Opinion
Michael Roberts: ATOC Platform
20/20 vision T
his is an historic year for the rail industry, marking 20 years since the passing of the Railways Act in 1993 that created a privatised railway and paved the way for private train companies to start operating services three years later. Rail is a forward-looking
industry. But it is fitting to start the year by looking back at what has been achieved in those 20 years to get us to where we are today: a Britain with a booming railway, where more journeys are being made than at any time since the 1920s. Passengers have seen services improve under a programme of investment that has helped to turn round years of decline and under- funding. Train companies now run 4,000 more services a day than they did fifteen years ago, a 20 per cent increase in capacity on a network that is half the size of 60 years ago. We expect to pass the 1.5bn journeys per year mark soon, which shows passengers are continuing to vote with their feet and choosing rail for both work and leisure. Passenger satisfaction and punctuality levels hover around record highs. Rail is the safest form of transport in this country, a testimony to the hard work of tens of thousands of railway staff and significant investment by the industry in technology, equipment, training and learning.
This is only the start. We have an exciting future ahead, filled with growth and innovation. Our ambition is to do more for passengers, more efficiently, so that the railway plays an even greater role in boosting sustainable economic growth and connecting friends, families and communities. This is set out in the Industry Strategic Business Plan, which was launched in January and is the response to the Government’s High Level Output Specification for Control Period 5 (CP5). The plan focuses very much on the period to 2019, but with an eye on where we want to be in the next 20 years. By 2035, we aim to serve twice as many passengers as today, at world-class levels of reliability, and to secure a financially sustainable railway delivered through both efficiency and revenue generation.
A key test for us is the ‘more efficiently’ part of that vision. As an
industry, we are already on a clear trajectory of declining unit costs, helped by a franchising process which has attracted transport companies with strong track records in cost efficiency and a long-term commitment to rail. An ORR report in November last year on the costs and revenues of train operating companies noted that the cost per passenger carried has fallen 12 per cent since the turn of the century. The trick now is to build on that to the end of this decade and beyond. We are doing this whilst becoming much less reliant on government support. The level of subsidy to the industry as a whole has reduced from over £6 billion in 2006/07 to less than £4 billion in 2011/12. The ORR acknowledges in the same report that the net subsidy being paid to train operating companies by government is relatively close to zero. That is a huge achievement.
But the industry is the first to recognise that it needs to deliver a better deal for taxpayers and passengers. Network Rail has clear plans for how it will continue its efficiency drive, with over £1.6bn in savings identified in the Industry Strategic Business Plan. Opportunities to exploit innovation, best practice and new ways of working are critical here. Better-aligned objectives and incentives between train operating companies and Network Rail, together with a more collaborative approach, are also important. Train companies also have much to offer in further improving value
for money. Opportunities exist in areas ranging from retail to rolling stock. The scope for unlocking this potential, however, depends on having the
The first 20 years of private passenger rail and the next 20
right franchising and regulatory framework – and it remains to be seen how far the government is prepared to do that. The other key test for our industry is to deliver financial sustainability by continuing to grow our market. We have done that very successfully in the last twenty years, but we will have to run hard in the future as customers’ expectations change and knowing that competing modes of transport will not stand still. There are four ways we can do this. The most obvious is to make sure we keep on offering affordable travel by rail. Using the planned improvement in cost efficiency to rethink the need for annual, above- inflation fare rises is an obvious route to this – and of course depends on government making the right decision. Operators can also continue playing their part here by offering attractive prices that reflect the different combinations of comfort, speed and flexibility which passengers want. By way of example, you only have to think about our success in offering Advance tickets: almost a million of these are now sold every week, more than twice the numbers sold five years ago. The second way is by making tickets easier to buy. We want to make things as straightforward as possible for passengers, while still providing them with the degree of choice they say they want. That is why we are working to cut out jargon and make ticket vending machines more user-friendly. Innovation in ticketing, particularly in the form of smart ticketing, will also help by moving the industry more in line with how people live their lives today.
Third, we can never rest in improving the overall customer experience. The industry plans for CP5 will substantially increase the number of peak time seats serving our major cities, as well as maintaining high levels of punctuality and reducing journey times on some routes. Two specific funding streams are being set aside to improve facilities at stations, continuing improvements over recent years in stations large and small across the network. We are also committed to improving the quality of information which our customers get before and during their journey. The industry is rolling out an £8 million upgrade to passenger information at stations, so that in two years’ time more than 2,000 stations will have the latest ‘live’ real time arrival and departure information on screens. Fourth, the environment may have seemed less of a priority in recent years against the background of economic recession, but we believe that rail’s green credentials will be an increasingly important selling point. That is why the industry has set itself the ambition of a 25 per cent reduction in carbon emissions per passenger kilometre by 2019 and remains determined to meet or exceed this. Plans to electrify larger parts of the network, apart from delivering improvements in operations and running costs, are a key ingredient in this green agenda.
In looking optimistically to the next 20 years, my final observation is that our success in living up to the promise of rail ultimately depends on the quality of relationships within the industry. Partnership between infrastructure manager and train operator, between the public and private sectors, is the way we overcome the inherent complexity of running a railway – often successfully, but too often imperfectly. We need to make that partnership work better, for example, through clear decisions on the future of franchising, and on the future role of regulation in rail. These will be the true tests of whether the coming year has really laid the foundations for a successful industry over the next 20 years. Michael Roberts is chief executive of ATOC (Association of Train Operating Companies)
FEBRUARY 2013 PAGE 17
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