by George Muir, Director General, ATOC
December 2005

The railway needs to cater and plan for the predicted passenger growth of around of 40% over the next 10 years if current trends continue, while at the same time maintaining a ruthless focus on driving down industry costs.

There are many sceptics who say that the current industry structure will not allow us to deliver this. They are wrong because the Government has given the industry a structure through the Railways Act 2005 which sets down the parameters and, by extension, the standards it expects the industry to operate under.

By merging the role of the Strategic Rail Authority into the Department for Transport Rail and devolving more responsibility to Network Rail and train operating companies, it gives the tools to achieve this. This is the case in the commitment to joint planning, in area such as Route Utilisation Strategies which will allow us to produce better outcomes and lower costs while growing the railway.

The partnership between - the Department for Transport, Network Rail, ATOC, the train operating companies and Office of Rail Regulation (ORR) - the rail industry, has created an effective structure to deliver a better railway to our customers. This is important, as since the privatisation process began ten years ago in 1996, the industry has demonstrated solid success in attracting more passengers and freight albeit at a cost.

Year of Growth: Britain has the fastest growing railway in Europe and no other country can show anything like the 40% growth in passenger demand that has been seen in Britain over the past ten years. It is twice the growth rate of Germany and fifty percent more than France.

Train mileage has been increased to meet this new demand, up 20%, and this has been delivered against an improving performance trend over the last four years. In June, we beat the Government’s target of achieving 85% of trains arriving on time, nine months early. Passenger satisfaction is at a five year high, while complaints are down to a four year low. At the same time freight on the railways continues to grow. In 2004/5 there was double digit growth in net tonne kilometres carried over the previous year. Freight carried on Britain’s railways has increased by almost 50% over the past ten years. Recent figures released by the Community of European Railways (CER) in Brussels shows that in many countries rail growth is, at best, sluggish.

Year of Improvement: At the same time, a third of the national rolling stock fleet has been replaced by brand new, state of the art trains while a further 10% of the fleet has been refurbished. Power supply systems have been upgraded and good progress made by Network Rail in tackling the backlog of renewals stretching back for many years. And there have been some striking improvements to stations – big ones like Manchester Piccadilly or Paddington, or smaller ones like Barnsley, Hastings and Cambridge.

There has also been investment in new ticketing systems to meet the needs of a younger generation who look for their information and deals on the web, rather than at the station. Here, too, Britain is leading in Europe, with a huge call centre operation, a new website with ‘live’ train running information, and the new Train Tracker system, ideal for quick enquiries on direct train services. This dynamic, fast- growing railway is being delivered by the Train Operators and their franchises.

Year of Refranchising: As important is progress with re-franchising. There have already been some good signs in this regard – at the time of writing (November 2005), the invitation to tender for the South Western franchise has just been issued and the winners of the Integrated Kent, Thameslink and Great Northern, and Great Western franchises will be announced in the coming months. All being well, by the beginning of 2006, we should have seen four franchises, Intercity East Coast, Integrated Kent, Thameslink and Great Northern, and the Greater Western franchises successfully re-let in the previous nine months.

One of the benefits of this open competition is that new franchises bring new ideas, stronger competition and innovation. There is no better illustration of this than the recent competition over the refranchising of the East Coast franchise which has been retained by the current franchisee, GNER. The company is committed to delivering more and even better services to the passenger and infrastructure improvements while ensuring that the Government gets value for money from its substantial investment into the railway industry.To ensure that the railway and franchisees deliver the best possible services to passengers another aspect of the recent review is on the number of franchises. We are now seeing a process which will see a small change in the franchise map, with the number of franchises coming down to 19.

Despite some difficult periods over the years, the Government has continued its support for the industry, helping it to adjust to new challenges and expectations, and to move forward after the decades of under-investment.

Year of Cost Control: Passengers want the railways to grow BUT, and it is a big ‘but’, for any of this to happen, all parts of the rail industry must bring costs down. High costs are the main deterrent to continued growth. If we can’t cut industry unit costs, then we just don’t deserve to grow. The sensible solutions to manage and handle passenger and freight carriage growth do not and should not have to cost a king’s ransom: rather, we need a set of capacity improvements that are affordable and can be delivered sooner rather than later. We need to find ways to meet the rising demands for rail travel but affordability is key.

The supply industry has an important role in helping to reduce industry cost and improve affordability. In recent years we have seen very good line managers in the supply industry helping to deliver projects at a reduced cost, helped by clear improvements in the reliability of systems and components. They want to see good supply chain processes and with good delivery to the industry; we can all be more efficient with costs ensuring better value for money.

Looking Forward: The industry has had plenty to be cheerful about: full tilt Pendolinos, Mark 1 rolling stock now off the network and most of the new trains procured now in service; Allington Chord opened in September helping to increasing capacity on the East Coast Mainline (ECML) by 15%; more franchises awarded; punctuality getting firmly back on track; and finally, more money now being spent on stations with hundreds of schemes carried out by TOCs this year alone. Busy intercity stations such as Reading, Cambridge and Doncaster as well as the smaller regional and rural stations like Haddenham & Thame Parkway and Kemble have all seen investment in better facilities contributing to an improved journey experience.

Of course, with the railway carrying more passengers, it does bring more challenges for the industry. A YouGov poll did register concerns about overcrowding, and this reflects our forecasts of further growth in the range 28% to 42% over the next decade. This growth is coming because the railway is now starting to deliver what its customers want, and because other modes just can’t cope with the burgeoning demand for transport. Some big schemes like Channel Tunnel Rail Link are in hand or, like Crossrail, being taken forward now. But, we need to start planning other, more modest enhancements now, to provide for this known future rail growth.

As part of this process and joined up thinking we have in recent weeks seen the publication of the First Route Utilisation Strategy (RUS) led by Network Rail, with contribution by ATOC, the TOCs and other stakeholders. Together we can plan and build the business case, ensuring that the enhancements needed are provided to cater for this predicted growth. The first of these was the South West Mainline RUS which gives 27 options that could accommodate greater passenger and freight demand, as the SWML is forecasted to see passenger kilometres increase by 20% and freight by 15-20% over the next 10 years. 

All this leads us to the prize that is well worth having – a thriving railway that will play a growing role in meeting Britain’s transport needs, and provide value for money for the continued substantial support that this Government is putting into the industry. Train operators want to work with Network Rail and Government to turn that vision into reality.