Judging by all the heat, anger, vitriol, emotion and vicious criticism that swirled around the Southern strike, the proverbial visiting Martian would be forgiven for thinking that we have the worst railway on the planet.
It hasn’t helped that this strike has caused such chaos in the South East - and specifically London. Our London-focused (some might say obsessed) national media has not only had this disastrous dispute right on its doorstep - making it very easy to cover - it has also affected many journalists personally, their friends and families. They can very easily identify with the misery this strike has caused because they share it every day. That’s led to an even more toxic media outcome for the railway than if the strike had been in the North.
It’s easy for journalists (as it is for politicians or anyone else) to fall into the trap of believing that everyone thinks like you and those around you - either physically or on Twitter. And this has led to some horribly damaging media coverage, in both print and broadcast.
Reporters’ scripts, and the accompanying video package introductions read by studio anchors, have been framed to give the impression that the entire 11,000-mile network was on its knees. This is nonsense - performance elsewhere has been patchily average, good and excellent, as always. But we must engage with the world as it really is, rather than as we would like it to be. and ‘the industry’ has had to deal with a tsunami of hostile coverage.
I have often talked in Comment about the specifics of how the railway handles its annual ordeal of the January fare increases (grumpy commuters always make good news TV), and so it becomes a story about how the Rail Delivery Group performs - or not.
This year, although there was a considerable improvement on some awfully inept foot-in-mouth PR policy in the past, the industry’s media performance was still nowhere near effective enough. The response more widely lacked clear strategic thinking, which led to a patchy and generally poor tactical response. It misfired by being reactive rather than proactive, and (as usual) merely seemed to ‘offer information’ rather than assertively ‘sell’ its message. It was too bland, too much on the back foot, and lacked zest and punch.
But there was an exception - a ray of hope, you might say. Although he has a long way to go to match the impact of some previous railway media spokesmen, I have to congratulate RDG Chief Executive Paul Plummer. He not only had the cojones to put himself at the eye of the storm in front of the cameras, he also made a pretty good fist of putting the railway case in the face of the customary very sharp questioning.
Since his appointment in November 2015, Plummer has made a noticeable difference. The organisation comes across as more purposeful and focused, and is creating much more of a positive profile in the rail industry. Mind you, Plummer started from a very low base. Created in the wake of the McNulty review, RDG has struggled to find an effective and credible role, and has been the subject of considerable criticism - not least from me. As an organisation with no clearly defined specific industry role and no accountability in itself, the word ‘Delivery’ sat rather uncomfortably in its own title, arguably until Plummer’s appointment started to create a bow wave (albeit a modest one thus far).
From the start RDG was hamstrung by the contradiction between its claim to ‘represent’ the British rail industry and the harsh reality that it just didn’t. Its members are the the train operators (passenger and freight) and Network Rail, and the organisation struggled under the accurate charge that huge swathes of the industry were just not formally represented.
The chosen explanation that there would be too many people around the table if suppliers were there simply didn’t wash. So when the Rail Supply Group was eventually formed to fill this vacuum, this both validated criticism of the RDG while introducing yet another interface into an industry already seen as considerably fragmented. Even Plummer refers to this as the “industry’s alphabet soup” in the course of our conversation.
RDG’s public profile and PR approach had hardly sparkled, with periodic bursts of truly lamentable performance that did nothing for the railway’s image. This is not necessarily a reflection on the abilities of its spokesmen, more a comment on its failure to generate a coherent PR strategy from its largely unfocused role.
For a long period, RDG really believed that the only - and best - PR it needed was ‘doing a good job running trains’. Yes, really.
But even if the industry had delivered this across-the-board 24/7 excellence (which is frankly impossible), this notion was (and remains) naive nonsense. Running a great service can only be a starting point.
At fare increase time in particular, print and broadcast journalists consequently gave the railway a torrid time. Yes, grumpy commuters always make good copy at an otherwise quiet time, but RDG rather did walk around with a sign on its back saying ‘kick me’. The rest of the year, RDG press releases were barely relevant. In the RAIL office, we quickly tired of meaningless documents that all-too-often started with the words “RDG welcomes…” By definition, these words are the hallmark of a wholly reactive organisation.
RDG was therefore seen for what it was - a forum serving not the wider industry it claimed to represent, but the Association of Train Operating Companies’ owning groups, the freight companies and Network Rail.
ATOC had never been set up as a trade association - it was there to perform the back-office and cross-industry functions needed in the post-Railways Act passenger railway, such as revenue sharing and railcard provision and management. And it showed - ATOC never functioned well when it tried to be a conventional trade organisation. So when RDG was set up with its name in small letters beneath the ATOC banner, further confusion followed. Not only was no one sure what it was or what it was for - but even what its name was.
Plummer, to his credit, has started to change all this. He is leading from the front and taking responsibility. He has even got rid of the ATOC name, at least dispelling confusion in the organisation’s reception as to who you’re talking to. And while it would be easy to mock a mere change of name, clarity of nomenclature and role are important.
In the annual PR farce over fare rises, one of the reasons the industry is given such a tough time is that it is terrified to ‘bite the hand that feeds’, and refuses to make clear that regulated fares and season ticket increases are entirely a matter for Government. The Department for Transport traditionally keeps its head down, leaving the railway to ‘take the heat’ and fuelling a belief that ‘profiteering privateers’ are ripping passengers off.
This year, it was different - and prominently so. In the very first couple of lines of the RDG fare increase statement, it said: “Fares are influenced by government policy, either through government-regulated fares such as Season tickets or as a result of the payments train companies make to Government. This money helps Government to support the biggest investment in our railway since Victorian times.”
In early February, after years of pressure from organisations such as Transport Focus, Campaign for Better Transport, Which? and RAIL too, there was finally acceptance that the complex, confusing and chaotic fares structure needed to be properly addressed (in contrast with the tinkering of recent years) and sensible pilots of potentially radical changes were announced.
During 2016, Plummer had been far more outgoing - and, crucially, open - in his dealings with the wider media generally and with RAIL in particular. And so I decided it was time to put him ‘on the spot’ for a RAIL interview. He agreed immediately and with good humour, too, notwithstanding my history of criticising ATOC and RDG.
We start with the biggest of his members… Network Rail. The infrastructure owner went into a major Christmas engineering programme under the lengthening shadow of the Great Western electrification, whose published costs have rocketed from £800 million to nearly £3 billion, and with the Midland Main Line scheme now widely tipped to be cut short at Kettering/Corby. As a result of NR ‘issues’ and high costs in Scotland, Transport Minister Humza Yousaf has demanded full devolution of infrastructure powers and responsibility to Holyrood, while elsewhere NR is under the cosh for allegedly eye-watering costs for reinstatements and reopenings.
Again, in response to increasing pressure and demand for change, Network Rail launched a contestability review under Peter Hansford into different ways of delivering major projects. The aim is to identify specific barriers to competition and find different ways of working; the report is due in spring 2017. Further major change is on the way to encourage closer working of NR and train operators in managing the network: in late 2016 Secretary of State for Transport Chris Grayling announced the creation of joint Regional Operating Boards as part of an enhanced devolution plan.
Does he agree with Grayling’s plan for accelerated devolution of NR responsibilities and the creation of regional boards, with the operators?
“I think what they are trying to do is all the right stuff,” he responds. “But a lot of people find the pace of change is too slow. All the stuff around devolution - the focus on train operators as customers, through to the end customers- are all the right things, but unfortunately it takes time.
“The danger is that this causes impatience and somebody then does something more radical which pushes us off that course. But everybody wants to help NR - everyone across the industry wants to help accelerate those changes.”
But do you and your members see these changes actually happening at NR?
“They all really want to help NR make all that a reality much quicker. Specifically on Infrastructure Projects (IP), as a supplier to the route, I think people would say that’s not yet happening and that on many projects IP is more alongside the route rather than a supplier to the route. So the narrative and commitment from the top of NR to change that is still there, but it’s taking longer than people hoped and they are not seeing that happen on the ground.”
Is it happening slowly - or not at all? I get a long and careful answer. He doesn’t avoid the question, but he treads cautiously…
“Everyone is supportive of progress to give RMDs more accountability and more authority to make decisions locally, and they are keen to help accelerate this,” he says.
“There is good work on route scorecards and route governance which hasn’t been fully implemented yet. And the routes are expected to develop and own their plans for their railway, particularly from 2019.
“But there will inevitably be frustration, since the required culture change is hard and some routes are developing the required capability faster than others. That means the rest of the industry needs to help through local collaboration, and Government/ORR need to support these changes in the way they regulate NR or manage franchises to properly empower these local businesses.”
I think he’s saying: “Not yet.” I leave a silence and he moves into it.
“Most members were quite clear - there should be a much thinner centre of Network Rail, and the Routes should be much more empowered with a very light central holding company structure. What they want to see is the system operator - the technical authority - supporting the Routes to make sure you have a properly joined-up technical approach.
“But it has not gone anywhere near as fast as some of them would have liked. So you see that in the frustrations in people - you see that in Route Managing Directors, because the top MDs really taking ownership is what everybody wants to see. Network Rail centre also wants to see that, and in this case it certainly isn’t happening as quickly as we want.”
Hmm. Interesting. I glimpse real frustration behind Plummer’s careful language. I have heard nothing in many conversations with both NR Chairman Sir Peter Hendy CBE and Chief Executive Mark Carne to make me believe they are not sincere about devolution. Both speak with passion and what I see as sincerity about their desire to ‘see it happen’. Carne has made good on his undertaking that if his company’s highly-controversial and oft-criticised (and believe me, that’s putting it mildly) Infrastructure Projects function cannot offer competitive services, then he will open their work to ‘contestability’ in the wider industry. And yet it is happening not just slowly, but not at all according to some observers and participants. Why?
“Local ownership of plans is so fundamental - but little pieces of behaviour unintentionally undermine that and dilute that accountability,” Plummer replies.
What does that mean, exactly?
“I think the project piece is an important example. We need to get to the point where everybody in NR and its stakeholders go to the Route to ask a question about our projects - until we get to that point then the routes won’t feel fully accountable for those projects. Even if it’s unintentional, when DfT or the NR board go to the project team to find out what’s happening, they dilute that accountability. I think that behavioural thing happens all the time, and it sets back the absolute commitment of where we want to go with the customer relationship.”
Both Hendy and Carne have made it very clear to me that if anyone believes they can upgrade or reopen railway infrastructure better than they can, they should step up and do it. Plummer agrees. So what are the obstacles?
“We are trying hard to understand those obstacles,” he begins. “So we have a project which has NR people in it - top people - people from Government, even the supply chain, to understand the obstacles to different ways to financing and delivering projects.
“A lot of it is around behaviours. So no matter what you say at a senior level, if people on the ground don’t believe that what you want will happen, then they’re not going to try and make the effort. Success requires partnership between the route, the developer, the financier, the contractor - those partnerships which are happening in most other industries, they’re hard work on the railway.
“In the past NR and the industry has been able to rely on a convenient way of financing which has been hugely powerful in many ways. But if you want alternative ways of doing it you have to invest the time to make those partnerships work.
“My view is that there really are no fundamental obstacles - but until we get some successes then people aren’t going to put the effort in. Once you get some momentum you can really start to motor and achieve things much, much more quickly. When you get Route Managing Directors with strongly capable teams that have more resources for them so they can be more outward looking… once you get them really owning the asset management plan on their bit of railway… once you get them working with operators and other partnerships to deliver projects in a different way, you can quickly gain more momentum than is there at the moment. But for a time you have to believe that that’s going to happen. At the moment it’s sometimes frustrating for people, and difficult to believe that - so it doesn’t happen.”
Transport Scotland (TS) is very clear in its view that the rail industry has no way of effectively challenging project costs, and that engineers are divorced from the purpose of their work to such an extent that they neither ‘feel the risk’ nor understand real customer needs. Costs soar as a consequence, says TS. Is there a role for RDG here?
“I’ll start with the last bit - no, the role for RDG is limited there,” replies Plummer without hesitation.
“Rather than have somebody else come and do it to them - or even for them - the RMDs need to feel much more accountability and be much more engaging with their customers. They need to feel it’s worthwhile engaging - it’s the RMDs who need to be challenging those.
“It certainly seemed how that worked under the SRA , and it’s how it works already for Transport Scotland. TS is very demanding as a client, and that’s been very positive. They’ve not had some of the problems that we’ve seen elsewhere.”
So how do you encourage NR to work much more in that manner?
“RMDs need to take much more accountability, with the TOCs as their customers.”
RAIL has been urging the rail industry to be more proactive in its conversation with the British people for over a decade… to no avail. But it now seems to be happening with the Britain Runs on Rail (BROR) campaign of print and TV ads. While it’s great to see, was the best time to launch it during the Southern strike, which has had such a toxic effect on the entire industry? Was there not a concern that it would trigger a hollow laugh from the raucous voice at the back of the room, rather than admiring glances and renewed understanding?
“Much of the debate abound BROR’s launch was timing amidst the strike. My answer was there is never a good time!
“I wanted the railway to actually get with some difficult conversations, so it was important to be much more on our front foot. We need to get out there and broadcast what the railway is achieving on the one hand, while also being honest about where it’s not achieving. We need to ask ourselves the difficult questions about fares, ticketing, investment and so on. The response has been positive.”
Where? Inside the industry - or outside?
“Both. When you actually have a conversation about it, you encourage a discussion that’s incredibly positive. When you’re remote from people and engaging only on social media, that makes it much more difficult to have a real conversation.
“I don’t want to imply everything is perfect - because it isn’t. There will always be some people who are very, very frustrated with the service they get which they don’t recognise in the BROR context. To them, it looks like we are celebrating success when their service isn’t as we’d like it to be. What we want to do is use that to prompt a conversation with them about how we’re trying to improve things, rather than coming across as being in denial of those problems.”
How has it gone down with the owning groups? RAIL has been urging a campaign even bigger than this for years, but there was solid opposition either on financial grounds or in terms of ‘what’s in it for me?’ There was a lot of silo thinking. What changed?
“There was an effort over quite some time to make the case for BROR - that we should be much more proactive… that we should communicate successes. What changed was a growing realisation of the importance about focusing on the longer term and across the whole of the industry, rather than just at company level. I don’t think there was any one particular event that caused that.”
Was it just a case of the industry - and ATOC/RDG - maturing?
“I think there’s some of that,” he says thoughtfully. “Over the last year in particular there’s been a step change - a big change in the way the membership and stakeholders think.”
A major shift in their attitude?
“Yes - across the membership they’re much more open to challenging themselves and using this organisation to find out how things could be different in customer experience, ticketing and so on. The ability that this organisation now has to challenge its own members and help them to improve is much greater than it was.
Is that your influence?
“I’m not going to claim credit for all of that - the whole organisation has stepped up. The two names we had were hugely confusing, so moving from ATOC and RDG to a single organisation with one purpose - creating a better railway - is really important.
“We have also sorted out governance arrangements internally which were horribly confused and confusing - another massive step forward. We can now have better conversations about how we drive things, and BROR is an example of all of that. It’s the right thing to do because it’s going to help in the long term even if it’s not helping short term. I came here not to do it the way it was done before, but because members were asking for the organisation to be more challenging, to be more active about getting messages out there. So that’s what we’ve been doing.”
Will it carry on? Are members willing to go the distance and keep paying for the ongoing campaign which will be needed? That is a big commitment. Or will we look back on this as a flash in the pan?
“Absolutely yes!” says Plummer. “Members’ reaction has been positive. Everyone understands that BROR is not just a campaign saying how wonderful things are, its purpose is to proactively address some of the difficult issues that you have been advocating for a long time.
“We will debate openly about how we need to change things differently - because there are choices the nation needs to make about what it wants on the railway. We want to have that conversation, rather than just do it quietly behind the scenes - or not at all.
“We need to make those decisions and then quickly deliver whatever is decided. We will help challenge our own members and stakeholders alike, including Government, to help them deliver what the nation wants from its railway. RDG will highlight that these are important choices that can’t just be ignored.”
So what will we actually see? Are your members in it for the long haul? Will they continue funding BROR to the degree required to make it truly effective?
“You’ll see more in terms of ads, yes - in the spring - that’s already part of what’s currently committed. You’ll also see much more of us in terms of generally being proactive, setting out more clearly what rail modernisation actually means: Why is it so important for customers? Why does it help? Is it not good news for all of our workers? Why does it matter for taxpayers?
“I’ll certainly be making the case for BROR going forward, as I did this time, and looking to get that confirmation from members. You wouldn’t expect people to commit to multiple years at this stage - we need to keep ‘proving it’ - but I’m optimistic.”
Plummer is also keen to offer top railway executives as spokesmen for the railway. People like Tim Shoveller or Chris Burchell, for example?
Where do you think the Southern strike will end up? It’s got to end at some point?
“It has, but I’m reluctant to speculate how quickly that’s going to end,” he replies carefully. “We want to be clear about what the industry is trying to achieve - modernise the railway, and deliver better service for customers, better opportunities for staff and better value for taxpayers. That’s what this is all about, and that’s what we’ll keep focusing on rather than speculating on what disputes are going to happen.”
What about the thorny subject of fares? This has always been a running sore, and it’s become worse as work patterns and lifestyles have steadily separated from the fares structure needed to support them?
“I would firstly differentiate fares and ticketing, although they are clearly massively related,” he begins. “On ticketing, we have clear plans at a relatively high level of what we want to do to make use of modern technology - how people buy and use tickets and get permission to travel. The Secretary of State has been very clear that we should accelerate that plan - he’s not saying we should be doing something different.”
Plummer is talking about barcode travel, ticketing by phone, tap-and-pay and other current ways of paying. RDG Managing Director of Customer Experience Jacqueline Starr told me last year she wanted to see an end to the familiar mag stripe ticket within a couple of years. That seems a tall order… but we’ll see. Plummer conveys quiet confidence.
“On fares, I’m absolutely passionate that we use this opportunity now to have the debate, build on BROR, and have the conversation about what we should do differently for the longer term, rather than have just a fiddling around the edges. That’s long term, but we also need progress in the short term. There are things that we need to do to simplify fares, and this in turn will enable us to to accelerate ticketing issues. For example, there are things we can do on fares which will actually help us to modernise ticket machines.
“We do need to show some early wins to gain confidence, but we do absolutely have to have an eye to where we are going over the longer term and be ambitious about that, too. Technology is changing very quickly, and we have to recognise that expectations are massively different but confront these questions. At the moment these conversations are not quite happening, so people get very frustrated with the fares system. But knee-jerk simple answers almost certainly aren’t going to be right.”
Ah! The feared law of unintended consequence in changing a very complex system - revenues are driven down?
“The danger is that this results in less revenue, which means less money available for improvement. So we need to deliver change with care. Government has to make the high-level choice about the levels of fares - we all need to be honest that they make that choice.”
After many years of pressure and increasing criticism – not least from RAIL – about the urgent need for fares reform there is, finally, movement. Hooray. Not before time. In early February RDG announced trials on radical fare reform on routes between London and Sheffield and Scotland in an attempt to address some of criticisms. These included very high headline fares which compared very badly with European and sometimes even international air fares, horrific complexity and resulting confusion ticket machines which don’t give the cheapest and best value fare and the disparity between existing through fare rates and much cheaper ‘split ticketing’.
“ We simply have to tackle this problem and whilst there are major concerns about how reform will work in practice we simply can’t and won’t know that until we actually try doing it significantly differently. So that’s what we’re doing.”
This isn’t straightforward and Plummer points out that a good number of historic rules and regulations which have stood in the way in the past have been suspended for the trial. So what happens if the reforms work well – too well – and passengers find they can get significantly lower fares and that revenues are indeed driven down?
“In that case, both industry and Government will face some hard choices which will have to be made.” He is also quick to stress that the search for simplicity is one of the reasons that ticket machines sometimes don’t offer the cheapest journey. “In any reform like this, not everyone will win. It is inevitable that some passengers will find themselves paying more for some journeys that is simply unavoidable in a reform of the depth we are seeking here. We shall see. Sometimes, train operators fears are unfounded. They resisted the application of London’s Oyster to the capital’s local services in fear that revenues would fall. They actually increased. This will be an interesting trial.
While train operators are routinely excoriated for fare increases, it is (of course) the Government which sets regulated fares, including season tickets. This is very poorly understood, and each year the DfT stands back while in early January the wider media tears into ‘rip-off rail fares’, usually blaming TOCs for ‘profiteering’.
Plummer acknowledges: “The industry needs to be better at saying to Government: ‘this is what we could deliver, this is the vision for a deliverable fares structure, this is what we need from you to make this happen.’
“Opportunities coming up with franchises are very clear. We pretty much know what we want to do in terms of the changes in well-meaning regulations that were put in place to protect customers, but which are now out of date and standing in the way of progress.”
“Like the requirement to provide fares for every single ticket combination you can imagine, and the fact that the regulated fare is the return fare. In order to simplify, we need to make ticketing more responsive to what customers actually want. We need to move away from that return fare base regulation and focus on the single fare.
“That true transformation would enable innovation in franchising while still providing proper passenger protection - but it’s a very big change.”
Plummer has a stark warning both for those advocating fare reform and the Government that would have to deliver it.
“A major difficulty is that while there would be many many winners, it’s also true that a few people would end up paying higher fares. If this means that we can’t change - then we will never change. That’s the debate that we must have.”
Are you foretelling the end of the return fare?
“No - I’m saying that if the return fare is offered, we needn’t regulate it in the way we do. What we do at the moment restricts innovation and flexibility.”
I want to explore the widening gulf between 21st century lifestyles and 19th century ticketing. There’s currently no railcard for general use for people aged between 25 and 60, and the increase in home working means that salaried staff don’t visit an office every day. They don’t travel quite enough to justify a traditional five-day-a-week season ticket, and maybe three journeys a week is ruinously expensive.
Why not pre-paid carnets of tickets (say, ten or 20 at a time), available nationwide on any route, at maybe slightly more than season ticket journey rates, offering significant savings in walk-up fares? I’m disappointed, but not surprised, that Plummer’s answer is murky and evasive.
“These are all things we are debating - how do we provide better service to customers in a way that generates revenue and generates investment? Some of these things can be done by the industry alone, while others require permission. Some of that is relatively easy, while others are really quite hard conversations.”
I give him a very personal example. I’ve been buying a lot of East Coast fares recently between Peterborough and Newcastle. Sometimes the advance fares are maybe £45, sometimes they’re around £90 according to time and train - and often it just isn’t possible to use the really cheap ones.
OK, so sell me a book of 20 tickets for around £55 a journey to use when I like. You’ll have my money up front and I’ll get a good deal. And you know what - I just bet I’d end up travelling more. Plus, of course, everyone knows that the odd one goes down the back of the sofa and is never used, so it’s good for the railway, too. This would reflect modern lifestyles and would be easy to do. So why not just do it?
“Those are exactly the things we are debating,” he replies. “So what is it we can do to improve those things quickly, and what are the things we need permission to do because the regulations otherwise stop us?
“The problem is the requirement to offer a fare for every station combination for all operators. And that’s just the start of layer upon layer of complexity, which is why we need to tackle the root issue of those regulations and requirements which either prevent progress or make it look hugely complicated.”
So we’ll finally see progress, will we?
“I can certainly commit to promoting and provoking that debate, and highlighting where we can deliver those things within the industry and where we need agreement elsewhere before we can act.”
The RDG’s Jacqueline Starr has said we’ll see the end of mag stripe ticketing in around two years?
“We published a booklet a few weeks ago saying that we weren’t necessarily going to get rid of the mag stripe because some people actually want that, but certainly you would have barcode-based ticketing across the country from 2018. You’d have the ability to use mobile phone devices for tickets from that time, and progressively you’ll see smart target solutions in the major cities for commuting - exactly the things that the Secretary of State said in his recent statement. So you’ll see that being delivered progressively from 2018.”
Plummer agrees that passenger flow at gatelines is too slow at peak times. So why don’t we adopt Japanese-style gates which remain open all the time, and only close when an invalid ticket is detected?
“That’s absolutely the sort of thing we need to be doing.”
What about franchises? Are we still happy with long-distance franchises, or should we now be thinking of concessions? If we now have franchises being pursued by only two bidders, isn’t that a bad thing? Should we take revenue risk away by switching to concessions?
“There are aspects of franchising where RDG and its members are quite clear that the Department needs to make changes in terms of the balance of risk and reward - those areas of economic risk that are outside the control of bidders.
“That balance needs to be consistent and at the moment, yes, we’ve had a number of examples where there have not been as many bidders as you would want. If that was to continue then that’s not a fully competitive situation, but we believe that if those refinements are made to the franchise model then we will see more bidders fighting for those important franchises. And that competitive environment is important for everyone.
“We would also like to see a few more smaller franchises. But we don’t want the pendulum to swing too far and have too many franchises and interfaces. By having a few more franchises, you create more of a dynamic market and are more likely to have competition.”
The DfT once wanted shortlists of at least four bidders, yet now seems content with two because of the sharper sense of competition it is assumed this creates - with the added advantage (I am told) of the elimination of ‘makeweight’ bids.
“My gut feeling is that if you thought there was always going to be two bidders, then that’s a problem. If there’s two occasionally, then that’s maybe not a problem.”
What is his view on a potentially tricky situation emerging in train leasing, whereby relatively new trains could go for scrap many years - decades even - before the end of their expected lives?
Plummer is enigmatic: “Is that a quirk, or is that just ‘the market’? Isn’t that just innovation and evolution?”
It’s hardly customer-friendly, though, is it? If it follows through, then rolling stock costs will soar and passengers will end up footing the bill - either through fares or taxes.
“But we should also try and be consistent,” he replies. “In the past we’ve had the opposite problem, with no liquidity in the market at all, and then people criticise us for having taken a risk then charging a market price. The flip side is if you want a market to work then you need liquidity - you need some ability to have some choice. Bluntly, if there’s no liquidity there’s no choice, and then somebody has to manage where everything is going in order for it to work. We need to be consistent about that. Do we want this to be a market or not? That said, we just need to be clear how we want this to work as a proper market.”
For years, the railway and Government alike have become cautiously accustomed to annual compound growth of around 6%, which only blipped slightly after the financial crash of 2008. For the first time there is clear evidence that solid growth is at least softening. Is it the end of the run?
“There’s a lot of work being done to understand what happened and why it felt a surprise to many people why we had that slowdown. As ever, it’s a whole combination of factors that resulted in that slowdown, and you can explain something ‘after the event’.
“We need to understand if this a sustained flattening of demand. It certainly does look as if the rate of growth is likely to be slower. We have had a really high growth for many years and many people believe that growth will continue, but perhaps not at such a high rate. Rail growth will depend on the growth in population, the economy, the desire to travel - and we’ve had some short-term issues with terrorism, Brexit and confidence in the economy to deal with, too.
“But in all of the scenarios we are looking at, we will still need to invest in capacity. What is less clear is how much more challenging it will be given lower volume and yields. Investment will become less affordable, but we can’t stop and do nothing.”
How much of the downturn is a result of the sharp fall in petrol prices last year - to as low as 99p per litre at one point? It’s now rising again and is currently around £1.20 - if that was the problem, is it now in the past?
“For some time the models were predicting growth, and the reality was even higher than that. So what’s happened is almost certainly a correction - we’re now back to what the model predicted. All of the scenarios we are currently modelling are actually giving us more confidence in those models, and in many cases they are broadly right. And yes, we got to a critical point on petrol prices which had a bigger effect than we might have expected. So we can expect to see growth coming back. But we shouldn’t be complacent about the other things going on in car technology.”
Autonomous vehicles or driverless cars?
“Indeed. Are we really going to see self-driving cars bringing masses of people into central London? Or is it more likely that such technology will get people to their commuter station? I think it is. So that would not be competition for the railway. The big question is how we deliver that end-to-end journey and how cleverer interfaces potentially change things like the car parking, which is becoming a huge constraint.
“I just find it very difficult to believe that mass commuting will change significantly - likewise for long-distance business and leisure travel. The train is a very powerful market. Is it best for everything? Of course not. But is it a competitive product? Absolutely.”
What about the thorny question - certainly for established TOCs - of open access passenger operation?
“One of the biggest issues is again that there is consistency between DFT, ORR, the franchise model and the way in which track access is granted. That’s another one of those difficult conversations needed to ensure that the industry does not get pushed in different directions in either franchises or regulation.
“I agree that there is a really powerful place for open access competition. But we need to be clearer about whether we see that on some parts of the railway as being very open, liberal competition for paths, while on other parts of the railway it might be limited competition for spare capacity. On other parts of the railway we’ll say there’s no prospect of open access. I think it’s powerful to have separate infrastructure and operations because it gives you the opportunity to do things differently in different places rather than the current ‘one size fits all’ open access mindset.”
Liberal competition hasn’t worked well where it has been tried, has it? In Europe, there has been chaos where it has been applied.
“Where could it work?” he asks. “Where could you apply that liberal approach? There are only limited places where you could do it. We could collectively decide that on some of those long-distance corridors we are going to have a more liberal approach rather than a few bits at the edges. But we should be explicit about that decision and then be consistent with it, rather than pushing people in different directions.
We keep coming back to the DfT, don’t we?
“It’s not just the DfT but ultimately, yes, they need to decide some key things.”
What about freight? The freight operators are key RDG members and yet don’t seem to get much air time?
“One of the things I’m most pleased about is the RDG freight group, which is bringing all those operators together. In the past they haven’t really had that sort of forum, and therefore haven’t had the basis for expressing a common voice with legitimacy. I think that’s really good.
“In terms of freight marketing, we need to get a whole lot better at it. Coal was always going to disappear, and that’s very painful, but we can’t be shocked. For many years the railway has had to respond to what was happening in power generation and was under huge pressure to provide more capacity. That’s now gone away, and this time it’s very unlikely that it will come back. The flipside is that the intermodal market continues to be strong, and we need to promote that. It’s where rail freight can make a really significant contribution to the economy as well as to the environment and road safety.”
I’m slightly… frustrated. I’ve heard all that a thousand times before. Isn’t it time for something different? Can there ever be a breakthrough into a genuinely new market - there’s never going to be a better driver or incentive than the collapse of coal?
What about the rapidly escalating air/diesel engines concerns in London? Was there ever a better time to hand London Mayor Sadiq Khan a solution? Is it not time for a really bold trial of roll-cage freight into London at night, with a fleet of clean electric lorries delivering in the small hours?
It would tick so many boxes that it’s a no-brainer in principle. And guess what: all the infrastructure you’d need for a trial is there, unused at Euston. The old parcels deck above the platform could handle hundreds of road vehicles, and there’s easy road access to the platforms below….
“I don’t see a great momentum for that at the moment…”
No, neither do I. That’s a big part of the the problem. Maybe the Rail Delivery Group should create one?
This feature was published in RAIL 820 on 11th February 2017