Rail Professional interview: Michael Roberts
Michael Roberts, CEO of Atoc, tells Katie Silvester why the association has started to become more proactive in its stance, demanding changes to Network Rail’s structure and trying to influence government rolling stock policy
When I met Michael Roberts in mid-June, the Association of Train Operating Companies had been fighting off attacks on ticketing on two fronts. Passenger Focus had launched a report a month earlier drawing attention to the harsh treatment of some passengers who had innocently misunderstood complex ticketing rules and found themselves either with a fine or a court summons. Then at the start of June, the ORR called for operators to provide better information on ticket types, as its research revealed that 50 per cent of passengers find the fares system too complicated to understand.
‘We believe that quite a lot has been done in recent years to improve passenger information, but we know we can do better,’ Roberts admits. ‘There’s a lot that Atoc and others have already committed to do to improve the information available around tickets. The research obviously identifies an area that customers are concerned about, but the report is as much about saying what we’re already doing to improve information around ticketing as anything. Ticketing is one area where we can make a difference to the railway. We’ve published our plans for the next few years and one of the areas we want to improve is retailing.’
Providing better passenger information is one thing, but some of the case studies that Passenger Focus have unearthed (see page 7 for details) make Tocs look bad and reveal very poor customer service practices on some parts of the railway.
‘If you go back a bit, there’s clearly an important job to do in making sure people have a ticket to travel. Fare dodging is something that even other passengers don’t like. Inevitably when there are billions of journeys made on the railway every year, there will be times when the rules aren’t implemented in the way that they should be. We’re putting together a code of practice which, hopefully, will bring some consistency. And again, I would say that this is an industry that listens to concerns that are raised.’
Roberts has been at Atoc for four years now, having arrived from the CBI. He appears to be very at home in his role now, referring to the associations’ members as ‘Tocland’. While his first couple of years in post were fairly unremarkable, Atoc has slowly started to become more proactive, challenging Network Rail’s structure and attempting to lead on policy such as rolling stock procurement – traditionally the DfT’s domain.
Atoc has put together a wish list of trains that it thinks would be needed by 2019 to keep the network running and allow for expected growth. Its paper, Rolling Stock Requirements 2014-2019, was released in May with the intention of informing the DfT’s Statement of Funds Available for the next control period (CP5).
The document, which follows a discussion paper on rolling stock published by Atoc in December 2011, says the total fleet could grow by 11 to 18 per cent above the total fleet size expected by the end of CP4.
So how has the rolling stock paper been received? ‘We liaised with Network Rail and the DfT, so we knew there was pretty widespread interest in it before we published it. The department was keen that we put it in the public domain. That strategy – essentially looking at CP5 – is part of a wider strategy that is going to look at the even longer term over 20 and 30 years, trying to establish an industry-wide overview to consider the quantum of stock we’re going to need, looking at things such as electrification.’
Roberts believes that the current government will naturally move towards a system of rolling stock procurement that is less prescriptive, giving Tocs a greater say. Most of the rolling stock decisions the coalition government has made so far have had their roots in arrangements that began under Labour. Like many, Roberts is critical of the Intercity Express programme – which will see Hitachi building trains that can run on electricity or diesel, replacing the current High Speed Trains – that seems to be stalling again at the moment. He thinks that the train order did not take account of subsequent electrification plans.
‘It’s an example of where the government hasn’t been as effective as it would like to think it could be and the market could have been more effective in delivering rolling stock solutions. The thrust in the future ought to be for the government to work much more closely with the industry on rolling stock procurement.’
Atoc was also instrumental in bringing about Network Rail’s devolution after it put forward proposals in the autumn of 2010 for the infrastructure owner to be split into separate regional businesses. So is Roberts pleased with the results?
‘It’s work in progress. We’ve got the six alliances, with the deep alliance starting in Wessex with SWT. What has been clear is a sense of commitment by Tocs and Network Rail to have a go at making this work. The key to success is partly the formal arrangements – who’s responsible for what – but it’s as much about the chemistry of the people. It’s early days yet. We need to find the right sort of incentivising framework for both parties’
Some commentators were concerned that costs may rise with the break up of Network Rail, flying in the face of all the work to cut costs in the rail industry. Indeed, Wessex’s managing director Richard O’Brien told Rail Professional in June 2011 that his regional staff numbers had doubled due to devolution. Can Roberts give any examples of where costs are starting to fall?
‘A couple of years ago there was a debate about giving Tocs a greater stake in the management of stations. At the time, some research was done that looked at a number of case studies where there was evidence that on some small or medium-scale projects operators were very effective at securing quotes locally that were very competitive compared to Network Rail’s quotes.
‘This wasn’t universally the case, but there was enough evidence that Tocs were quite good at this. What we’re trying to encourage is a new competitive dynamic in the industry, where the accepted way of doing things can be challenged. Looking at asset management in the round, this is one of the things the RDG is looking at. One of the things to come out of McNulty is that this is a potential area of cost cutting. You can challenge the scope of the project sometimes, it’s not just about getting the lowest quote.’
Part of Atoc’s 2010 call for Network Rail to be broken up was a pitch for vertical integration on some areas of the network. But the association has not been so vocal about operators taking over some of Network Rail’s functions since then. It’s always been a sensitive subject for Atoc, since its members are divided on the subject. Some owning groups, like Virgin, have been quite outspoken about wanting to take control of the tracks. Others, like Go-Ahead, would prefer to just stick with trains.
‘I think we’ve always been quite clear that vertical integration might be something that could work on certain parts of the network, but it wasn’t something you could apply across the whole network. Some of the operating community feel more strongly about it than others, but for all of the community there are some areas where you wouldn’t start a vertical integration project. You wouldn’t start it on the West Coast where there are just so many players, both amongst Tocland and the Focs as well. We were quite heartened that there was an appetite on the part of the government to pilot it in one or two cases and we would like to see that. But a uniform approach probably wouldn’t work everywhere.’
The DfT signalled its interest in a vertical integration pilot in the March command paper, which was the government’s response to the McNulty report on value for money in the railways. Was Atoc happy with the command paper?
‘On the day it came out, I think Bob Crow said: “This could have been written by the train operators.” It’s not often Bob admits he’s been outflanked,’ laughs Roberts. ‘But, being serious, it has all of the right messages in it, our community feels. We have reservations about the potentially expanded role for the ORR. On franchise reform, we feel there is quite a long way to go to translate the principle into practice. We now have the ITT for the West Coast, which starts to move in the right direction on flexibility, but could go a bit further.
‘And what we have tried to emphasise to the government is that, over the next three years or so, approximately 70 per cent of the passenger rail market is going to be put to competition, so this is a generational opportunity to get this right.’
The ‘potentially expanded role for the ORR’, that Roberts refers to, is a bid by the ORR to regulate Tocs, as well as Network Rail. Roberts has been quite vocal in the rail press about his objections to these proposals, while Richard Price, the head of ORR, has been equally keen to speak to the media in defence of them.
‘The main concern is “double jeopardy”,’ says Roberts. ‘At the moment, in essence, we have a situation where there is a contract between the DfT and the operator to deliver services for a payment line, whether it be a subsidy or a premium.
‘And if the government takes a different view over time about what it wants, there is a process by which the two parties discuss it – if there is a financial implication, the government is asked if it wants to pay for that. The proposal being consulted on effectively brings another party into that contractual arrangement. The risk is that, possibly for quite legitimate reasons, the ORR may say that “as the regulator, we now want the operator to do something that wasn’t in the contractual agreement”. But if there is a financial implication, that isn’t the ORR’s concern, it’s the concern of the operator or the DfT. We think it could bring more costs into the industry.’
One of the busiest times of the year for Atoc, certainly for its press office, is the autumn announcement of the January fare rises, when the mainstream media demand an explanation for the hike in ticket prices. It happens again on the first working day of the year when the new fares kick in. In past years, Atoc has been criticised for failing to get the point across that fares are largely controlled by the government.
‘In the last few years we’ve been more explicit in trying to communicate the point that what happens in January on fares is the direct result of government policy on adjusting the balance between what is paid by the taxpayer and the farepayer. And that the fare rises in January are the result of that policy, either directly or indirectly, because of the franchise agreement an operator has with the DfT, where they have agreed a certain payment line. I think that has put the spotlight on the government and that was probably part of what made the government think, in the run up to January, whether it was still happy to raise fares by RPI+3, which it decided it wasn’t.’
Looking to the future, Atoc has produced a paper on the areas it will be looking at over the next three years. ‘The three areas where we think we can make a difference in helping our members are in generating policy and technical solutions; improving the retail environment; and providing information about ticketing and fares so people can have more informed choices. We are absolutely committed to this, not just to helping members, but to helping their customers.’