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Williams – Shapps report ‘sadly disappointing’

‘Great British Railways – The Williams-Shapps Plan for Rail’ : Back to the Future?

The Rail Reform Group’s response

The Rail Reform Group is an independent network of rail professionals each with a lifetime of experience in the railway industry, at senior levels. It is completely independent and receives no external funding. www.railreformgroup.org.uk

Summary

After such a long time in gestation the Williams Report, now re-named to indicate the clearly considerable Government (DfT) involvement, has been published.  The major change is that it appears to recognise that the railway is a complete system and needs to be managed as such, reversing the Treasury imposed fragmentation of the 1993 Privatisation.  However the detail is sadly disappointing as it fails to follow through, retaining a commercially-slimmed private sector involvement in train operating, but one where there now appears to be little value in the continued fraction in the system delivery.  There is no analysis of the problems that resulted in the establishment of the original Williams report.  There is scant reference, let alone, analysis, of the other key issues that need to be addressed, such as decarbonisation (electrification) and infrastructure development (e.g. Northern Powerhouse, Midlands Engine) or of why Great Western electrification costs rose out of control.

Conversely there are numerous references to railway industry failings, such as poor accessibility, uncomfortable modern trains, lack of cycle space, May 2018 but with no recognition or acceptance that the DfT were, as a minimum, party to these issues and in some cases specified the outcomes.  So much for accountability.

The demise of the franchise is over-stated as the new ‘National Rail Contracts’ are merely franchises with the revenue risk stripped out.  The same issues as currently exist, including delay attribution which is detailed as an example of how contractual the railways have become, will continue across the wheel/rail divide, which has been perpetrated for no obvious reason and with no justification.

The change to an overt ‘Great British Railways’ brand covering both the English passenger railway and the Great Britain-wide network will add complexity, confusion and reduce accountability in the railways run by devolved administrations, each of which has their own strong identity.

The report is supportive of community-rail partnerships and it is hoped they will get further funding to develop their work. However, expecting them to bid on their own for ‘micro-franchises’ could be over-optimstic unless resources are made available to assist them.

Fares simplification has been on the agenda for nearly ten years with the ticket type name change taking place in 2013, but no further progress, because it is an extremely complex issue.  But apart from more flexible ticketing to reflect part-week working, which has been available with some operators, there are no new proposals.

Centralised control of timetables and fares lacks any link to local markets which are key to growing rail business, yet whilst reference is made to the five current regions (one of which is Scotland and run quite differently) there is no indication that the regions will be the key  specifiers and drivers.

It appears, as so often is the case, that the ‘single guiding mind’ translates into a highly centralised operation, much like the railway of the 1950s, 60s and 70s.  This will suit rail freight which is clearly seeing much needed recognition of its value, although that will need to be translated into action if decarbonisation of freight movement is to happen.

In the end it is has some laudable ideas with some totally unjustified complications. It is lacking in crucial detail, which given how long it has been under development, is disappointing – but perhaps not surprising.

Analysis of the Report

The Government standard process for investment is based on appraisal with a clearly prescribed process which requires the background to be explained, the problems identified, objectives set and then options developed to deliver the objectives, and thus solve the problems. This report does not follow that format.  It does suggests some problems: franchises failing, lack of bidders and competition for franchises with a move to direct awards, the May 2018 timetable problems and the changes in potential use post-Covid, in particular a big drop in commuting and a consequential loss of passenger revenue.

It specifically draws out delay attribution and the ‘Blame culture’, leading on to an observation that the system is too complex. It cites weak oversight and lack of accountability resulting in decisions that did not consider the network as a whole and failed to respond and look after passengers with a loss pf trust in the management.

Williams, (presumably pre-Covid) work found that the railways were not getting the basics right – running trains on time, making it easy to buy a ticket and making rail more accessible and inclusive.

The final problem is one of loss of income because of Covid, in part induced by the ministerial panic to frighten passengers off public transport during 2020.

From this jumble of ideas ten ‘outcomes’ are conjured:

  1. Modern passenger experience
  2. Retail revolution
  3. New way of working with the private sector
  4. Economic recovery and financially sustainable railways
  5. Greater control for local people and places
  6. Cleaner, greener railways
  7. New offer for freig
  8. Increased speed of delivery and efficient enhancements
  9. Skilled innovative workforce
  10. Simpler industry structure

Of this list it seems that some (1, 2, 4, 6, 7) are outcomes, but that the others (3, 5, 8, 9, 10) are facilitators to deliver on the outcomes and are changes to the processes underlying the operation of the rail industry. There is then a short section (Chapter 2) setting out the long term commitment to the railway, including ‘levelling up’. But then with Chapter 3 it pitches straight into the solutions – ‘Integrating the railway’ but observes that McNulty had highlighted the lack of whole-system thinking ten years ago, so the problem, at last, is defined as lack of accountability coupled with out of control costs and franchising no longer working.

However the report fails to address, and does not appear to understand, that this is an England issue, with the DfT acting in its capacity as responsible for railways in England. Railways in Scotland Wales and Merseyside are already operating and much more integrated units with very clear accountability both within the railway industry and politically.  So the new public body – Great British Railways (GBR) is basically ‘Great English Railways’.  Much of the rest of the discussion is confused because this is not made clear.

GBR is presented as a single entity which will run the whole network, shades of the Railway Executive of the 1950s. There is however one clear statement – that ‘the railways to be run as a public service with the financial discipline of a modern business’.

However the ‘single guiding mind’ and ‘leader’ implies all this is focussed onto one individual and that this is a centralised organisation. There are refences to budgets being ‘pushed down to regional and even local levels’ which does little to allay the fears of centralised control of everything including timetables and fares.

The longer term financial planning which came with privatisation is to be retained, recognising that the old public sector British Rail was severely hampered by the ‘stop-start funding’ implicit in the public sector.

Common sense has re-emerged with the retention of not only the double arrow, but also the Rail Alphabet typeface which is universally recognised as one of the most readable – which is after all what it is all about. In effect this is dismissing the ‘froth’ of private sector involvement in the railways – short term, ‘have to be different’ image.  It is tacit recognition that British Rail had got it right.

The move to one, on-going brand – including on-trains – is following London buses and ScotRail, and is to be welcomed, as long as it is done sensitively and well.

There is a strong emphasis on GBR being a new organisation, not just an expanded Network Rail, with an expectation of staff being recruited from other parts of railway and externally. The latter is of some concern as the record of external appointments has been mixed and there still seems to be a lack of understanding that, for whole system thinking, managers need whole system experience.

There is a clear remit developing with “its primary focus serving the interests of passenger, freight customers and taxpayers and growing rail usage”. That is not one, but four objectives, which are likely to be opposition with each other and is little different to the current confused and contradictory duties laid on ORR by the 1993 Railways Act.  That this will require ‘strong measures and structures’ to prevent it cutting services instead of cutting inefficiency shows it is at least recognised.  But this could have been and in theory has been the case with OR oversight of Network Rail for the whole of privatisation does not suggest great hope of success.  Moreover it implies quite intrusive oversight by UK Government. This is reinforced by statements that “ministers will take key funding decision” and have “strong levers to set direction.”

This is then countered by offering local involvement and control but implies that the same template will operate over the five Network Rail regions, of which one is Scotland, where financial responsibility lies entirely with the Scottish Government, who have, as far as the legislation permits, adopted a vertically integrated approach. It does offer the possibility on a Northern Region in the future, but only after “Northern Powerhouse Rail (NPR) transforms travel between the major cities across the Pennines” whereas the need is now to cost effectively develop and deliver NPR.  It then offers “greater control over local ticketing and services” having previously stated that fares will be set, and services planned by GBR.  Local input into fares is unlikely to resolve many of the issues with long distance fares and rebooking that are seen as key problems with the existing fares.

Devolved administrations are unlikely to be reassured by the short section, especially as the requirement to support the one GBR website and app implies a loss of local branding.  The two need to be able to co-exists as national (UK) and national (Scotland and Wales) and regional (London and MerseyRail) operations, especially as for most users of these networks it is the integrity of their local travel network that is important.  The impact on Scotland and Wales is clearly not considered in this report as these new arrangements are to be ‘explored’ with Transport Scotland and Transport for Wales.  Certainly in Scotland there is a risk that the current well integrated structure will be replaced by a confusing model based on that as yet untried model being developed for England.  There is support for the Community Rail concept and potentially, hidden in the words, for micro-franchising of local routes.

The retention of HS2 Ltd as a free-standing organisation is understandable, but the retention of East West Rail is perverse. If this is an acceptable model for a railway with will interact with three NR Regions then it is perverse not to agree to the Scottish Government’s desire to take full ownership of the Scottish Region enabling it to pursue the same broad agenda as is being applied to railways in England.

New track access rules are proposed, but there are no details, because they have not been considered. The devil is in the detail in railways, and this is a prime example.  The implication of this section is that the Train Operators will continue to hold access rights, even if timetables are decided by GBR.  None of this will encourage the development of new Open Access operation, leaving the specification of the train service to GBR.

Much is made of replacing franchising and the new Passenger Service Contracts.   Reference is made to continental regional and local services and London Overground, but the concessions proposed are on a completely different scale and in long distance operations will be direct competition with other modes which are operated commercially.

What is not stated is the benefits that private sector operation brings. They will not bring imagination to the customer offer as it will all be specified by GBR, so it will only be in the delivery, which will require a whole new monitoring organisation and a whole new set of penalty/performance figure with the commercial risk being played out in that regime.  Train operators are going to have punctuality and performance targets.  Across every boundary there will need to be rules – which will need to be legally binding, and penalty based for non-compliance.  So the much quoted delay attribution process will still need to be replicated in some form.

Revenue incentives are to be built into the new contracts, which is not the same as now, but will only be effective if the new operators are able to influence ridership and revenue, which with GBR in charge of timetables and fares along with possibly more local organisations suggests little room to make a difference.

The implications are that there could be a lot more operators with differing levels of activity, but there is no reference to staffing and resourcing – so the impact of the timetable on resourcing is not mentioned nor is the on-going problem of differing conditions for staff in different operators and the thorny issue of industrial disputes – where franchising has actually given staff greater power and has driven up wage levels and costs. Nothing in these proposals addresses this issue.

By implication the train operators will still be leasing rolling stock, which brings another interface, especially with an aging diesel fleet that will largely need replacement in the next 15 years.

The expectation is a larger number of bidders, which implies organisations with less experience of rail, which in the past has not proved to be a great success. However the possibilities for truly local operations are raised, but with no indication how the barriers to entry are to be reduced or resolved.  These include such critical issues as being licenced as a railway operator and holding a Railway Safety Case.

There are exciting offers about a retailing revolution, but all of this has been possible for some time but government has not been prepared to push forward. That GBR is responsible for ticketing and retailing does not make it clear who will be retailing tickets at stations – GBR staff of train operator staff?

It is not clear how the GBR website and app will interface with local integrated travel offers and retailing. One-team working will be important and runs with the ‘GBR’ theme as well as reducing costs.

The fares changes are all promises that have been made in the past – easy to say, fiendishly difficult to deliver, especially as there is an implicit control on fares increases. If it had been easy we would be a lot further ahead now.

The section on bikes is a quiet reversal of government policy which reduced space on the IEPs! And the observation about the dire quality of modern trains fails to note that this was a direct result of central government policy and specification.  So whilst it is good to see reversals in policy the blame has been laid off onto the railway.  Even more interesting and welcome is the reduction in ‘annoying and repetitious recorded announcements’ which have been introduced for a reason, but it is not clear how that reason now disappears.

Whilst there is a strong claim that the new train operators will bring innovation, as they are no longer taking revenue risks it is not clear how they will justify investments and there is no evidence presented where this has happened elsewhere. A side example of investment in longer platforms being wasted by the operator deciding to run more shorter trains illustrates the difficulties in the future – as presumably GBR would specify the longer trains and also the capacity required – so directly impacting on the resources that the train operator will have to provide.  It does not seem a very stable business model.

Whilst there are a lot of fine words about innovation and doing the right thing for passengers, this is not likely to happen without the right incentives as any costs will be rigorously controlled by the Train Operators and these nice ideas usually have a cost, which is not now going to be offset by any potential revenue or brand benefits.

There are more positive words about electrification, but the risk is that relying on GBR will just push more delay into the process, although the removal of payments to train operators during planned disruption will help reduce costs, but risks increasing the number of line blockages.

There are positives in the proposals with a more competitive approach to procurement, more joined up thinking on R&D where money has been spread about with little obvious policy direction and importantly a move to cross-sector training and workforce.

But there are some underlying concerns. There is no indication that there is any marketing behind this.  The railway brand will become GBR.  GBR control much of the product (timetable), but not the other part – the trains – unless they specify them in some detail in the new contracts, the fares and some, unclear, aspects of retailing but nothing is said of marketing and there is no clue to how the long distance routes are going to be specified and managed.

But GBR will only be the brand in England, with the dominant brands in the devolved railways remaining, which gives a clue to the wider politics driving the report. This is at best a link back to the early days of BR sectorisation where the businesses set the specification and did the wider marketing, but the regions operated the services. That was quickly superseded by the full sectorisation, despite all parties being part of British Rail who would manage to deliver the corporate good, as specified by government.

So how do the private sector operators fit in, without creating a new industry of contracts, monitoring and compliance? It fails to deliver on proper vertical integration and leaves a lot of the worst aspects of the rail/wheel split in place, but for no benefit at all.

In the end it is full of fine words, but lacking in crucial detail, which given how long it has been under development, is surprising.

 

 The Rail Reform Group                                24 May 2021

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