What’s in the sandwich?

What’s in the sandwich?

How can the passenger experience really be brought to the forefront of the industry, ask Darren Fodey and Suzanne Tarplee…

Politicians are known – and are often mocked – for their PR-friendly slogans. Anyone for ‘strong and stable leadership’ or ‘for the many not the few’? How about ‘change Britain’s future’? These are all slogans with which ‘the many’ are unlikely to disagree: soundbites which look good on paper but which can have far less substance than the infamous Milliband bacon sandwich. Is the railway industry equally guilty of using slogans without substance, the metaphorical equivalent of the British Rail sandwich? For a number of years, politicians and bodies such as RDG, the ORR and train operators have spoken about ‘putting passengers at the heart’ of the railway industry. Clearly this does not mean giving passengers the opportunity to drive trains or equipping them with shovels to clear the tracks following snow. But how can the passenger experience really be brought to the forefront of the industry? In this piece, we consider two potential ways of doing so: devolution and alliancing.

Devolution models

Devolution enables decisions to be taken closer to those who will be affected by them. Recent government policy suggests that there is a move towards devolution, allowing local priorities to be given more weight. This gives the opportunity for passengers to be placed at the heart of the decision making process.

We currently see three devolution models (in decreasing order of the level of power devolved):

• ‘Full’ devolution: the full delegation of powers and responsibilities from central government to the devolved body. As a result, the devolved body has substantially the same role as central government. In order to do this, amendments are needed to legislation (such as the Railways Act 1993). An example of this model is Transport Scotland

• ‘Supervised’ devolution: the devolved entity largely has the same powers and responsibilities as central government but subject to the overall supervision of central government in certain areas (for example, budgets and consistency with overall railway policy). Again, legislation is typically needed to achieve this form of devolution. An example of this model is Transport for London

• ‘Interested party’ devolution: this involves certain local authorities being able to input into and manage matters affecting the railway – perhaps by way of a partnership agreement with central government. However, the powers and responsibilities remain with central government and are not devolved. This type of devolution does not typically require legislation to be passed. An example of this model is Rail North.

What works?

In principle, all three models can work. The ScotRail and Caledonian Sleeper competitions undertaken by Transport Scotland did not follow the English franchising model to the letter. They were clearly tailored to the specific Scottish needs identified by Transport Scotland. TfL has been highly praised for its London Overground and TfL Rail services. Rail North is undertaking day-to-day management of rail services in the north jointly with the Department for Transport. In all three cases, decisions are being taken closer to those who use the services.

There is not a ‘one size fits all’ approach – various factors will influence the decision:

  • what level of democratic accountability does the devolved body have?
  • what geographical area is covered by the devolved body and railway services?
  • does the devolved body have the expertise to exercise the powers and responsibilities of central government?
  • what timescales are involved – is there enough time to pass legislation?

Currently, Wales is expected to be given ‘full devolution’ (except for the rail infrastructure) – which is the same as the Scottish model. Elsewhere, the final factor potentially explains why we are generally seeing the ‘interested party’ model as the current approach: if similar outcomes can be achieved through contracts without needing to pass legislation, why not do so? Of course, this then limits what the devolved body can actually do.

The needs of one geographical area within the scope of the devolved body may not match the needs of another. This is particularly relevant where there are a number of interested local bodies, elected by different electorates. Where the geographical area covered by the devolved body is more aligned with the electorate, there is arguably greater justification for more powers to be devolved. We see this in London, where there has been recent controversy in relation to the decision not to devolve certain Southeastern services to the Mayor of London. Potentially, TfL is a prime candidate for moving to the ‘full devolution’ model. It has proven to date that it is capable when it comes to rail and places passenger benefits at the heart of what it does.

Alliancing models

Can alliancing also place passengers at the heart of the railway? The secretary of state for transport certainly thinks so, given his proposed focus on joint working between franchisees and Network Rail. Again, there are three existing models:

‘Deep’ alliance: this involves joint management, with a substantial proportion of the roles and responsibilities of both organisations being included within the alliance, the sharing of responsibilities and cost/benefit incentive arrangements. An example of this is the original South West Trains – Network Rail alliance

• ‘Medium’ alliance: this involves joint management at the top of the organisation, with links into the respective businesses, which remain more at arm’s length than in the ‘deep’ model. An example of this is the ScotRail – Network Rail alliance

• ‘Light’ alliance: this involves the creation of a joint discussion forum, with the parties working together on specific projects. This is the model currently used most commonly between franchisees and Network Rail.

What works?

Provided they are well-planned and the risks and rewards are carefully thought through in advance, any of the options could drive benefits for the passenger, drawing on operators’ experience of what the passenger wants. Existing alliances (including the abandoned ‘deep’ alliance) have driven performance and other tangible benefits for the passenger.

For any alliance to be successful, behavioural change needs to be driven and attitudes need to be aligned. Ultimately, it will depend on the appetite for risk and potential reward which will lead the parties to a particular model. With Network Rail’s highly publicised cost overruns, it seems unlikely in the short-term that the ‘deep’ model will be preferred if cost/benefit sharing forms part of it. Grayling’s announcement indicates a preference for the ‘medium’ alliance – but there remains scope for the ‘light’ alliance for specific projects.

This means there are a number of possibilities for:

  • First/MTR and Network Rail in the new south west franchise
  • alignment between devolved bodies and the potential break-up of Network Rail into a more route-based structure; and
  • franchise bidders going forward.

Can devolution and alliancing put passengers ‘at the heart’ of the industry?

If carefully planned and well-executed, devolution and alliancing can both deliver tangible benefits for the passenger. If passengers are not placed at the heart of the industry, they are at least placed at the forefront of the mind when decisions are made. Devolution and alliancing can both provide some substance to the slogan: adding a little more filling to that British Rail sandwich.

Darren Fodey is a senior associate and Suzanne Tarplee is a partner in the Rail team at law firm Stephenson Harwood LLP

2017-09-15T11:51:10+00:00May 25th, 2017|June 2017|