EXCLUSIVE ANALYSIS: Time for our industry’s leaders to rise to the challenge

• This analysis was published in RAIL 904 (May 6-May 19), available digitally now.

Crisis? What crisis? These might not have been the actual words uttered by Prime Minister ‘Sunny Jim’ Callaghan as he stepped off a plane (looking tanned and refreshed) from Guadaloupe in 1979, during the ‘winter of discontent’.

What he actually said was: “I don’t think other people in the world would share the view there is mounting chaos.”

But this got fashioned by The Sun into that simple headline. It succinctly summed up in just three words the popular sense that government was out of touch with the gravity of the challenges it was facing and was unable or unwilling to provide the necessary leadership or take the required action.

Even before the Coronavirus epidemic started to affect Britain’s rail network in March, I thought that our railway network was facing its biggest crisis for a generation or more:

• Punctuality and reliability had fallen and largely plateaued at an unacceptable level, badly affecting passenger satisfaction and confidence in the railway.
• New train introduction had become shambolic with extended delays - mainly due to repeated software issues, seriously late deliveries, and gauging problems.
• Industrial disputes over modernising train working practices seemed to end only when management eventually capitulated on key issues, locking the industry into a future of high labour costs, poor productivity and inefficiency.
• Unit infrastructure maintenance, renewals and enhancement costs had escalated - caused by an over-complex approach to on-track safety, a squeezing of track access time, risk aversion, standards creep, a culture of not challenging policy, and some poor delivery models.
• Franchise design had become ever more complex, yet failed to ensure that what matters most to passengers in each part of the country was delivered.
• The franchise market collapsed as margins narrowed through competitive bidding, while the level of risk increased. The result was an unsustainable asymmetric risk profile.

The situation at the beginning of March was one where pretty well every franchise let in the past five years was struggling to survive (and around five were in the ‘zombie franchise’ zone).

The Government was struggling to let Direct Awards in time to renew those expiring, and there was no forward strategy to deal with the wave of franchise re-lets required over the next few years.

What has happened since then has turned what was a crisis into a catastrophe. The collapse in travel caused by the lockdown was akin to turning off a light switch. No franchise could have survived even a few weeks of such enormous revenue losses, and so it was inevitable that the Government would have to step in and convert them all onto cost-plus-style management contracts.

Government, to its credit, acted swiftly to take the necessary action to keep the trains running. But as the pandemic impact lessens, getting out of this situation will be a good deal harder. I know from experience that it is much easier to shut things down than it is to restart them again, and three things will make this even more difficult:

• The lengthy ‘work from home’ experience will act to permanently reduce both commuting and long-distance business travel.

Even if most commuters go back to travelling, a reduction in the numbers of days per week seems inevitable, so a drop-off in demand of 10% or more for the foreseeable future seems likely.

• There will be significant concern among many to avoid crowded places, at least initially. This seems likely to translate into modal shift from public to private transport, which will further suppress demand (at least for a time).
• It is now certain that there will be a deep recession starting in the current quarter (April to June), and it may take a year or more to reverse out.

This will reduce the demand for freight and business travel. Lower levels of disposable incomes among consumers will also suppress demand for leisure travel.

All this comes on top of the hiatus caused by the Government’s inability so far to agree among its various departments what to do with the Williams Review. It’s fair to say that the whole industry has effectively been on hold for nearly a year already, pending some sign of white smoke coming from Great Minster House.

Up until February the delay could be attributed to last December’s General Election, the great Brexit diversion, and to January’s cabinet reshuffle.

However, the failure to publish the much-vaunted White Paper since then can only mean that there is disagreement on the way forward between the Department for Transport, the Treasury and Number 10.

The latest announcement says that we can expect it to be published in July. But I wouldn’t advocate holding your breath, as airtime for this within government at the moment will surely be strictly rationed as a consequence of all the other major issues being handled concurrently.

So, what should industry leaders be doing in the meantime?

We all know that Williams was planning to address the structural failings in our current industry model, and also to make significant changes to the current fares and ticketing arrangements.

Perhaps in the middle of the hiatus we can’t move forward on these key issues, but it seems to me there is much that the
industry ought to be capable of getting on with.

Surely we need to be getting on with this stuff right now? Otherwise the industry risks (even more than it does already) being seen as a rabbit frozen in the headlights, waiting for some external force to come along and do to it what it will.

I have come up with a list of 12 ideas which I reckon are doable, and which the industry could be getting on with while we are in this pause.

Some will require support from franchising and concessioning authorities; others could be done by the industry on its own. All involve a level of cross-industry collaboration of the kind that we seem to find quite difficult. But now is surely the time for our industry’s leaders to rise to the challenge? If not now, when?

Here is my list of initiatives which I think are achievable within two years. They would lead to improved passenger satisfaction and industry productivity - and could start to rebuild public trust in rail.

 

1: Develop a SQUIRE-type regime on a contract-specific basis for all future franchises and concessions, to ensure the railway focuses on what matters most to the passenger experience.

We have seen this approach work effectively in concessions let by Transport for London, and in franchises let by Transport Scotland.

It has been enormously successful in ensuring that the franchisee or concessionaire pays sufficient attention to matters such as station staffing, cleanliness, and others that are vital to securing a good passenger experience. It’s now time for this kind of model to be rolled out across the entire system.

I don’t think this should just be left to government. The rail industry could easily develop a SQUIRE-type quality incentivisation regime, tailored to the differing needs of varying types of franchise, and present it to government with a recommendation that it implements this in future franchise competitions.

 

2: Tackle the poor level of core infrastructure reliability.

It’s odd that 25 years of Railtrack and then Network Rail being incentivised to produce steadily more reliable infrastructure has led to a situation where it is probably no better (on average) than in the last days of British Rail.

Partly this is due to the surge in rail traffic, but also to a general squeeze on both maintenance and renewals costs forced by successive regulatory reviews.

Each successive Periodic Review has generated efficiency requirements which have always been missed. Other factors, such as the desire to improve workforce safety and other safety improvement initiatives, have also resulted in worse productivity. One consequence is that less maintenance and renewal gets done within a five-yearly fixed cost envelope, and this has been repeated over successive cycles.

In the most recent regulatory determination, the amount of money made available for maintenance and renewals has increased, which is good news.

But average asset condition has been gently declining for some time, and this will not be easily reversed.

An additional approach is therefore needed to make a step change in infrastructure reliability. This could be done in two ways:

ν Getting better-quality, better-structured access for routine maintenance.

ν Using access more effectively (cyclic planning, deployment, and so on).

Such an approach has now been adopted on the busiest part of the Wessex network into Waterloo, for implementation in December this year. Significant changes will be required to the approach to maintenance, but there is a significant prize on offer in terms of reliable infrastructure on the most critical part of the network.

Such an approach could also work for a number of other parts of our busy network in all the major conurbations around the country.

 

3: Complete overhaul of the possessions and isolations protection regime.

The way engineering possessions are planned and taken is rooted in the Victorian era. It is absurd that we still send workers onto the track at night and in all weathers to place red flags and explosives onto the rails as the first line protection for track works.

Likewise, the inability to isolate small sections of track remotely shows how primitive our approach to electrification still is, dating back to early schemes in the 1930s.

Furthermore, isolations have been made more difficult in recent years by a need to comply with tightened Electricity At Work Regulations, resulting in earthing straps having to be carried trackside (again at night and in all weathers) before being used to ensure specific sections are dead electrically.

Never mind the safety risk exposure and waste of cost involved in these archaic processes, the loss of productive time on overnight worksites is enormous. Typically, the time taken to take and give up possessions and isolations is between a third and a half of overnight time allowances on the most critical parts of the network.

Cracking how to bring it out of the Victorian era and into the digital age in one bound is the objective. The good news is that there are lots of ways this can be achieved.

 

4: A step change in passenger assistance.

It is nothing short of a scandal that so many people still have such a poor experience trying to access our rail network. Unless you are fully able-bodied, stations and trains present challenges at almost every turn.

While it is a long time before we will see universal level access between platform and train, there is a lot more that could and should be done now - both to comply with the law and to encourage rail usage by those with mobility restrictions or disabilities, or simply with prams or heavy luggage.

My goal would be a step change across the board with the objective of universal walk-up and a target of (say) 99% reliability in passenger assists.

 

5: Modernise and standardise Ticket Vending Machine architecture.

TVMs have been around in their modern incarnation for about 30 years now, yet the user interface still resembles a screen version of the printed National Fares Manuals I was used to as a lad.

Somehow, the art of making these things intuitive to the user has eluded the industry for all this time. Yes, the fares system is complicated, but with appropriate determination this is a nut waiting to be cracked.

My goal would be to make it completely intuitive for passengers, the objective being to enable passengers to buy the correct ticket for their journey easily, every time.

 

6: Develop a single, standard stored-value smart ticketing platform and product.

Here is another area which has been allowed to develop piecemeal over time, with contrasting approaches to everything.

But it is also an area where a single approach on a network basis would simplify the plethora of platforms, back offices, readers and products available around the country.

The biggest prize here is the value which could be unlocked by a single stored-value smart ticket product for the whole network. What a customer-centric proposition that would be! And it is all doable technologically.

 

7: Eliminate the risk-aversion culture in rail and the lack of willingness to challenge the appropriateness of standards.

In the past 20 years we have seen a progressive increase in risk aversion. No doubt historians will in due course opine on the reasons for this, but clearly the tone on these matters is set from the top of the organisations involved.

A culture of compliance, whatever the cost, has grown up, while in the meantime pressures seem to have been generating ‘standards creep’. Professional driving policies are an example of this.

I’m sure that some of this is good and appropriate, but I am often left wondering whether due consideration has been given to balancing off affordability and impact against the safety or other benefits posited.

We all want our railway to run to a high standard, to be interoperable and as safe as we can practically make it, but we’re in danger of pricing rail enhancement out of affordability.

The net result will be an even more congested network operating less efficiently, with users priced or forced off it by overcrowding, resulting in less safe travel modes being used or journeys simply being foregone.

The industry and its regulators must throw themselves behind Network Rail Chief Executive Andrew Haines’ drive to make it acceptable to question the appropriateness of standards and the interpretation of legislation.

 

8: Identify the main drivers of cost and timescale escalation in infrastructure renewal and enhancement projects, and find ways to reverse these.

I reckon that just about everything in today’s rail system takes at least twice as long to achieve and costs at least twice as much as it should. I can’t back this up with figures, but my experience tells me this formula is not far out.

The reasons are many and varied, but it is high time that project teams and sponsors become much more demanding on both time and cost. This is where the new devolved regional structure in Network Rail really needs to up its game.

 

9: Develop a national diversionary routes plan and capability to reduce the frequency of bus substitution.

The industry resorts to bus substitution more often than it used to. Passengers tell us that when they buy a rail ticket they really want to travel by train. They don’t want to be bussed from Peterborough to Bedford because of a possession at Sandy, for example.

The railway has traditionally had lots of diversionary capacity, but its ability to utilise this and willingness to be creative to enable it seems to be dwindling. It ought to be possible for some small-scale enhancements to improve diversionary capability.

There are many situations where no investment is required, merely a determination to make the most of the existing network. All that needs to happen is a higher value to be placed on retaining through journeys by rail, resorting to buses only as a last resort.

10: Revise timetable planning and access regime rules.

Recent major timetable changes have been poorly executed, leading to significant disruption to the daily lives of hundreds of thousands of passengers. This has highlighted flaws in the cross-industry processes used to design timetables and avoid over-selling of capacity. The solution is relatively simple - change the industry processes in two ways:

• Involve Network Rail earlier in major timetable changes to improve the quality of outcomes.
• Introduce a maximum capacity utilisation formula to prevent overselling which causes performance failure.

 

11: Overhaul the gauging process for new trains.

Gauging is one of the industry’s seemingly forgotten corners. Rather than tackling the whole elephant, my focus here is on one particular aspect which could make a real difference quite quickly - the process to enable new trains to become route-cleared for the sections of line they will work over.

To say this is antiquated would be something of an understatement. What is needed is a step change in the processes used to simplify, reduce waste and cut timescales.

A small cross-industry working group of experts within Network Rail and a selection of those in train operating companies who have recently introduced new trains ought to be able to crack this.

 

12: Develop a decarbonisation strategy for the national network.

This is reasonably straightforward. With government so far unable to determine a strategy on this, how about the industry develops one and presents it to government?

In Scotland, they spell ‘decarbonise’ E-L-E-C-T-R-I-F-Y. There, how difficult was that? But, of course, we do need to get electrification costs under control to make this a saleable strategy.

No time to lose. Let’s get to it folks!