R A I L T R A C K Railtrack PLC (in Railway Administration) Alan Bloom, Chris Hill, Scott Martin and Mike Rollings were appointed Joint Special Railway Administrators of Railtrack PLC on 7th October 2001 The Joint Special Railway Administrators act as agents of the company and without personal liability EVIDENCE to GLA TRANSPORT OPERATIONS SCRUTINY COMMITTEE SCRUTINY OF MAINLINE RAIL SERVICES IN LONDON Introduction Railtrack owns, operates and maintains Great Britain’s rail infrastructure, including the tracks, signals, tunnels, viaducts and level crossings, and is responsible for managing the provision of access to the network, including creating the timetable. It also owns 2,500 stations, which are leased to the train operating companies apart from 15 major stations which are operated by Railtrack. Within the GLA area, Railtrack owns around 320 stations, of which 9 are major stations operated by Railtrack, and operates around 800 route kilometres of track – a network around twice the size of the LUL network. 21 separate passenger train operating companies, as well London Underground Ltd and freight operators, operate train services over the network within London – of these 10 predominantly provide commuter and other services in London and the South East. Railtrack operates the rail network in London through four Zones (Great Western Zone, Midlands Zone, Eastern Region and Southern Region), who also manage day-to-day relationships on operational issues with TOCs, boroughs and other stakeholders. It has a separate London Development office, headed up by the Director, London, who takes responsibility all London-wide issues, including strategic planning and major projects. The Director, London also takes overall responsibility for stakeholder management and relationships, including managing Railtrack’s relationship with the Mayor, Transport for London, and the GLA and its members, as well as the various sub-regional partnerships. Railtrack sets great importance on maintaining good relationships with its stakeholders. The Wider Context The rail network in London is clearly a vital part of the city’s infrastructure, and essential to its development. However it is important to recognise that, in railway terms, London is not an island, but the key focal point of the national rail network. There is virtually no 14 January 2002 Scrutiny of Main Line Rail Services in London RAILTRACK national rail infrastructure in London which is used solely by services serving the London area, and equally there are very few national rail services which only operate within the Greater London area. This means that many of the stakeholders in London’s rail network have interests beyond the capital. In particular, there are varied and often potentially conflicting demands for network capacity, from metro, long distance and freight services. Railtrack plays a central role in reconciling these demands in order to optimise the utilisation of the national network. It is not just in terms of infrastructure usage that London is inextricably linked with the surrounding region and the rest of the country. 23% of all persons entering the Central London area in the morning peak come from outside the Greater London area, and 80% of these travel by rail. Nearly 50% of rail passengers coming into central London in the morning peak come from outside the GLA area. This contrasts strongly with, say, Paris, where only 8% of those entering the Central Area of the city come from outside the Metropolitan Area1. London is therefore economically dependent on commuters from outside the Greater London area, who in turn depend on rail services to bring them into the centre. The national rail network is an essential component of London’s transport system. Railtrack recognises the need to work with other operators and stakeholders in the operation and development of the network. It should be noted that there are a number of issues relating to the use of the network in which a Transit Authority may have an interest, but which are not matters which Railtrack deals with. These are not, therefore, further addressed in this evidence. These include branding, fares, passenger overcrowding targets, and the ownership of rolling stock. Problems facing the national rail network In many respects the performance of the rail network improved in the first few years following privatisation, with rising passenger numbers and freight volumes, significant improvements in operational performance, and the introduction of new services. However recent events, and in particular the consequences of the Hatfield accident, have served to highlight a number of fundamental problems which the rail industry faces, and which need to be addressed urgently. We highlight what we consider to be the main issues below, and the next section makes some general observations about their solution: in the interests of keeping this evidence brief we have avoided detailed discussion. 1 Data from London Research Centre: The Four World Cities Transport Study, The Stationery Office, 1998 page 2 of 9 14 January 2002 Scrutiny of Main Line Rail Services in London RAILTRACK Finance and funding and risk allocation Investment in rail infrastructure has to be justified by the benefits it generates. Railtrack, as a commercial company, is required to cover the costs of investment and to generate a commercial return on asset enhancement. A similar regime applied to BR as a nationalised industry. For most railway enhancements, particularly in London, the benefits are largely non- financial, such as time savings, reduced crowding and reduced road congestion. While such benefits can be valued financially, they accrue to society at large rather than directly generating funds to meet the cost of investment. This means that funding from local or national government is needed in recognition of the wider benefits. The railways in London are likely to remain dependent on government funding in some form for the foreseeable future. Government and the SRA have advocated that certain projects should in future carried out by Special Purpose Vehicles (SPV’s). An SPV is a mechanism for financially structuring a project to facilitate third party investment. The mechanisms by which SPV’s would be implemented on the railway are as yet unclear, and such issues must be resolved in order to implement new projects. The structure of the rail industry means that any scheme will involve a number of players. Even when a scheme does produce overall benefits for rail users, some of these players may lose out. Addressing the way in which risk and reward are apportioned between industry partners and government or other funding bodies is an important part of ensuring a project’s success. Growth The rail industry saw an unprecedented growth in passenger numbers in the five years before the Hatfield crash. Passenger travel by rail is now at its highest since the 1940’s. However, this has brought with it its own problems, as a network which had been underinvested for many years was stretched to its limits by the increasing usage and the increasing demand for train paths. The resultant shortage in capacity has led not only to overcrowding but has had an impact on performance as network utilisation has reached capacity in many places, particularly in the South East. Capacity allocation On a crowded network it is vital that strategies are defined for allocating scarce capacity. This presents particular challenges when there are different types of traffic (freight, short distance, long distance or train services serving different London termini) competing for space, as mixing traffic on a route in itself reduces efficient use of available capacity. A clear strategy is needed against which to set priorities for different types of traffic and produce a timetable which maximises the use of available capacity. page 3 of 9 14 January 2002 Scrutiny of Main Line Rail Services in London RAILTRACK Operational and performance issues Considerable emphasis has been placed on the need to make a step-change in railway performance. Railtrack is concerned that there is an implicit assumption the improving long-run performance on an increasingly crowded network can be seen as simply a day-to-day management issue requiring little explicit funding. A step-change in performance cannot be achieved without the realisation that (a) there is a balance to be struck between capacity utilisation and performance; (b) network stewardship must be properly funded; and (c) renewals and enhancements to the network must as a matter of course build in an element of resilience. Lack of policy direction The SRA’s strategic plan is due to be published on the day this evidence is being submitted, and so we are unable to comment on it here. It is hoped that it will provide much needed overall policy direction to the industry, something which has been singularly lacking in the past few years. Direction is particularly needed in the area of prioritisation and the use of scarce resources, such as signalling and electrification design and installation engineers Contractual relationships and perverse incentives The rail industry as currently structured depends on a complex matrix of contractual relationships between different players. In some areas this has worked well, serving to tighten up responsibilities and relationships which had previously been informal, introducing proper performance targets and incentives. However, in some cases the contractual structure has introduced additional costs of contract, and even perverse incentives. An example of this is the original infrastructure maintenance contracts, which Railtrack has now replaced with the new IMC2000 contract, designed to address the problems identified. Lack of integration with other modes There has been a great deal of work carried by all parties including Railtrack, LUL, TfL (and their predecessors) on creating an integrated transport network in London. This includes, for example, the publication of an Interchange Code of Practice. However, in the public eye, there is still a lack of integration between national rail and other modes, particularly in terms of presentation, fare structure, and consistent provision of information.