The Williams Rail Review is a timely opportunity for reform at a critical juncture for the UK’s railways, Dan Large of CBI explains

It would be rather an understatement to say that the rail industry has faced considerable challenges in recent times. With last year’s timetabling issues and trains routinely failing to turn up on time, passengers can easily be forgiven for presuming the system has failed. However, it is important to pause for thought and look at the evidence.

Since privatisation, the UK rail industry has considerably improved its performance across a number of key indicators. The UK invests over €1 billion (£850 million) more than France, and over €3 billion (£2.6 billion) more than Germany, in its railway infrastructure. In addition, the UK’s spending on rail projects has increased by an estimated 255 per cent since privatisation, including an increase of 63.5 per cent in private sector investment.

This increased investment has resulted in real benefits. Compared to 1996/97, there are 2,500 more carriages on the railway: an increase of 25 per cent. It has enabled train companies to run more services on the track, increasing by over a quarter (28 per cent) since 1997/98. And planned investment will enable rail companies to commit to running 7,000 new carriages by 2021.

The UK’s highly-utilised network also boasts a stellar safety record, second only to Ireland, which has a much lower rail usage. This is despite passenger numbers more than doubling since 1997/98.

The Government benefits directly from the current model, being the only country in Europe that receives a net payment from private railway companies, rather than paying a net subsidy to them. For example, in 1997/98, the UK rail industry operated at an annual loss of £2 billion. Today, the industry provides the Government with a net payment of approximately £200 million.

While these improvements should not be underplayed, we also need to make an honest assessment of where the current model is underperforming. Fragmentation and lack of accountability have hit the network and the passenger experience.

The most recent example is the timetable changes of May 2018. In its inquiry into timetable disruption, the Office of Rail and Road found that there were ‘systemic weaknesses in the planning and delivery of major network changes’ with ‘a gap in accountability for major network changes, which led to ‘no one taking control’’.

Whilst positive steps have been taken to resolve these issues, the Williams Review must find a long-term solution to this fragmentation, and it’s good to see the Review has the joint operation of track and train in its remit. With record levels of investment in the pipeline, it is important that improvements to the network result in minimal disruption whilst delivering maximum benefit to both passengers and freight.

Clearer roles and accountability would benefit not only passengers, but providers too. In the 2017 CBI/AECOM Infrastructure Survey, rail providers were the least satisfied with their delivery and policy environment, with, only 22 per cent satisfied – and 61 per cent dissatisfied or very dissatisfied. Given the challenges in delivering the CP5 rail investment programme, providers will be looking for continuing signs that lessons have been learned in CP6, and a demonstrable effect of Network Rail’s delivery and procurement reforms.

One political intervention that may appear an easy-to-grasp comfort blanket – but would prove hugely damaging for consumers and the economy – would be to bring the industry back under state ownership.

The 1970s was a decade notorious for chronic under-investment in the railways, poor industrial relations, and counterproductive Government interference.

We don’t need to look far from home to see the major problem with a nationalised service, which is that those industries are forced to compete for a limited pot of funding annually, invariably leading to a deteriorating service and poor outcomes.

France’s railway, SNCF, is a state-run entity. In recent years, the network has encountered financial difficulties, accruing annual debts of £44 – 48 billion. These debts are estimated to be growing at a rate of approximately €3 billion (£2.6 billion) annually. French Prime Minister, Edouard Philippe, recently stated France’s rail situation was alarming and untenable: ‘Whether or not they take the train, the French are paying more and more for a public service that works less and less well.’

In October 2017, former Air France Chief Executive, Jean-Cyril Spinetta, was commissioned to assess the future of the network. Published in February 2018, the report concluded that France’s network is ‘unsatisfactory’, its operating costs were rising ‘ceaselessly’, and its funding model was ‘seriously and fundamentally unbalanced’. It recommended that French passenger services should be opened to competition, with a view to having the first new operating companies in service by 2021.

And it’s not just France. Deutsche Bahn has shown increasing signs of strain following years of underinvestment in its infrastructure. This has prompted passenger groups in Germany to suggest there is not enough money available for the investment the network needs, leading to investment decisions being delayed.

So, the Williams Review is a golden opportunity to create a sustainable railway industry. Looking to the white paper this Autumn, business wants to see ambitious recommendations, to ensure the UK rail industry works in the best interests of passenger and freight customers and helps deliver prosperity for the whole of the UK.

Consumers will be the real winners if we have a debate based on evidence, not ideology.

 

Dan Large is CBI Head of Infrastructure