The future of railways in Britain

Text of speech delivered to the Future of Rail conference in Edinburgh, 27 February, 2019, by Tom Harris, member of the Expert Challenge Panel supporting Keith Williams' independent review of the railway industry.

?

In September 2008 I was still the railways minister in Gordon Brown’s government, and I was fulfilling various commitments in that role while I was at Labour’s annual conference in Manchester. I took one meeting with a senior figure in one of the Train Operating Companies, and he regaled me with a list of familiar grievances: chief among these was one I had already tacitly acknowledged, namely that civil servants at the Department for Transport were taking far too much of a role in specifying and managing franchises. They were, in fact, micro-managing, making it much harder for train managers to do the job they wanted to do.

I was convinced. Even though I had heard these complaints a thousand times before from a thousand sources in the previous two years, something about that conversation struck me as urgent. And I realised I had to do something.

I resolved that as soon as the summer recess was over, in just over a week’s time, I would go into Great Minster House and recommend a fundamental root and branch review of the franchise system, with a view to removing the DfT from its central, controlling role.

And three days before parliament reconvened, I was sacked.

That’s politics. Of course, the appeal I had intended to make back in 2008, even if I had remained a minister, would have fallen on deaf ears. Counter-intuitively, despite inheriting a railway system whose privatisation had been – in New Labourspeak – “botched”, the railways were to become an unacknowledged success of that government. Investment was at record levels, five-year control periods were instituted in order to level out investment and do away with the peaks and troughs of investment of previous years, political decisions were taken to rebalance the cost of the railways from the tax-payer to the fare payer, and throughout that period, passenger numbers went up and up, to the point where we began to wonder if that upward line on the graph might ever level out.

Well, now we know that the answer to that is “yes, it did”. Part of the cause of that levelling out, and the associated fall in season ticket sales, stems from societal change. People are choosing to work flexible hours and, increasingly, from home, releasing them from the tyranny of the season ticket. But we shouldn’t fool ourselves: poor performance, particularly over the last seven years, alongside industrial unrest, has made the railways a much less attractive prospect for commuters.

In his latest editorial, Nigel Harris (no relation), the managing editor of Rail magazine, wrote: “There are only two things that passengers really care about: fares and reliability. That’s it.”

And he’s right. Keith Williams has repeatedly said that his priorities are the network’s customers. And if you are stuck on a delayed train between Glasgow and Edinburgh, you don’t spend much time considering the separation of track and train, or who owns the rolling stock, or who writes the timetables. You want to know when you’ll reach your destination and you want to know if and how you can get a refund.

Some politicians – I know their type – will tell you that the public fret constantly about the structure – and particularly the ownership – of the railways. They do not. It’s instructive to note that public demand for changes of a fundamental nature, whether nationalisation or privatisation, is at its most intense when a service is failing. So demand for rail nationalisation has increased in recent years as performance has deteriorated. We should not be surprised that when politicians offer simplistic answers to complex questions, they find plenty of takers from frustrated voters.

In his Bradshaw address in London last night, Keith said: “The railway is not run for engineers, or shareholders, workers or politicians. It is run for passengers.”

Let me assure you, of course, that the remit of the Rail Review is rather wider than fares and punctuality, but we start with an acknowledgement of passengers’ priorities.

I also want to address a criticism – or perhaps it might be better to describe it as a concern – that the Williams Review is simply the latest in a long line of worthy Department for Transport reviews whose chief purpose in life will be to serve as a coaster on Chris Grayling’s coffee table.

I understand those concerns and the cynicism that has been generated by repeated attempts to tinker with the system and make proposals that are rarely or, at best, half-heartedly implemented.

Without wishing to offer a hostage to fortune, I want to assure you that the Williams Review is different. It’s different, partly because of the context of the recent problems that have engulfed last summer’s timetable changes and, of course, the franchise system, particularly the East Coast franchise.

But it’s different also because there is a real political will behind our review. Unlike previous reviews, our conclusions will be published in a government White Paper in September, paving the way for our proposals to be legislated for. And the remit we’ve been given by the Secretary of State is deliberately broad. For the first time that I can recall, politicians have asked us to come up with the answers without telling us in advance what what those answers should be. I can just imagine a senior civil servant telling Chris Grayling that that was “a courageous decision, Minister.”

Our review means a root and branch review of everything, from franchising to fares, from governance to structure.

Depending on which circles you move in, franchising is rarely spoke of in a positive way. Yet, and without overstating it, it has at least played a part in the historic and unprecedented growth in passenger numbers we saw in the first two decades after privatisation. But it would be short-sighted and illogical to insist that a model that was appropriate in the 1990s must always be appropriate in the future. One thing that has come across loud and clear to the expert challenge panel so far has been the awareness – the pride, even – that our railway is a constantly evolving beast. The structure changes, the trains themselves change, the timetables – and the timetabling process – changes, the routes change, our staff change. So to place any part of that system in aspic, to preserve it unchanged, would fly in the face of experience and reality.

When franchising was first launched, the cost of bidding was a small fraction of the costs we now see. Today, owning groups have to pay upwards of ten million pounds just to take part in the process, even for a bid that is lost. That has led directly to a reduction in the number of companies who wish to bid and be part of Britain’s railway industry, and that means a significant loss of competition. National Express, for example, which used to run the ScotRail and other franchises, gave up its last UK train interest a number of years ago.

In Scotland there are plans to allow a public sector organisation to bid for the ScotRail franchise when it comes up for renewal. It is inspiring to know that any minister is courageous enough to risk upwards of ten million pounds of public money in a process that may well result in the private sector keeping the franchise anyway. Whether tax-payers would appreciate such generosity with their money is perhaps another matter, for another day.

But if the Rail Review is to provide thoughtful and – crucially – sustainable solutions to the challenges facing the industry, we need to be honest about what has gone before. Most people would agree that parts of the franchise system are now failing. But at the same time we should recognise that that innovation played a key role in growing our network. Acknowledging the failures of the current system should not blind us to its past achievements:

§ The doubling of passenger numbers;

§ Running more trains than at any time in the railway’s history;

§ Delivering the safest railway in Europe;

§ And seeing more money than ever spent on improving the railways.

But despite these successes we cannot ignore some harsh realities, that poor performance, fare hikes, disruptive industrial action and the failures to deliver key infrastructure on time or to budget have contributed to a few dismal years for the railway.

Put bluntly (and as Keith said in his speech last night), franchising cannot continue in the way it is today. It is no longer delivering clear benefits for either taxpayers or fare payers.

So the review will examine what the best commercial model or models for the future might be.

It is clear that the industry and, significantly, the government, wants to move on, to build on successes of the past and to address the failures. Importantly, having built up an invaluable reserve of private sector experience, ability and discipline in our railway industry, it would be short-sighted to dispense with it and pretend that the private sector has no role to play in the provision of this most vital public service.

The public experience of travelling by rail is what motivates and drives this review forward.

One of the most regular complaint we get from rail users, aside from fares and reliability, is communication, which too many TOCs still can’t seem to get right. An example from my own experience might help to illuminate the problem.

I regularly catch the Virgin West Coast service from Euston to Glasgow. It is a great service, despite the constant criticism the company receives from all quarters. Often (though not always), depending on how I’ve bought my ticket, I will receive a text message as I wait at Euston, informing me when my train ready, what platform it’s on and even reminding me what seat I’ve booked. Tremendous.

But there’s a “but”.

Occasionally, and for annoying but valid reasons, trains occasionally have to be terminated early. On the last occasion this happened, at Preston (it’s always Preston), having been informed by text about my seat number and time of departure and platform number, no one at all was available to give confused and angry passengers any information about what was happening or how to compete our journey. As most of us will appreciate, such delays and cancellations are that much easier to tolerate when we, as customers, are fully and properly informed about the reasons.

So we are now in a different phase. Passenger growth can no longer be taken for granted and there is less certainty about how the economy is going to fare in the future.

There has been less ability to deliver on innovation. The reputational risk for franchises has increased whilst at the same time returns are less than expected in some areas.

These are hardly the conditions we need to develop a modern rail industry to attract future investment.

The review will continue to examine what the best commercial model or models for the future might be.

We will also look into the longer term issue of affordability. Passengers are no longer willing to pay more when their perception of service is getting worse.

Yesterday, Keith published the first in a series of papers which provide factual summaries of a number of key issues in the rail industry. This paper focuses on the role of the railway in Great Britain and on its costs and benefits.

The paper highlights many of the benefits which rail travel brings- how it handles large volumes of commuter traffic, the role it plays in leisure, the benefits to business and the growth in freight.

It also looks at such things as its relative environmental credentials.

And it highlights the vast amounts of money that government has put into rail, reflecting the importance of rail to our country and the need for investment to maintain and enhance our railways. This investment is around half of taxpayers’ total annual public spending on transport in the UK last year.

Far too often, discussion about the railway industry focuses too much on structure and ownership. Keith has set out on many occasions that his priority is to determine what the railways are there for, who they’re there for, and allow the most appropriate structure to follow.

Nevertheless, it’s understandable that structure weighs heavy on our minds and in particular on the minds of those tasked with running the network.

The Labour government of which I was part introduced the Strategic Rail Authority in a bid to bring some much-needed planning to the national network. And then, a few years later the same government abolished it.

Most of the powers of the SRA ended up in the Department for Transport, where they still reside, where civil servants determine every detail of every franchise tender document. One of the industry leaders we spoke to, a former manager with Northern Rail, explained his frustration that the people who decided services in Manchester and Leeds did so from Great Minster House in Horseferry Road, London, SW1.

And while the return of some form of central “guiding mind” for the railways seems to have general support, it raises another challenge: without meaningful and effective devolution, we would still face the same problems of London-based individuals deciding the minutiae of local service provision on services they will never use themselves.

We need to recognise that there is unlikely to be a “one size fits all” solution which will work for every part of the country and all types of passenger.

That’s why we will continue to consider all potential answers, from nationalisation to new models of franchising, to much more localised decision-making and integrated concessions, where those operating trains and managing infrastructure work together in genuine partnership, acting like a single business absolutely focused on customers.   

We will follow the evidence, and suggest the most practical measures to fix the system. But whatever we suggest needs to be taken in the context of creating clear accountabilities.

All of this needs to start happening quickly, for the sake of customers.

Last night Keith described his review, accurately, I hope, as the biggest review of the railway for generations. It will certainly represent the biggest shake-up of the system since the 1992 Railways Act.

Will our conclusions satisfy every rail user, politician and commentator? Certainly not. Because all radical change means accepting trade-offs: Between capacity and resilience, for example; between more services and reliability; Or accepting that not everything can be done at once.

And it will take time to implement, balancing local input and requirements, against those of maintaining a national network.

And as Keith has said, “We must resist the urge to promise all things to all people or to let ideology get in the way of practical, intelligent, creative solutions. “

I’ve mentioned the need for change in reliability, fares, communications and structure. There is another fundamental change we need to welcome into the industry and into the mindset of those who promote and run the industry, including politicians: honesty. Customers and tax-payers deserve the truth, even when that’s unwelcome. So we need to get used to saying no to some requests for some services and some changes, because if we do as we have tended to do in the past, and promise the earth, then we will increase the demoralisation, disillusion and distrust felt by too many.

Change is coming. And whatever your role – passenger, tax-payer, train operator, leasing company, freight operator, staff member, manager or politician – it’s going to affect you.

Thank you.