REF0092 Written Evidence Submitted by Rail Delivery Group Introduction
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REF0092 Written evidence submitted by Rail Delivery Group Introduction The Covid-19 pandemic, and the economic turmoil that followed, have wrought deep changes in our economy and our society. We have all changed our habits, assumptions, and plans for the future. Many millions of workers will find themselves changing their travel habits post-pandemic, as home and hub working become part of life. People who have experienced lockdown in the cities may hanker after relocation to the suburbs or countryside. Regular commuters if travelling, are doing so at different times and in different patterns than before. Everything – the way we work, shop, travel and go on holiday – has changed. Indeed, while prior to COVID around 60% of journeys were onDRAFT Season/Anytime tickets (aligned to commuter/business travel) with around 40% of journeys on more leisure-oriented products like Off- Peak and Advance, currently we are seeing between 50% and 60% of journeys being undertaken for leisure. In addition, modelling undertaking by Imperial College London shows that while rail demand overall is likely to be depressed for some time and could only fully recover by 2025, leisure travel is likely to recover more quickly, as people shift their travel patterns away from commuting to work each weekday1. Pre-pandemic drivers of change are still there too – a growing, aging population, the digital revolution, and the pressing need to stem global warming. Britain’s railway must adapt to survive. Before the pandemic, the railway was already in need of reform. Overly prescriptive contracts had stymied innovation and investment. Lines of accountability have been blurred. The system of fares and ticketing reflected the passenger expectations of the early nineties rather than 2020. The Government established the Williams Review as the engine to forge a new public-private partnership. With the onset of the pandemic, this process was halted, as the decline in passenger demand necessitated the introduction of Emergency Measures Agreements (EMAs) to keep the trains running for key workers. The industry is very grateful for this and the ongoing support of the Government. As national lockdown restrictions were eased, operators increased service levels and launched the Safer Travel Pledge to give passengers the confidence that they would once again travel by train. The overriding purpose of this was to support national economic recovery, in particular of town and city centres as well as tourist destinations that rely on the railway. Freight services have also been playing their part, as they did during the national lockdown, by running longer trains in order to carry more goods and supporting the restart in the construction sector. Whatever the future direction of the pandemic however, there can be no going back to the status quo that did not work for passengers, nor is the current situation sustainable for the taxpayer. We welcome the Government’s agreement with this view and their announcement of an end to the 1 Imperial College London Transport Strategy Centre, Scenario Planning for the Rail Industry after Covid-19, September 2020. REF0092 franchise system and transitional contracts in the form of Emergency Recovery Measure Agreements. It is vital though that these Agreements are used as a stepping stone to a better, more customer focussed railway, as envisaged by the Williams Review, and we urge the Government to provide clarity as soon as possible about what the railway of the future looks like beyond the timeframe of these contracts. The private sector wants to play its part in helping to develop this future strategy and the proposals outlined in this submission are designed to inform and assist this work. As part of this, the industry wants to improve reliability and punctuality on the network, reduce infrastructure costs and implement reform of the fares system to suit the changing way people live and work and to attract more people back to the railway. In addition, it is vital to press ahead with work to accelerate the decarbonisation of rail and support NetworkDRAFT Rail in accelerating investment at an efficient cost at the same time as bringing more private sector investment to the railway, helping to reduce the burden on taxpayers. Finally, the industry wants to press ahead with ensuring we have the skilled and expanded workforce necessary for the railway of the future. To deliver this, the experience, innovation and investment that private sector operators bring to the network must be harnessed, in particular to help regrow the market for train travel in the months and years ahead. The private sector has shown over the last 25 years that with the right framework and incentives it can do this. A renewed and reinvigorated partnership between the public and private sectors, with train operators, working with Network Rail and the wider supply chain, will add greater value, improve services and make a significant difference to the pace of recovery. This will deliver better outcomes for customers, taxpayers and, ultimately, the economy as well as helping the UK achieve its environmental targets and achieve the Government’s stated ambition of ‘building back better’. REF0092 Empowering customers and providing accountability We want to put the customer back at the heart of the railway, with a framework and objectives set at a national level but within which decisions can be made closer to the customer. The old franchise system often stymied private sector train operators from doing what, with the right framework and targets, they can do best: delivering a high quality service to passengers; innovating based on changing technology and customer expectations; investing in the future; and doing all this in the most efficient way, reducing the burden on the taxpayer. As we made clear at the start of the Williams Review two years ago, we believe bottom-up customer demand is the best way to drive improvement and innovation, with a system of decentralised decision-making that is flexible and powerful enough to make change happen. Empowering train operators to deliver better outcomes for customers means change will happen faster, better, and happen organically and continuously. It is, DRAFT after all, train operators who have the direct relationships with customers and therefore are best placed to understand their needs. To facilitate this new way of working a major area of reform that should emerge from the post- pandemic railway system, and the current emergency support being provided, is new types of train operator contracts. We want to see a new, flexible and responsive system of contracts on the railway, with the needs of the customer, taxpayer, economy and the environment at their heart. In commuter markets where customers want a fast, efficient and cost-effective journey to and from work, with clear accountability for the standards of service, contracts could be a ‘concession’ style agreement, where companies are paid a straightforward price for the job of running an effective rail service. This might be a contract issued with a city-region or mayoralty, or other national or local authority, depending on what works best. We see a strong role for devolved authorities in England: they could specify and award these concession service contracts once they had the capability to do so, including closer integration of rail with other modes of transport, and perhaps even take on some or all of the revenue risk associated with the delivery of passenger services. Other contracts should be structured around customer-focused ‘outcomes’ for example to increase customer satisfaction – but leave it for the operator to implement and where necessary change initiatives to deliver this. This could suit markets where customers have greater choice of when and where to travel or where there is competition from other forms of transport. With these kinds of contract, the balance of risk and reward would be shared fairly between private and public sectors. We also know by asking our customers that they like a choice of operators on long-distance routes, so new arrangements might include structured competition between operators on the same routes, benefitting customers. Competition is key to driving improvements, as operators compete to offer potential customers the service that is right for them. Each of these approaches considers the balance between risk and increased revenue depending on the passenger needs and type of contract. They incentivise the private sector to drive down operating costs and encourage revenue growth, thereby lessening the burden on the taxpayer. REF0092 The competing demands of different bodies and customers, must, we believe, be managed by an independent national rail body, providing a single ‘guiding mind’ to help the industry act in a coordinated fashion and provide clear lines of accountability for when problems arise. Clearer accountabilities will be achieved if there is a clear line of sight from the customer to train operators directly responsible for delivering the services customers require, to Network Rail as the key supplier of infrastructure services to train operators, to the new independent national rail body we believe continues to be essential, and finally to governments which must decide public policy and funding levels. The new body should set the outcomes that need to achieve and develop the incentives that enable and support effective partnership between infrastructure and train operations. We know from all past experience that long-term, centralised decision-making on a system as complex as the railway can be slow, cumbersome, and lead to perverse outcomes. Indeed, this is why Network Rail has moved to a devolved regional and routeDRAFT structure. Such centralised decision-making over the long-term, whether by government departments or by the independent national rail body we are calling for, would set the railway back, not set it on a path to drive better customer outcomes, economic growth and taxpayer value.