carriages by 2021. revolutionary app to speed up booking These reforms should not lose sight of what important role and has a strong track record assistance and, by summer 2020 when the works in the current system. Much has been • More services. Investment means train of delivering better value for taxpayers app will go live, helping passengers have achieved over the last 25 years, and the companies are running 28% more services and the economy; more investment in new more control over their journey. partnership of public and private sectors since 1997 and the frequency of services infrastructure and services; and improved continues to work hard to improve the daily on many key long-distance routes has customer experiences. • Digital ticketing. Passengers travelling experience for passengers. We believe that a doubled. from all major stations across Britain are Working together for change now reformed partnership can deliver much more now able to go paperless, buying smart • Freight productivity. We have achieved over the decades to come. In addition, the industry is continuing to do tickets more quickly and easily online or wider environmental and societal benefits what it can to improve services for customers via their smartphones to store on their The railway has achieved a lot in the last 25 by strong growth in rail freight since 1996, today. This includes practical, tangible handset or a smartcard. Very soon, we years reversing decades of decline. Rail freight measures such as the introduction of 7000 expect 9 in 10 tickets to be available for delivers around £1.7 billion of economic We are proud of the areas where we have seen new carriages by 2021, meaning half the sale to customers as smart tickets, which benefits per year, including £1.2 billion of transformation in recent decades, including: existing fleet will be replaced new for old, and benefit passengers by helping them save productivity benefits. the overall number of carriages will increase time and skip queues at ticket machines; • Safety. Following a spate of tragic • Sharing the proceeds of growth. The by 20%. Along with more seats that means ending the days of lost tickets with passes accidents at the turn of the century, our railway’s finances have been transformed, improvements like air-conditioning, plug- stored securely on a phone or a card; and passengers and our people now travel with an annual operating deficit of £2 sockets and Wi-Fi, boosting productivity. It making it simpler and easier for customers and work on one of the safest railways in billion cut by three quarters, saving includes initiatives such as: to claim compensation. Europe. taxpayers £1.5 billion a year and freeing • Introduction of the 26-30 Railcard. • Delay-repay compensation. Supported by • Passenger growth. After decades of up money for other vital public services. Since going on sale in January, the 26-30 the industry, a number of operators have decline, Britain’s railway has seen 25 years The combination of public and private Railcard has saved more than 200,000 introduced Delay Repay 15, allowing rail of sustained growth. Passenger journeys sector investment going into the railway passengers over £10.5 million, with an passengers to claim compensation if their have doubled, growing more than twice will boost the UK’s economy by almost estimated annual saving for each 26- train is more than 15 minutes late. Future as fast as UK GDP. We’re moving more £85 billion over the next decade. 30 Railcard holder of £281. Since 1993, contracts will include a requirement to people and goods and better connecting Railcard holders have made around 2.2 introduce this policy. Compensation is communities across the country to new billion journeys, saving themselves an often paid regardless of the cause and opportunities estimated £8.5 billion. train companies are making it easier to claim.

22 Changing Track Challenges and opportunities 23 Challenges and opportunities Challenges and opportunities Challenges

• On time measures. The industry In addition, all the companies running the We also face challenges and we must be It is in recognition of this need for change that has introduced ‘to the minute’ train railway recognise punctuality has not been honest about those the industry called for a rail review. With its performance metrics as the primary good enough for a few years, and current broad scope and reach, the independently While we continue to work hard to deliver method of measuring punctuality in 2019. improvement initiatives include: chaired Williams Review creates the improvements, it is a fact that the system The move means that train punctuality opportunity to deliver a once-in-a-generation • Collaborative leadership. Improving is no longer delivering the consistently high measures in Britain are now the most shake up of the rules that govern Britain’s punctuality requires effective standard that customers have a right to transparent of any major railway in railway. collaboration across the industry and its expect. We welcome the fact that passenger Europe. The new measure means clearer leadership. Operators and Network Rail numbers have doubled but understand that Its success depends on lasting, long-term information for passengers, and the data will jointly be focussed on delivering much this piles pressure on the system. The smallest reform. Previous reviews have not lived up is already being used by train companies better performance outcomes, with a delay has a vast ripple effect across the railway. to their promise – not looking at the whole and Network Rail to pinpoint issues that greater focus on delivering improvements Since surveys began in 1999, our overall system, or providing solutions which have cause delays and improve punctuality. locally through collaborative working. customer satisfaction has increased from 76% only been implement in part. • Introduction of the Rail Ombudsman. to 83% but in autumn 2018 it dropped to 79%. • Learning lessons from the May 2018 In particular, we believe that some of the As part of the industry’s efforts to That is a worrying drop in support. timetable. Following the unacceptable challenges facing today’s railway would have uphold the highest standards in its disruption many passengers experienced And while we’ve seen seismic advances in been avoided if the recommendations of the complaints process and increase customer during the May 2018 timetable, a new digital technology in other areas of life, Shaw Review on the future shape and financing satisfaction, all train operators signed cross-industry programme management creating new ways to shop, connect and work, of Network Rail (2016) and the Brown Review up voluntarily to a new impartial and office is monitoring the industry’s so many of our processes remain stuck in the of the rail franchising programme (2013) had independent Ombudsman, which has readiness for introducing new timetables. analogue age. been implemented in full. the power to make binding decisions on This includes reviewing the progress of them, and which can include awarding Everyone agrees the system needs to change. The failure to address in full these infrastructure projects, the introduction compensation. But it must do so in a way that is lasting and recommendations from previous reviews has of rolling stock and the training of drivers. sustainable. Change must make the railway had consequences for the industry and all of • Trialling of RDG’s fares reform proposals. These new arrangements supported the fit for future generations, delivering the best its customers, and has contributed to the set RDG has submitted ambitious proposals successful introduction of the December deal for our customers, holding the industry of issues which now need to be prioritised and for fares reform. The industry is now 2018 timetable with attention now to account and creating a railway that which include: working on a series of real-world trials to focussed on the forthcoming May and communities and businesses across Britain bring the benefits of these reforms to life December 2019 changes. • Misaligned targets, incentives and will rely on to thrive in future. for our passengers, with the aim of rolling business models have made it more out a new system across the country over challenging for the wider industry to the next 3-5 years. collaborate more effectively to deliver for the customer. • Railway upgrade plan. Network Rail is investing £130 million every week on • In the past Network Rail has lacked improvements across Britain to improve focus and real engagement with its train the railway for passengers including the operator customers at a local level. This is Derby resignalling project, the Edinburgh- now changing with a strong drive towards Glasgow Improvement Programme deeper devolution, partnership and and new stations at London Bridge and customer focus. Birmingham New Street.

24 Changing Track Challenges and opportunities 25 Challenges and opportunities Challenges and opportunities Challenges

• Prescriptive obligations in franchise In developing our proposals for change, we agreements often result in a lack of considered the recommendations of these resilience on behalf of operators. Train reviews, as we believe they would deliver operators would be more responsive to better outcomes for customers and taxpayers. changing customer need and economic The opportunity we have today is to reform conditions with more customer outcome- our industry so it is able to address these based and flexible contracts. issues and deliver much more effectively. • It is often problematic for DfT to act as a Reform can help us create a system which is systems integrator for England and Wales more innovative, quicker to respond, focussed with understandably limited capacity and on delivering in partnership and which capability. encourages and enables more investment. It • A complex fares system and outdated can help provide clear leadership and, above regulations have led to a lack of trust that all, a clear focus on what the customer needs. customers will always get the best fare, and a system which has not kept pace with changes in lifestyle and working practices. • The franchise model has generally not encouraged long-term behaviours by operators. All industry players need to be incentivised to consider the long-term needs of customers within a framework that encourages and supports innovation. • There is a lack of clear leadership, with those with the accountability for decisions not always having the ability or authority to act. • The regulator has put more emphasis on train operators as customers to agree with Network Rail targets to deliver improvements for customers. While this is right in principle, it is necessary to have aligned incentives and the right contractual levers to do this. • The current system does not encourage enough private sector investment which would help to address capacity constraints and grow the network.

26 Changing Track Challenges and opportunities 27 Looking outwards for Looking outwards for answers for outwards Looking answers answers for outwards Looking

28 29 Looking outwards for answers for outwards Looking answers for outwards Looking

Asking the country with responsive fares for customers, combine to regional economic development and long-term Sweden. Swedish railways were give passengers flexibility, choice and value for growth. We gained insight into the power of the liberalised more than 25 years In developing meaningful proposals for money. railway to rebalance economies, build stronger ago. Railway companies compete generational reform of the railway, we have communities, create jobs, apprenticeships and for market access and a number listened to people and businesses around the Finally, we looked beyond the UK to other business opportunities, and contribute to the of other functions in the sector country and consulted with them to understand countries with developed railway systems, and UK’s engineering and manufacturing base. and have also been subject to competition. what they want and expect. sought to learn from their experiences. In 1996 the rail freight market was liberalised In short, people want the railway to continue Our engagement exercise included roundtables This research and engagement has enabled RDG and track and train are run by separate at the heart of British life, but recognise that with local leaders, business leaders, and to build a wealth of data and knowledge and companies (known as vertical separation). On- tomorrow’s railway will be different from stakeholders from the railway from around the helped shape our proposals, based on evidence rail competition began in 2010 and is regarded yesterday’s. People want continuing growth, country. We listened to chambers of commerce, of what works. as having pushed down prices on intercity investment and modernisation. People want local councillors and officers, people from city- routes. A role for regions has meant that What we were told safe, reliable, clean, punctual, comfortable trains, regions, passenger groups, accessibility groups, train operator contracts aim to meet regional as part of an integrated network of transport think tanks and others with an interest in the Naturally amidst so many disparate voices, there needs. There has also been subsequent systems in every part of the UK. They want value future of the railway. were some competing demands and differing passenger growth in Sweden. for money, transparency, accountability, and a priorities. People feel passionately about the We met with officials from the Department clear sense of where the buck stops. They want Vertical separation means despite a state future of the railway. However, there were some for Transport (DfT), Transport for the North, to access information and services on the railway incumbent railway operator, new entrants strong unified themes which emerged from our Transport for Wales, Transport Scotland, with the same ease and convenience as other in both the freight and passenger market process. Transport for London, Transport for the West areas of modern life. This is what our proposals have been able to grow. Sweden is perceived Midlands, Transport for Greater Manchester, The first is that change is a necessity. People must deliver. to find a good balance of public and private Merseytravel, Nexus (Tyne and Wear), and other recognise that we need a new way of doing involvement, with private sector competition Looking around the world regional stakeholders. This gave us insight into things on the railway for it to adapt and grow into keeping the public sector operator the possibilities of devolved decision-making and the twenty-first century. Listening to passengers, Alongside widespread public consultation, our competitive. As such, the public sector is regional economic regeneration. we heard loud and clear that the priority is our proposals have been guided by the experiences balanced by private sector competition, the core product: value for money, punctuality, of other railways across the world. The UK is not use of specified public service contracts is As part of our consultation on the future for reliability, and a comfortable journey. alone in grappling with the issues of efficiency, balanced by commercial open access, and the ticketing and fares, published as ‘Easier fares accountability and value for money. While there role of the regions is balanced with that of for all,’ we received nearly 20,000 responses People want clear information, understandable is no single ‘one-size-fits-all’ approach to running central government. from people wanting to share their views. We prices, and redress if things go wrong. Transport a railway, and all models involve choices and also conduct ongoing surveys and focus groups Focus, the independent watchdog, asked more trade-offs given the many markets the railway with the railway’s customers, to gain up-to-the- than 12,800 people to rank things that would serves, there are nonetheless insights and lessons minute insights into how people experience the most improve their journey experience. Value for from other systems. Railways reflect the political, services we provide, and their aspirations for the money came top, followed by getting a seat and economic and historical development, and the future of the railway. We measure and evaluate improved punctuality. This desire for value for distribution of population, of their country. Rail the feedback we receive from customers across money, punctuality and reliability was echoed functions and organisations are often related to the railway as part of our Customer Wavelength from freight operators and others in the freight the physical locations and connections between programme. business. Freight operators, like most businesses, stations, tracks and depots. want a stable framework to allow them to make We wanted to understand how other sectors long-term investments. However, one common theme that runs manage comparable challenges of technology, throughout our analysis is that private sector growth in passenger numbers and pressures on As we listened to regional authorities, chambers involvement and competition in one form or resources, so we conducted a study of the UK of commerce and business groups, we heard another, repeatedly drives greater efficiency and aviation and road industry. For air, we wanted to another strong theme: the need for devolved, better customer outcomes. see how competition for landing slots, coupled accountable decision-making in the interests of

30 Changing Track Looking outwards for answers 31 Looking outwards for answers for outwards Looking answers for outwards Looking

Japan. A single Japan National Germany. German railways France. France has one of the USA. Railways in the USA are Railways structure was split are vertically integrated in a world’s oldest rail networks vertically integrated with either into six geographical vertically holding company structure with a comprehensive high- a freight operator, or in limited integrated railways and a freight called Deutsche Bahn (DB) – speed network covering more circumstances the national operating business following with infrastructure, freight and than 2600km. SNCF is France’s passenger operator Amtrak a process of privatisation initiated in 1987. passenger operations coming under separate national state-owned railway company. It managing operations and infrastructure. Japan is often cited as a good comparator due and independent management. Competitors operates as a ‘holding’ for three companies They are vertically integrated businesses but to its good punctuality and bullet trains, or to DB operate in the open freight market, which also contain separate business units. compete and co-operate while operating over Shinkansen. There is clear accountability with competitively tendered passenger market and Having a dedicated high-speed passenger rail their own infrastructure and infrastructure strong single branding even among different there is limited open-access passenger rail network means that France can segregate not owned by other operators. A competitive ownership structures. Regional vertical competition. Germany has a lower intensity of only its passenger and freight services, but freight industry has increased efficiency integration is facilitated by the vast majority passenger train usage when compared to UK. also its long-distance and regional trains. This over the years with the main catalyst of journeys being made within the railways’ However, passenger satisfaction in Germany is benefits reliability and enables France to offer being deregulation. Commercial freedom regional geographical boundaries. lower than the European average. a ‘premium product’. and economic regulation are perceived as driving some of this efficiency and freight Private sector involvement and competition Public service contracts (PSCs) are often Accidents and increasing rail debt in recent performance. is perceived to have had a positive impact on regarded as fit for purpose and with different years have been a catalyst for a major review efficiency and innovation. The companies have client bodies making it attractive for bidders of French railways. The instigation and Passenger operations perform poorly with commercial freedom, particularly in relation – varying in length and with different conclusion of the Spinetta Review highlighted some services late as much as 80% of the to service levels. High levels of punctuality risk profiles. Despite the contracts being a lack of sustainability in the French rail time. Vertical integration of freight lines has are helped by having a segregated high-speed attractive, it is not always easy for operators model. In particular, 15% of total annual rail meant that passenger services using these network. Capacity provision is very good to enter the market, with a perception funding was spent on routes carrying 2% lines on an open access basis are deprioritised – high capacity trains at high frequencies. that the incumbent can create barriers for of France’s passengers. It is arguable that with up to 90% of passenger services on some However, trains are often overcrowded around competitively tendered PSCs. a focus on passenger only lines has had an lines regularly disrupted by freight. The US urban areas. Further, vertical integration in impact on the rail freight sector. Similar to also has a relatively poor safety record for Japan appears to have benefited passenger Germany, France has a much lower intensity passengers. There is no single reason for this, services when compared to limited rail freight. of passenger train usage than UK. and major accidents have had a number of causes.

32 Changing Track Looking outwards for answers 33 Looking outwards for answers for outwards Looking answers for outwards Looking

The British system is unique, but there are Overall, by listening to customers, interest lessons to be learned from elsewhere groups, public leaders, businesses, and a range of others, and by looking beyond our There is no perfect system, nor one which own shores, we have gained an evidence- serves as a perfect blueprint for Britain’s based understanding of the way ahead. Our railways. But there are lessons to be learned proposals are rooted in insight, practicality from all of them. and common sense, free from ideological In Sweden the balance between public service constraints or narrow self-interest, and contracts and commercial open access is presented openly in the interests of the considered positive. The role of the region is railway and the nation. balanced with that of central government, and new entrants in both the freight and passenger market have grown. Japan is also considered a success but takes a different approach to Sweden, adopting a model of passenger-led vertical integration. As with all structural models there are trade- offs with Japan experiencing limited rail freight. In Germany, public service contracts are considered attractive, however barriers exist for new entrants. In France, high subsidies and growing debt have served as a catalyst for a major review. Finally, in the USA, there have been very significant productivity improvements in the freight sector, but with a strong focus on a vertically integrated rail freight, passenger services are regularly disrupted. While it is paramount to look outwards to see what works around the world, our proposals for the future of the railway in Britain are anchored in our own experiences, structures and cultures.

34 35 Our plan Our plan for a Our plan joined up, accountable and customer focussed railway

36 37 Our plan Our plan

Passengers want a reliable and on time service, that offers value for money.

Mike Hewitson, Head of Policy, Transport Focus

The Rail Delivery Group has been calling Put a new independent organising body in Make sure track and train are all working for a major review of the railway, and we charge of the whole industry: Form a new to the same customer-focussed goals: welcome the establishment of the Williams independent organising body which removes Introduce a single thread of consistent targets Review. We want to be part of a modern, the politics from the running of the railway as and incentives running through the whole efficient, popular and successful railway. far as possible and acts as the glue that binds industry, from CEOs to frontline teams and As the body representing the organisations it together, joining up decisions, making sure between the track and the train, so that all delivering millions of journeys a year, we have customer needs are prioritised and holding parts of the railway pulling together in the a grounded and practical understanding of 2the industry to account with penalties where same5 direction - ending the blame game. what needs to change. it falls short. Bring decisions about local services closer But we know we need a step-change to Introduce responsive, customer-focussed to home: Where appropriate, for example make tomorrow’s railway ready for the next public service contracts replacing the in larger city regions which serve commuter set of challenges – a growing population, current franchising system: Create a new markets, customers would benefit from local the exciting possibilities of the technology system of contracts that would be more transport bodies being given more power to revolution, and the economic challenges responsive to what our customers are asking design and specify local services, bringing and opportunities after Britain leaves the for. Our new ‘public service contracts’ system decisions about the railway closer to the European Union. There is no one, simple would be made up of TfL-style single branded communities it serves. solution. The future of the railway cannot 6 ‘concessions’ where usually an integrated be reduced to a slogan or simple policy 3 transport body effectively runs the service, or Enhance freight’s central role in delivering prescription. But we do present a plan formed new ‘customer outcome-based’ contracts, in for Britain’s economy: We want to work of eight interrelated measures, which taken place of today’s tightly specified inputs-based with government to develop a clear national as a whole, add up to the change we need. We model, which better incentivise the private framework to put freight at the core of the recommend the following: sector to innovate to improve, while only government’s business, environmental, rewarding good performance. and transport strategic policy making. It is Deliver easier fares for all: Update decades important that freight obtains the access of regulation to enable a fares system which Give customers more choice of operators on it needs to the whole rail network to keep is much easier for passengers to use and 7 some long-distance routes: For some long- supermarket shelves stacked, the lights better value for money, introducing pay as distance routes, having more rail companies on and the economy moving in a global you go with a price cap across commuter competing for passengers means they could marketplace. markets, and reducing overcrowding on some be offered a range of different services based of the busiest long-distance services while on what they want. Whether it’s quicker Invest in our people to deliver positive long- encouraging more people to use the network 1 more comfortable journeys or faster Wi-Fi, term change for our customers: Develop a at different times of day. This fully reformed demand would shape the market; meaning new approach to working with the unions, system would be backed up for the first time 4 rail companies would have to adapt to the governments and the industry which provides by an industry ‘best fare guarantee’. needs of passengers if they want to keep their our people with the skills, resources and business. rewards they need to deliver generational change in the railway. The8 following sections set out each of these eight points, which form a whole plan, in detail.

38 Changing Track Our plan 39 Point one Point Deliver easier one Point fares for all

40 41 Point one Point one Point

We want to update decades of regulation to all, nearly 20,000 people responded and we These changes would enable: five days a week or are able to travel off enable a fares system which is much easier travelled the country consulting passenger peak. This supports changes in working • The ‘unbundling’ of fares through a for passengers to use and better value for groups, business groups, accessibility groups patterns, with part time working and move to a single fare as the basic unit money, introducing pay as you go with a price and local authorities representing nearly self-employment having increased by over of all pricing in the new system, with cap across commuter markets, and reducing 300,000 organisations. a third in 22 years. 90% of consultation rules underpinned by regulation to allow overcrowding on some of the busiest long- respondents wanted consideration The consultation found that eight in ten and encourage the best combinations distance services while encouraging more (definitely or maybe) of price capping. people want the current system changed, of single, return, and multi-journey people to use the network at different times with respondents calling for a fairer, more tickets. This is similar to the way fares are • Long-distance and leisure travellers could of day. This fully reformed system would be transparent and easier-to-use experience. currently structured within London. see demand spread more evenly across backed up for the first time by an industry Responses to the consultation have been used the day, potentially reducing overcrowding ‘best fare guarantee.’ • Train companies would be able to create to develop five principles that should underpin by up to a third on the busiest services. discounted, premium, train-specific and As a public service the railway is being majority- reforms to the fares system, including value for Updating regulations around peak and personalised variations of these fares, for funded by the £10 billion in fares paid by those money and simplicity. off-peak travel would mean ticket prices example, charging less at quieter periods, who use it, so it is vital that the range of fares could be set more flexibly, spreading Based on these principles, we developed our more for first class, less for reduced on offer makes rail an attractive choice by demand for a better customer experience. ‘Easier Fares for All’ proposals for a reformed flexibility, and so on. This ensures that supporting the way people want to work and This would be supported by a wider range fares system. These are built with a simple fares are priced appropriately to market travel today. Crucial too is that the public has of on the day fares. 78% of respondents proposition at their core: that customers only and are not simply the sum of their parts. confidence and trust in what they’re buying. wanted consideration of fares that pay for what they need and are always charged • Protection from excessive fares encouraged empty seats to be filled. Yet outdated regulations that tie the the best value fare. To deliver this, we are through regulation of key price levels fares system to the structures and buying proposing a two-stage approach to reform, • All customers could have more options rather than of specific fares types, for requirements of the 1990s, coupled with underpinned by real-world trials which would to travel flexibly and no longer need example commuter fares, with systems further layers of requirements added through give customers more opportunity to engage to commit at the time of buying their programmed to ensure that the cheapest individual franchise agreements with little or with the proposed changes: outward journey to the time of day available fare that meets customers’ nothing taken away, have created a system when they will return. Instead they could • Stage One: Industry and Government needs at the time of sale is offered. riddled with anomalies. The result is that mix-and-match different types of single work together to reform the way that there are now over 55 million fares, created Amongst other improvements, reforming tickets, and changing travel plans would fares are worked out. This means replacing in fixed bundles within a restrictive structure. fares in this way could mean that: be made easier. 74% of respondents the outdated Ticketing and Settlement Customers and ticket office staff then have wanted consideration of fares based on Agreement (TSA) with a new set of system • Commuters travelling from outside to try and untangle which ones might suit the amount of flexibility required. regulations. London into the capital and in other them best, making it increasingly difficult to major cities could benefit from the kind If the proposals are developed and adopted, guarantee the right fare. • Stage Two: With these new system of weekly capping system currently they could enable the industry to offer a ‘best regulations in place, commercial That is why last summer the Rail Delivery available for journeys within London. With fare guarantee’, so that customers would changes would then need to be agreed Group approached passenger group Transport pay-as-you-go pricing and a tap-in tap- be assured that they are always paying the with operators, reflected in new pricing Focus to work with it to conduct the biggest out system, commuters that currently lowest fare available which meets their needs regulations written in to Government ever national listening exercise into what a buy weekly season tickets could save where and when they buy it. contracts. reformed fares system should look like. In money when they travel fewer than

42 Changing Track Point one 43 Contactless pay-as-you-go,

Point one Point including capped fares, would one Point provide convenience, simplicity and flexibility for customers. Contactless pay-as-you-go can also allow customers to travel seamlessly between transport modes

Stephen Rhodes, Customer Director, Transport for Greater Manchester

A reformed fares system would make the As a next step we are currently developing stick to their travel plans in advance, but most of technology like online accounts, a series of real-world trials to bring to life Meeting our principles also by enabling a better range of cheaper smartcards and smartphones to make ticket the benefits of reform to our customers, and Customers at the heart fares to become available, including buying simpler, so that customers are shown undertake further financial modelling. We enhanced availability for on the day walk- fares which match their needs while screening are also continuing to improve ticketing and Our proposals for fares reform are based up fares. out irrelevant choices that cause confusion. retail as part of our wider reform programme, on a mass consultation, with over 20,000 including further roll-out of bar-code and people sharing their views, and in which 8 Drive economic growth Fares reform and devolution account-based ticketing. out of 10 wanted change of the system. Early independent modelling by KPMG In addition to improving customer experience, What this would achieve It moves from a system where customers indicates offering a better range of fares updated fares regulations would help local are currently expected to identify at different times of day on the long- political leaders have more control over their This re-structure could enable the whole the correct fare from a series of pre- distance markets could stimulate over transport systems, where relevant powers country to benefit, giving customers greater prescribed ‘bundles’, working backwards 300 million more journeys on services are devolved. This would enable local political freedom to mix and match their tickets and to establish the best option for them with capacity for growth over a ten-year leaders to co-ordinate train fares alongside potentially offering savings for people working – often against an array of bewildering period on top of the 1.7 billion journeys other local transport so that the system is set fewer than five days a week or travelling off- choices - to one where customers tell us which currently take place on the network. up to meet the challenges and opportunities peak. what they need, and we guarantee the This would catalyse local economies, of a future where Mobility as a Service, in At the same time, inter-city travellers would system will work out the best fare for their encouraging more commuting and which users pay for an end-to-end journey see a far bigger range of cheaper walk-up requirements, every time. business trips between towns and cities across different modes of transport in a single fares and potential reductions in their peak- across the country. online transaction, increasingly becomes the As well as a simplified buying process, time travel, better spreading demand and default in our towns and cities. reform would make it easier to Strengthen communities reducing overcrowding. The changes would immediately see what passengers’ options A single-leg pricing structure would also act also banish confusing contradictory fares, so are if they want to change plans on the Our proposed changes to the fares as an enabler to local reform, where control people would no longer have to find work- move, and make it easier to deliver hassle structure would enable local political of pricing has been devolved. It could provide arounds to get the best deal. free refunds and automated delay repay leaders across the country to have more local leaders the opportunity to package We want to see the regulations underpinning when specified in contracts. control over their local and regional up fares in a different way more suited to the system updated, so that we can make transport systems where the decision has local passengers or more reflective of local Deliver value for money improvements for the millions of people been taken to devolve the powers and investment. Combined with new public service who travel by rail every day. Fares change is With a reformed system customers would responsibility. This would increase their contracts, this would unlock the full potential necessary however the system is organised, have far more control over the journeys ability to co-ordinate train fares alongside of a local, integrated transport offer. and we want the journey towards a better they pay for, with the ability to mix and other local transport in and around cities. Our analysis indicates these changes could fares system to start now. match their requirements from basic Additionally, a new system based on stimulate 300 million more journeys over a single fares to get the best price. a single-leg pricing structure would ten-year period, growing the long-distance Reform would also mean fares that better allow the pricing of local fares to be market by 6.5% and in turn generating reflect modern ways of working and living, disaggregated from the national structure additional revenues for government to offering the opportunity to save money by of which they are part. This could enable reinvest in lowering fares in long-distance or travelling at quieter times of day or fewer local pricing decisions to be applied, for commuter markets, or in the network. This than five days a week throughout the year, example allowing low wage employees to increase in passenger numbers concentrated where they may otherwise not be getting be given cheaper travel, if the devolved primarily on inter-city routes could the full value of their season ticket. authority decided to prioritise and fund particularly benefit the North, encouraging such a policy. more commuting between its close cities and And it would make it easier for everyone helping to drive up productivity. to get a good deal for their travel needs – not only those able to lock down and

44 Changing Track Point one 45 Point two Point Put a new two Point independent organising body in charge of the whole industry

46 47 Point two Point two Point

We propose a new independent organising the railway and ensuring local decisions about • Prioritise investment in the network. Clear roles and responsibilities for key body which removes the politics from the the railway work within a national framework. Unlike today, where decisions about industry bodies running of the railway as far as possible and It would not be expected to make decisions where to invest in services are based on There are many rail industry bodies, some of acts as the glue that binds it together. It about overall rail strategy and funding levels modelled data, new electronic ticketing which have overlapping and conflicting remits, would join up decisions, make sure customer which are rightly for elected politicians, but offers the opportunity for these decisions creating questions around where ultimate needs are prioritised and hold the industry rather would enable government to make to be based on real journey data, making accountability lies. To fulfil its purpose, to account with penalties where it falls those decisions and ensure that they are them much more responsive to actual there would be benefits in the independent short. effectively implemented. customer need. organising body combining certain functions Our research has highlighted the need to It would not be expected to control all • Co-ordinate investment on the network. that currently sit within the Department for rebuild trust among customers who often aspects of implementation directly but would Where there are conflicting demands and Transport (DfT), the Office of Rail and Road do not think the industry is working together be accountable for longer term decisions desires, determining the trade-offs and (ORR), Rail Delivery Group (RDG), Network effectively. at a national level. The new independent mediate between stakeholders. Rail, and possibly some of those in the Rail organising body would need to be distinct Standards and Safety Board (RSSB), the Our customers are right to identify blurred • Oversee significant elements of and independent from all delivery parts of National Skills Academy for Rail (NSAR), lines of accountability. Accountability on the procurement and major projects. the industry, enabling companies to focus on and Transport Focus. Consolidation of the railway has developed over time and without the day to day running of the railway while it • Provide accountability through functions in these organisations would drive a clear plan. Ironically, twenty five years on focuses on the medium to long-term decision transparent and clear penalties for all greater efficiency as well as effectiveness and from the ‘privatisation’ of the railways, central making. As a summary, it would: parties involved in the delivery of services, could potentially produce a net cost saving. government is more involved in making day- only rewarding good performance. to-day decisions about the railway than ever • Ensure network integrity, both With this structure, we envisage that the before, while the industry can be perceived as for passenger and freight users, is To enable these changes contract existing roles and responsibilities of national ducking accountability when things go wrong maintained, and that the customer gets a procurement, contract management (see devolved client bodies (Transport Scotland, because it is not always clear who holds the consistent offer. point 3) and some aspects of economic Transport for Wales) would not be affected levers to improve. regulation of the infrastructure would by the establishment of this new independent • Ensure targets at a local level are aligned be combined. We also suggest that the organising body. The Williams Review provides an opportunity across track and train (see point 5), driving independent organising body oversees the to take an overarching view of where greater collaboration both nationally and What this will achieve implementation of freight policy (see point accountability should lie, and to make locally across the railway, in pursuit of a 7), and provides a coordinating role for on-rail In summary, we believe that a new changes that will bring about better better service for customers. competition (see point 4). In addition, it would independent organising body would act in the integration at a policy level and, as a result, • Ensure consistency between the inputs liaise with local bodies to deliver services to best interests of the customers as well as the better outcomes for customers. and outputs; recognising the constraints passengers (see point 6). broader economic interests of the country. As a core recommendation to address this that decisions have across the system. Free from day to day political interference it challenge, we believe a new independent would be a champion for the railway, for its • Ensure policy-making and decisions on organising body should be established. customers, and for the thousands of people infrastructure and planning are joined This body would join up the system and who work on it. It would be the consistent, up with the capacity available on the provide a singular focus on the customer – authentic and informed voice of the railway, network, rolling stock availability and the while actively holding the companies that now, and in the decades ahead. capability of the supply chain to deliver, run the railway to account and ensuring ensuring the railway keeps its promises to local alignment of incentives and local its customers. accountability to customers. The organising body would be responsible for implementing national rail policy while monitoring and enforcing standards across

48 Changing Track Point two 49 Point two Point two Point

Meeting our principles Value for money Customers at the heart A single body overseeing high level planning across track and train would The introduction of an independent significantly improve the ability of the organising body would ensure all parts of industry to deliver projects on time and the industry are pulling together to meet on budget, for example ensuring that common, customer-centric goals that infrastructure investment is aligned with would both enhance the reliability of the rolling stock investment and this, in turn, network and improve punctuality. is aligned with the capacity available. The single point of oversight would also Strengthen communities ensure policy-making and decisions on infrastructure and planning are joined The independent organising body would up with the capacity available on the play an important role in supporting and network, rolling stock availability and the facilitating more localised, democratically capability of the supply chain to deliver – accountable decision making by joining it so that the railway keeps its promises to up with a whole network viewpoint. its customers. The organising body would drive the industry to be more responsive to customer demand, with the right levers needed to effect positive change held in one place. Clear accountability Better alignment of track and train targets (see point 5) delivered by the independent organising body, alongside clearer accountability and a consistent approach to enforcement across the industry, helping to end the blame game when things sometimes do go wrong.

50 Changing Track Point two 51 Point three Point Introduce three Point responsive, customer focussed public service contracts replacing the current franchising system

52 53 Longer-term thinking is essential, we need rail to Point three Point interconnect with other modes three Point of transport. We need a system that joins up decision-making processes whilst prioritising the customer.

Sarah Longlands, Director, IPPR North

We are advocating the creation of a new • Gross cost ‘concession’ contracts where typically involve most or all revenues being Case study: Transport for London (TfL) system of contracts that would be more operators are given a concession to run received by the client body, with the train overground concession responsive to what our customers are asking a service by national, regional or local operator focussed on cost and service quality London Overground (LO) is a suburban for. Our new ‘public service contracts’ system authorities (for example a city-region). management. network serving London and the surrounding would be made up of TfL-style single branded These contracts might contain little or While suitable under certain conditions and areas. It serves a large part of London as ‘concessions’ where usually an integrated no revenue risk for the operators, just a potentially some markets, concessions are well as the home counties, with 112 stations transport body effectively runs the service, straightforward price for the job of running not the answer everywhere. Concessions including Cheshunt in the north and West and new ‘customer outcome-based’ an effective service. This could work on would work well in some commuter areas Croydon in the south, and Richmond in contracts, in place of today’s tightly specified commuter routes, for example, where for example, where a significant part of the west to Stratford in the east, on seven inputs-based model, which better incentivise demand and revenue in peak periods are revenues are driven by external factors such different routes. the private sector to innovate to improve, driven largely by economic factors, where as employment levels, and where integration LO is considered highly successful, this while only rewarding good performance. passengers have little or no choice about between other forms of transport (cars, buses, how to get to work each morning, and is evidenced through high National Rail Passengers’ priorities on the railway are safe, cycles, walking, river, air) is an important where they just want a frequent, reliable Passenger Survey (NRPS) passenger clean, reliable, punctual, comfortable trains. factor, as in London. Where they are suitable, service. They could also be operated under satisfaction scores of 90% in 2016-17 and 87% All of our research and feedback supports there still needs to be sufficient flexibility a single unified transport brand – making it in 2018. Frequent media reports also hail this this central point. This is our ‘core product’ – in the contracts to respond to changing model as exemplary. getting people and goods from one place to clear to passengers who is accountable for customer requirements and economic London Overground infrastructure forms part another in safety and comfort at the advertised the service. conditions. of the Network Rail network and operational time and at a reasonable price. Research by • Net cost contracts based on customer Hybrid solutions are also possible. When we services were contracted out by Transport for the passenger watchdog Transport Focus in its ‘outcomes’, for example numbers of trains conducted our research of other countries’ London (TfL) to Arriva Rail London (ARL) in annual National Rail Passenger Survey (NRPS) arriving on time. These might suit markets railway systems, we noted that in some 2016. Prior to this, operational services were reinforces our own findings, and also shows where there is a greater choice of when Swedish and German concessions, part of the run by London Overground Rail Operations that the majority of people have only a limited and where to travel (e.g. leisure markets) subsidy is based on the quantum of services Ltd (LOROL) from 2007, after the DfT devolved conception of how the railway is structured, and where there is stronger competition provided but the remainder is related directly the operations of the North London Railway and who owns or runs stations, trains and with other forms of transport. These or indirectly to passenger usage. Other to the regional body. In the most recently let tracks. contracts would be characterised by a contracts migrate from gross cost to net concession, the contract is a fee-based, no Many people, for example, are unaware that fair balance of risk and reward between cost once financial performance has been revenue risk (gross-cost) contract with TfL Network Rail, responsible for tracks, signals private and public sector partners. established after, for example, a number of retaining branding and publicity. and engineering works, is a body in the public The new public service contract approach years of operation. At its initial launch, TfL invested heavily to sector. People care less about the precise for the delivery of passenger services should improve service frequencies and station ownership and governance arrangements and reflect the market it is there to serve, with facilities, staffing all stations, introducing more about whether their train is on time and sufficient democratic oversight where natural new rolling stock and enabling contactless if they will get a seat. Therefore, what matters market conditions are limited. They would ticketing on the network from the start. The is a system of contracts which enables delivery include better aligned incentives and targets Right now the industry is contract contains several change mechanisms of a great service for customers, and reflects between track and train (point 5), driving fragmented and the system must which can be invoked by the client body. These local, regional and national needs. There is no excellent performance, facilitated by greater include fixed, pre-agreed change mechanisms one-size-fits-all solution. strongly incentivise operators to partnership working. (price book) and stipulate a set time needed to This is what drives our recommendation for a be accountable to passengers give notice. Concessions new model of public service contracts, relevant when things go wrong. We believe this type of concession contract, to local and national needs and tailored to the There are a number of examples on Britain’s delivering high levels of customer approval, best arrangements for passengers. There are railway where concession contracts have deserves close examination. It should be two different types of contracts that would fall been used to deliver what customers want, viewed as a model for future arrangements in under the public service contract regime: for example in London (see case study). These Chief Executive, London TravelWatch other parts of the country.

54 Changing Track Point three 55 Point three Point three Point

Contracts based on customer ‘outcomes’ We believe the allocation of risk needs to What this will achieve better reflect those risks best managed by Meeting our principles At present in franchise specifications, the high We believe these new proposals for public client bodies and those best managed by train level of prescriptive detail creates barriers to service contracts will be a positive move away operators. A private sector operator taking Customers at the heart implementing new products for customers, from the current franchising system. Through on risk for unforeseeable and exceptional Concessions are specified with the and barriers driving better value for money contracts that reflect local requirements, events over which it has no control – whether customer as the focus and are designed or growing the industry. Effectively, it reduces they would create a railway that can respond they be economic factors, such as a recession to deliver reliable, frequent services that the benefits of private sector involvement to what its customers need, with greater which fundamentally changes travel patterns, are usually integrated in to the wider and reduces innovation that could benefit collaboration, accountability and clearer or some large scale financial risk is not transport offer. customers. responsibility when things do not go well. appropriate. This recommendation was made Crucially, the public service contracts system Customer-outcome based contracts are We recommend that instead, client bodies by the Brown Review (2013), which argued would drive customer and taxpayer benefits designed to be more responsive to what should focus on setting the outcomes they that contract holders should be responsible by securing more private sector investment the customer wants, giving the operator are seeking, leaving flexibility for the operator for risks they can manage and should not be and harnessing innovation and efficiency room to flex with their changing demands. to determine how those outcomes should be expected to bear risk from wider economic or through enabling a reinvigorated vibrant The specification for both these contracts delivered and able to respond to changing other external factors. competitive market. can be undertaken by the Independent customer needs. The size and value of public service contracts organising body or a democratically With this new system, we intend to build on At the same time, it is vital that these is also important, and we believe that a accountable client body at a national or the successes of the last 25 years, in terms contracts attract maximum interest from wider spectrum of these, including smaller local level. of investment in new trains, faster services, private sector operators, so that strong contracts, and longer-term contracts, would and more passengers, while embracing the A more sustainable market place would competition generates the best outcomes attract a wider range of investors and bidders. opportunities of the next 25 years. make rail more attractive to new entrants, for customers and maximises revenue for Finally, our view is that contracts, particularly with more vibrant competition driving the governments. longer-term contracts, should include the industry to push up standards. Contract management and the allocation of possibility of being reset to be able to react Clear accountability risk to significant externalities which materially Public service contracts give change the assumptions on which the Key to making any market work in practice is accountability either through the local contract was based. Nothing should be the allocation of risk. It is an important feature client body in some cases, and where written in stone, so that if things outside the of a public service contract model, driving transport powers have not been devolved, control of operators change during the time innovation and value for money. The basic the independent organising body. covered by a contract, the arrangements principle is that risk should be placed with Outcome-based contracts enable clearer can be altered to suit the new conditions. the party best able to manage it. This must accountability to customers. This flexibility would mean the railway is not be proportionate, sustainable and capped Across all public service contracts weighed down with inflexible contractual to deliver good value for customers and there would be a transparent system of requirements. It would also give client bodies taxpayers through maximising competition. penalties where performance falls short. the ability to respond to changing customer This drives innovation, customer focus and needs. Value for money efficiency from the private sector. A reformed public service contracts system would drive customer and taxpayer benefits by securing more private sector investment. This would harness innovation and efficiency through a reinvigorated vibrant competitive market.

56 Changing Track Point three 57 Point four Point Giving customers four Point more choice of operators on some long-distance routes

58 59 Point four Point four Point

For some long-distance routes, having more • Customer responsive fares products: On • A structured open access competition Considerations for establishing more on-rail rail companies - competing for passengers the London to Yorkshire and the North model: This market driven, less specified competition - means they could be offered a range of East route, the franchisee (formerly and controlled approach to on-rail A number of challenges would need to be different services based on what they want. East Coast) removed non-franchise competition could work where there is overcome to implement these models. For Whether its quicker more comfortable specified carnet tickets from their offer. sufficient demand for different types example, there would be greater coordination journeys or faster Wi-Fi, demand would However, customers liked this product of services and a commercial incentive challenges with more operators, but aligned shape the market; meaning rail companies and therefore both open access operators to provide them, for example on some targets and incentives (see point 5) coupled would have to adapt to the needs of on the same route decided to introduce long-distance routes. While the services with partnership agreements between passengers if they want to keep their their own carnet for business tickets, would not be specified by the independent Network Rail and operators could overcome business. which were 50% cheaper than individually organising body, it would have a role in this. purchased tickets. In addition, on-rail ensuring efficient use of capacity and in We know from experience that competition competition has led to fares rising more bundling up access rights, to be packaged In addition, ensuring the bundles of access is an important principle for delivering a slowly than elsewhere on the network. and sold or auctioned to a small number rights achieve efficient use of capacity could successful railway. This is supported by a (probably two or three) of different be facilitated by the independent organising number of examples where having multiple • Stronger passenger growth: Competition operators. Other than providing services body (see point 2). They would work alongside operators (including on-rail) in a market has on the East Coast Main Line showed in accordance with the access rights that the established System Operator (currently resulted in businesses diversifying their offer that stations where there were directly operators hold, there would be no specific within Network Rail), using enhanced to customers, innovating to give customers competing services saw 42% growth in obligations to meet, in contrast to public modelling capability to enable the best more choice as to how they travel or providing passenger journeys as opposed to 27% for service contracts. Operators would have possible decisions on the trade-offs between a better value service. those stations without a competitive offer. the flexibility to swiftly adapt their offer to using that capacity and enabling reliable, A good example of this in the UK is on the RDG has developed the following two what their customers value. punctual services. East Coast Main Line, which has franchisees as options for appropriately structured on-rail In contrast with today’s typically short-term We recognise the need to make the transition well as two open-access operators. Passenger competition, in light of the benefits it brings: contracts, open access operators would be from one franchisee to a number of operators services on this route have benefited in a • Competing customer outcome-based long-term businesses with planning horizons as smooth as possible, including issues around number of ways, including: contracts (see point 3): We believe which aligned better with those of the the transfer of staff and use of depots or • Higher customer satisfaction: Arriva these should be considered where there infrastructure provider. These longer-term maintenance facilities. A specific challenge operate the Grand Central open-access are opportunities to deliver different horizons would create stronger incentives to address would be to avoid wasted service on the East Coast Main Line in customer propositions to the passenger to address issues such as staff engagement, government investments such as rolling stock the UK, which is also served by four other along the same route. For example, industrial relations and productivity, while procured by government which operators are operators. This service was established currently the Virgin West Coast contract, rewarding innovation and providing incentives not compelled to use. And we need to avoid in 2007 and has grown the market as which runs fast services, is in competition to invest. the potential loss of economies of scale if well as achieving high level of customer on the same route as the London North there are an increased number of operators We understand the social, cultural and satisfaction, traditionally offering more Western Railway, which runs the stopping serving one route. economic value of certain rail services, leg room and cheaper on-board services services. While Virgin offers a more beyond a narrow definition of the bottom line It is also important to protect the premiums than its rivals. At the start of 2019 Grand premium service and North Western and are committed to ensuring that services that government currently receives from Central had the highest passenger offers a cheaper service, both meet the which are not economically viable but which services on long-distance routes. In the satisfaction of any long-distance operator needs of their respective markets. deliver a social benefit are still provided. structured competition model, revenues in the National Rail Passenger Survey With our proposals, the new independent would need to be optimised through reforms (Autumn 2018) and the 2019 Which? organising body could ask the open access to the track access charging regime rather survey gave Grand Central “five-star operators to bid for a subsidy to provide any than through contract bidding process. ratings for seat availability and value for non-commercial services where there is a money.” social need for rail (see point 2).

60 Changing Track Point four 61 Point four Point four Point

RDG will continue to consider how these challenges can be met. However, it remains Meeting our principles Example case study: our view that there would be tangible Customers at the heart and Easier fares, more choice on intercity benefits from competition, with customers routes experiencing greater choice and innovation on accountability their services. In a competitive market customers would Amy works for a tech start-up in be able to vote with their feet if they didn’t Newcastle. She regularly travels back to like the service of a particular operator, London, where she went to university, to knowing they could instead choose other see her friends, or to Peterborough to see services on the same route. Operators her Mum and Dad. Her work is flexible – would need to be far more agile and there’s no nine-to-five and work comes responsive to customer’s needs as a in peaks and troughs. Amy finds it hard result, as evidenced by the higher levels to make plans too far in advance and so, of passenger satisfaction on routes where under the current system, she finds herself open access operates. paying a large part of her disposable income in rail fares bought the day she Value for money travels. Where there is competition in the market, In a reformed system, with a choice of evidence shows the customer benefits intercity operators and an easier to use from better value for money and in some system of fares, Amy would be able to cases lower fares. use her smartphone to shop around for Economic growth the service which suits her best and costs her the least. As with airlines, companies Longer-term operating rights encourages on intercity routes would fight for Amy’s more private investment, for example business with offers, discounts and more rolling stock and investment in under- options. Amy would have more control, served regions in the UK, connecting key and she would be spending less each economic centres through improved rail month. links.

62 Changing Track Point four 63 Point five Point Make sure track five Point and train are all working to the same customer focussed goals

64 65 Point five Point five Point

We are advocating that a single thread of Within this new regime, both train operators Driving collaboration without vertical Our proposal of an independent organising consistent targets and incentives running and Network Rail need to continue to have integration body responsible for system integration, through the whole industry, from CEOs to strong incentives to reduce delays, including combined with Network Rail’s devolution, There are many different types and frontline teams and between the track and ‘reactionary’ (knock-on) delays, irrespective new ‘public service’ contracts, and aligned forms of vertical integration between the the train, should be introduced. This would of who originally caused the initial incident. It targets and incentives will support far infrastructure provider (track) and the train see all parts of the railway pulling together is also important that there are appropriate closer integration and collaborative working operator (train). We assessed five different in the same direction – ending the blame incentives to ensure rail services are not without losing the benefits of a network wide models based on the alignment of customer- game. unduly disrupted by infrastructure works and approach. At the same time our proposals focussed goals such as punctuality, reliability, equally, that the infrastructure manager has allow this to be complemented by more We know that customers place a significant safety and frequency. These were: sufficient access to the network. formal collaboration arrangements between amount of value on railway services which • Shallow alliance – collaboration between Network Rail routes and train operators on are punctual, reliable and frequent – our There is concern that current mechanisms the train operator and infrastructure some parts of the network. core product. The system today does not (Schedules 4 and 8 of track access contracts) manager always promote this, for example there is do not always incentivise the right behaviours often a mismatch between the performance by train operators or Network Rail. We believe • Deep alliance - collaboration based on targets set by the DfT contained in the train further work is needed to consider changes contract – including a single Managing operator contracts, and the performance level that would make them more fit for purpose. Director and shared financial interests expected of Network Rail by the regulator Putting passengers first – Network Rail’s • Joint management – a devolved ORR. transformation initiative transport/rail authority lets two regional We want to see aligned incentives designed to: contracts for train operation and The railway has made some important recent infrastructure management. • Improve overall performance and service strides towards better alignment, in particular levels Network Rail’s ‘Putting Passengers First’ • Single agency – a single, public, vertical • Deliver improved value for money for initiative which involves deeper devolution integrated entity (with ability to passengers, freight customers and and localisation to regions and routes. We outsource) running track infrastructure funders believe devolving responsibility to the routes and train operations. in this way will create empowered businesses • Increase investment across the railway • Long-term concession – a single private which train operators can work with more entity operating trains and managing • Ensure efficient planning of capacity on effectively to align targets and be accountable infrastructure under a long-term contract. the network to customers at a local level. Following The new independent organising body (see through on Network Rail’s ‘open for business’ We believe that most of the benefits of all We want a reliable system point 2) would be accountable for aligning initiative should also drive cost efficiencies of these can be achieved by implementing these complex systems of targets, objectives and potentially leverage more private sector our reforms without the need for vertical for small business and a and incentives, while maintaining a core focus investment to grow the network while integration of activities in a single company. on what both passengers and freight users minimising the burden on the taxpayer. That is not to say that partnership or railway that runs on-time, need. It would have the strategic oversight Effective comparative competition between alliancing arrangements would not uncertainty is the problem. to make sure that the outcomes mandated in regions and routes should drive improvements complement our proposals. It is evident the new ‘public service contracts’ (see point in performance and efficiency. though that effective integration is highly 3) take into consideration any dependencies dependent on people, relationships and to deliver improvements to infrastructure collaborative behaviour – organisational and performance in order for those outcomes to legal arrangements are not solely enough to David Tucker, Chair, Transport Policy Unit, be realised. effect change. Federation of Small Businesses

66 Changing Track Point five 67 Point five Point five Point

What this will achieve Meeting our principles Example case study: Aligned targets and objectives will help enable each part of the industry to work Customers at the heart and Clearer accountability, faster forms of together to common goals. By having targets accountability redress and objectives between Network Rail regions, Aligned objectives, targets and incentives Ajay is a regular user of his local railway routes and train operators all aligned to between Network Rail regions, routes and for both leisure and work. He relies on achieve what the customer needs, clearer train operators would point everyone in the trains, and just wants them to be accountability to the customer and a better the same direction. By having a clear line punctual, reliable and frequent. He service is created. It will also deliver better of sight from those targets and objectives understands that things will sometimes value for money for passengers, freight to customers, a clear line of accountability go wrong but, when they do, he wants customers and funders because we can plan is created, helping to end the blame game to know someone is in charge of putting more efficiently, and take the whole railway when things sometimes go wrong. them right and to understand what his into account, not just fragments of it. Aligning options for getting home are. Today, he targets between all players and enabling Working collaboratively and with a greater feels powerless because he does not a greater degree of commercial freedom focus on the customer will also result understand who cares about him and his would in addition help encourage efficient in improved performance with fewer journey, and feels too often that everyone whole-industry investment decisions and cancelled or disrupted services. passes the buck. He never bothers to unlock business cases that may not have been Value for money claim compensation even if he is entitled previously viable due to costs and benefits to it, as he feels it is too much hassle. falling on different parts of the industry. By reducing points of friction in the With our proposals, as he lives in a city- Finally, greater focus on aligning our system created by competing or contradictory targets, having targets region in the North of England where workforce with the long-term success of transport decisions are devolved, he could the railway and creating more sustainable aligned would reduce the overly contractual approach to the way have confidence that the decisions that businesses, will enable higher levels of really affected his life would be taken investment and engagement in our people. operators and the infrastructure provider currently interact. locally by people who understood his priorities, and he could hold those people Aligned targets and incentives will deliver to account. greater cost efficiencies and improved value for money for passengers, freight Ajay could have confidence that the customers and funders by allowing for companies running the railway were efficient planning and whole system working together to the same end – decision-making. making sure his service was punctual, reliable and frequent and, if it did go Inspire our people wrong, that he had quick and easy access Ending the blame game of misaligned to the compensation he would be entitled targets would help create a better ethos to. And, with the independent organising of partnership across the industry work body overseeing the whole railway, he force. could have confidence that there was someone to hold rail companies to account for the service he receives.

68 Changing Track Point five 69 Point six Point Bring decisions six Point about local services closer to home

70 71 Point six Point six Point

Where appropriate, for example in larger Transport for London -TfL) these arrangements What this will achieve city regions which serve commuter markets, should be maintained and enhanced. Example case study: With these kinds of reforms, services would customers would benefit from local transport A better service for regular commuters Working with the new organising body to be much more responsive to local needs, and bodies being given more power to design George has been with his firm of accountants maintain a network-wide approach more adapted to local economies. The railway and specify local services, bringing decisions for thirty years, and commutes to his office in can help to unlock economic potential across about the railway closer to the communities it Of course, one potential drawback of devolving central London from the Home Counties. He city-regions, linking up employers and potential serves. decisions about local railway services is the risk remembers British Rail and knows the service employees, bringing goods to markets, helping of fragmentation of a truly national system. has got a lot better since the 1990s, but he is A recent evolution in the UK’s ever-changing SMEs in the supply chain, and creating new We know from the early history of the railway also frustrated things have not improved fast constitution is combined local authorities apprenticeships and jobs on the railway. A truly the dangers of different areas doing their own enough recently and the rail companies do covering city-regions, for example in local railway can add to a sense of place and thing, without co-ordination of timetables or not seem to work together better. He spends Manchester, Sheffield and Tees Valley. These pride in locality, generating community feeling consistency of railway gauges. over four thousand pounds a year on his city-regions, headed by an elected mayor, cover and a shared sense of citizenship. significant centres of population and have That is why there is a need to maintain network season ticket, and some mornings is not even responsibilities for economic development, benefits, such as national timetabling and Meeting our principles able to get a seat. In his day, work was nine-to-five, Monday-to- public transport and housing and regeneration. through ticketing, to protect users of the Strengthen communities network who cross boundaries. This is where Friday, but things have changed. George is Where appropriate, for example in larger city A single national approach to specification regions which serve commuter markets, it would the role of the new independent organising now doing more of his work from the small body is key (see point 2). For example, in the will never be as responsive to local needs office he has at home – perhaps one or even be beneficial to devolve aspects of determining as one that allows for local democratic the railway services to regional transport bodies new system we propose, local bodies that do two days a week. But he still has to pay that not have an established regional transport influence within a national framework. Local four thousand pounds – even though he is including those which serve city regions. Doing decision makers know their local community so has the potential to provide clear benefits authority or the appropriate capabilities not using the train anything like as much as to specify rail services but are nonetheless needs best. By giving greater input to he did five years ago. to local customers, supporting investment democratically elected bodies, passengers’ decisions which take in to account local contracting them out, would work with the With our proposals for reform of the fares independent organising body to draw on their needs are far more likely to be reflected in system, George could travel when he wants, economic needs and putting rail at the centre of the specification of railway services - and an integrated transport offer. expertise. and the price he paid would reflect the when their requirements change, the service journeys he actually made and not the ones As an example of where this has been They would also work collaboratively with the changes with it. he didn’t. And, if he went into work later, successful, TfL’s investment in the previously independent organising body to ensure local Clear accountability or left earlier, he would pay even less if he unreliable and congested North London line saw services tie in with the wider national network. travelled outside the busiest times. With stations remodelled, services added, and with Alternatively, and this would be important As decision making for transport is devolved the companies running the railway working its private sector operating partner, new trains during a transition period, the independent politically, the contracts that would be together to achieve the same end – making introduced - resulting in substantial benefits to organising body could contract with train specified and managed locally would have his service punctual, reliable and frequent – rail users and the local economy. The line was operators on behalf of the local bodies while democratic accountability. George would feel much happier that he was also integrated with the newly extended and maintaining a strong voice in specification. Alternatively, the devolved local body would getting real value for money and a better refurbished East London line to create London’s Other ways in which the independent work alongside the independent organising service. new orbital railway, which gained its own organising body would help facilitate a body to specify and manage contracts, orange colour creating the London Overground devolved approach include informing the local ensuring that local priorities are reflected in network we see today. body on trade-offs that need to be made for local rail services. It is because of benefits such as these that we efficient overall use of network capacity or the Drive economic growth additional funding needed to deliver greater also believe that in addition to devolving rail Local decision makers know their local capacity to accommodate local services. further to regional transport bodies, where communities, and understand best the role decisions have already been devolved, such as As set out in point 2, in the event of competing rail needs to play to support the economic in Wales (via Transport for Wales), Scotland uses of capacity, the organising body would growth of their towns and cities - for (via Transport Scotland) and in London (via decide on the appropriate trade-offs. example through integration in to their industrial strategies and housing agendas. 72 Changing Track Point six 73 Point seven Point Enhance freight’s seven Point central role in delivering for Britain’s economy

74 75 Transport planning is driven by passenger needs not the

Point seven Point economy. There is often a seven Point mismatch on the fundamental metrics by which decisions on transport are made which impacts freight on rail.

Maggie Simpson, Director General, Rail Freight Group

We want to work with government to develop • A set of consistent legal, commercial operators. Freight operators compete requirements, for example by amending a clear national framework to put freight and regulatory mechanisms is needed to directly with road hauliers amongst others. and adding new timetabled train paths. at the core of the government’s business, underpin continued business confidence In contrast to the rail charging regime, What this will achieve environmental, and transport strategic policy and private sector investment: Assets in road freight operators do not pay directly making. It is important that freight obtains the sector such as locomotives, wagons for the wear and tear they impose on the A huge part of the railway’s contribution to the access it needs to the whole rail network and cranes typically last about 30-35 years. road network, or for the congestion and the UK economy rests on our ability to move to keep supermarket shelves stacked, the Freight operators invest in these long- disruption they impose on other users of thousands of tonnes of freight across hundreds lights on and the economy moving in a global term assets without any guarantees from the network. Many of the products that of miles of track and onwards through ports marketplace. government. We need a stable framework are shipped by rail could also be shipped and airports to the rest of the world. Rail freight so that freight operators can plan and invest by road. Therefore, to maintain the must remain a key component of our modern The very first railways were designed to move with confidence. environmental and decongestion benefits economy. But to ensure a solid future for freight and it has remained a central part of rail freight offers we need a system of freight, we need a robust policy framework to the business of the railway for nearly 200 years. • A network and timetable that is co- charges which is sustainable, competitive join up thinking across all modes of transport. If Every year, the rail freight market delivers £30 ordinated on a GB-wide basis is essential: and fair. we achieve this, we will see a growing rail freight billion of goods to customers across Britain and 80% of freight journeys cross current business linking all parts of the UK, long-term generates £1.7 billion of economic benefits. Network Rail route boundaries and deliver • An industry structure that provides strong investment in rolling stock and other assets, There are also environmental benefits: taking goods right across the country. A co- incentives to all parties to encourage and reductions in road congestion and carbon freight off the overcrowded roads reduces ordinated GB-wide timetabling process, freight growth should be prioritised: The emissions. carbon emissions by 76% when compared to including co-ordination of engineering rail freight industry welcomes the focus on road haulage. access, and a dedicated Network Rail freight freight in the Scottish High Level Output team, provides significant benefits by Specification, with specific freight journey Meeting our principles However, if we want to see more goods moved making transactions between Network Rail time and performance targets, and other by the railway and off the roads, we need a Customers at the heart and freight operators more efficient. requirements around gauge clearance joined-up policy approach from government. It and maintenance. The rail freight industry Greater alignment of government policy will not happen by chance, but only by choice. • Modelling capabilities should be enhanced would encourage similar commitments to making would support freight operators in We propose the following framework to support which better capture the value of rail be contained in future policy documents meeting the needs of their customers. freight as part of the wider reforms to the freight, to help make choices about from other administrations, including the railway. network use: On an increasingly congested Drive economic growth devolved administrations and sub-national network, there are inevitable trade-offs • Government policy should be aligned transport bodies. Britain’s economy depends on the ability that must be made between different across modes: Government policy tends of rail to move thousands of tonnes of types of services. There is also a trade-off • Industry processes that provide flexibility to be split by different modes of transport goods and materials around the country between using capacity and retaining the for freight to respond to changing (road, rail, air), whereas companies think and out to the world via our ports, every ability to recover the service after a period industrial and logistics demands must be across all the modes of transport, deciding day. To meet that demand now and in the of disruption. There are limited models retained: The rail freight industry is driven which combination of transport delivers future, requires long-term strategic policy available that support these trade-offs. We by customer needs. It relies on winning their goods as effectively and efficiently making to support ongoing investment in need more new models and tools to allow contracts from its customers, who are often as possible. As governments develop their additional network freight capacity, freight informed trade-offs to be made and we large national or multinational companies. policies, there must be greater alignment facilities and rolling stock. welcome plans by the System Operator to Businesses are constantly evolving their and joined-up thinking to allow rail freight enhance modelling capability. logistics chains as customer demands Strengthen communities companies and other freight operators change. In the short-term, the needs of which ultimately link to the rail network, to • The UK-wide charging regime that Freight provides vital logistics links across freight customers can change frequently, get the best possible arrangements. Our provides long term clarity and is the country and internationally, supporting according to the season or the phase proposals for an independent organising affordable should be retained: It is crucial, jobs and growth. It also delivers significant of the project (such as in the supply of body (see point 2) would help with this. given the nature of their business and environmental benefits and reduces construction materials). It is important that markets, we retain a stable and affordable congestion on our road network. freight operators are able to react speedily network-wide charging regime for freight and efficiently to these changing business 76 Changing Track Point seven 77 Point eight Invest in our Point eight people to deliver positive long-term change for our customers

78 79 Point eight Point eight

We want to develop a new approach to Over the next decade, the age, diversity • Meaningful involvement through new working with the unions, governments and and skills of our workforce will change. For public service contracts: enabling Meeting our principles the industry which provides our people with example, 50,000 workers, about a fifth of employees to provide early and the skills, resources and rewards they need to the people currently working on the railway, meaningful input into the specification Strengthening communities deliver generational change in the railway. are due to retire by 2033. We will lose people process. In the future the railway will need more with skills, experience and knowledge. We jobs, not fewer, as it rises to meet the The railway creates skilled jobs in every • Better working relations with trade will need to encourage people to join as challenges and opportunities of the next region, signs up apprentices, gives working unions: work in partnership with trade apprentices and entry-level jobs, to entice 25 years. A reformed railway with a fully families stability, and contributes to Britain’s unions on issues such as diversity and people with experience from other sectors, engaged, diverse workforce offering long- manufacturing base. The success of Britain’s developing skills. and to develop our existing staff with training term, rewarding careers will attract the railway rests on a highly-skilled and valued and opportunities to move into new roles. • Preparation for a digital future: enabling best and brightest from the communities workforce, so we want a new holistic approach our people to maximise the potential of it serves, strengthening towns and cities to engaging with employees, and aligning We want to embed skills into every part of new technologies and automation with across the country. rewards from booking office to boardroom, our system, encouraging and supporting more training to prepare for a digital with our people sharing in the success of a job people from more diverse backgrounds into future. Inspire our people well done. At the same time we will pursue a the railway, for example BAME candidates, relentless focus on developing skills, valuing and those with disabilities, while attracting What this will achieve We want to continue to invest in our and encouraging diversity, and establishing talent from other industries with competitive workforce, unlocking the brilliant potential We want to deliver excellent customer service fair systems of rewards. systems of incentives and rewards. of our people, and developing the flexible for the growing numbers of people using the and transferable skills we will need for We value the people who work on the railway, Specifically, the industry should introduce or railway. As the digital revolution continues today, and on tomorrow’s railway. at every level and in every part of the country, enhance: to provide new ways to improve access to from engineers to signallers, from station information such as timetables, and services • Long-term incentives: a reformed system staff to train crew, and the trades, professions such as ticketing, we want innovation to be of public service contracts should set and suppliers that makes the railway run delivered smoothly for customers, by fully- long-term outcomes in relation to the every day. And as the railway moves forward, trained staff. workforce, incentivising the adoption of a we must ensure our workforce is ready for the more holistic and stable planning horizon As we work to recast rail as part of an challenges of expansion, more passengers, that will benefit the whole industry. integrated transport door to door offer, the greater use of digital technology, and changes types of jobs people do on the network will to outdated systems. No-one wants change • Leadership and skills programmes: evolve to meet these new challenges. But to lead to conflict. In partnership with supporting industry to bring on and we know we will need more people, not less. governments, we want to work more closely support the best talent, developing That’s why we will continue to invest in our with the trade unions, as the rightful voice of leaders with experience of every part of workforce, unlocking the brilliant potential of many in the workforce. We all want to ensure the railway, and who reflect the diversity our people, and developing the flexible and customers are not disadvantaged because of the whole industry. transferable skills we will need for today, and of strikes and to reduce the numbers of days • Cultural change: supporting a structure on tomorrow’s railway. lost in the UK economy because of industrial that promotes everyone to act in the long- action. term interest of the customer. • Collaboration on diversity: both formally and informally to increase diversity at all levels and identify pathways for key roles, such as the driver academy and leadership initiatives. We will tackle outdated attitudes and prejudices.

80 Changing Track Point eight 81 Conclusion Conclusion Conclusion

The time for change is now We believe the following should be priorities Questions about the direction and character for reform to deliver improvements for the of Britain’s economy have focussed many customer and for Britain in the years to come: minds on the future of our country. We are • Implementing the ‘Easier fares for all’ grappling with some of the biggest issues proposals in full within the next 3 to 5 facing any nation: the sources of our economic years, to deliver the modern, up to date strength, what kind of public services we system our customers are crying out for want, and our place in the modern world. • Moving quickly to establish an Whatever the British people decide about independent organising body in shadow these pivotal dilemmas, it is clear that the form railway can play a role at the heart of our • Reforming public service contracts and re- future economy. starting the process of awarding contracts As the people delivering railway services, • Ensuring alignment of objectives, targets the industry has a vital insight into how to and incentives across the industry ensure the railway is fit for purpose through these challenging times ahead. We welcome • Devolving funding and specification of the opportunity afforded by the Williams rail services to the most appropriate Review to make bold reforms to the railway, democratically elected bodies designed to improve what we do, and deliver • Harnessing the benefits of Network Rail’s for the millions of people, communities and transformation programme businesses which rely on the railway. We have It is essential we make swift and sustained argued consistently that the only constant on progress towards a new system that is the railway must be change. focussed on delivering for customers. A We are unapologetic in our conviction that the Partnership Railway. best way forward is a reformed partnership The White Paper developed as a result of between public and private sectors, with the the Williams Review should be a clear and great traditions of public service and private unambiguous plan for change overseen sector innovation joining forces to deliver a by a board including representatives from world-class service. This is what works around Government, customer bodies, employees the world. At its best, it delivers benefits and the wider industry. to the customer, generates investment Now is not the time for tinkering with in the railway, and allows innovation and the system, nor a retrenchment to the improvements. unsatisfactory models of the past. We need Our eight point plan is anchored in practical to build on our successes, and learn from our experience and insight from the people who mistakes, while recognising the challenges use our services every day. That’s why our and opportunities ahead. The railway is a vital proposals, for example for easier fares, more part of our national life. It belongs to us all, choice on intercity routes, devolved decision- and reaches deep into our shared memories making, and new public service contracts, and culture. Now, we must make the changes are focussed on improving things for our which will secure the future of the railway, so customers. Adopted in full, it adds up to a that it can expand, innovate and deliver the bold programme for change. world-class service the Britain demands and deserves. 82 Changing Track Conclusion 83 www.raildeliverygroup.com www.bigplanbigchanges.co.uk @RailDeliveryGrp