The franchising fiasco, poor punctuality in places and a number of passenger satisfaction issues should be causing serious headaches.

First, the ramifications of the West Coast franchise debacle extend far beyond the most important long-distance line in the country. While Transport Secretary Patrick McLoughlin should be commended for acting swiftly and transparently to clear up the mess and put in place a better franchising process, the episode has ushered in a period of considerable uncertainty.

Second, punctuality remains a serious challenge. Throughout most of the last decade, punctuality improved steadily, as the speed restrictions put in place after the Hatfield crash were lifted and major upgrade works were completed. But punctuality now seems to have reached a plateau.

According to Network Rail, only 78 per cent of trains were ‘on time’ in 2001. By 2008, punctuality had risen to 91 per cent, but over the last four years, there has been little improvement, with the proportion of trains on time remaining at around 91 per cent. And punctuality remains below 90 per cent for a number of operators – Virgin, East Coast, London Midland, Southern and Crosscountry.

But a commuter train can arrive 4 minutes 59 seconds late and a long-distance train 9 minutes 59 seconds late and still be counted as on time. By contrast, the proportion of trains arriving ‘right time’ – within a minute of schedule – is only 69 per cent, with no improvement since 2009. Over the last year, just 48 per cent of Crosscountry trains, 54 per cent of Virgin services, 57 per cent of Southern services, 60 per cent of First Scotrail trains and 65 per cent of London Midland services were right time.

Third, overall passenger satisfaction is high and improving, but certain areas stand out as ripe for improvement. According to the latest National Passenger Survey, only 39 per cent are happy with toilet facilities on trains and just 44 per cent are satisfied with how delays are dealt with. And value for money is given a big thumbs down, with less than half (47 per cent) of passengers satisfied, a figure which falls to barely over a third (34 per cent) of commuters.

These findings chime with our own recent survey of IoD members, which found that only 15 per cent of directors think that inter-city rail fares offer good value for money, with just 11 per cent thinking the same of commuter rail fares.

After the West Coast fiasco, the big challenge for 2013 will be restoring confidence. Investors must feel comfortable bidding for franchises and commuters and businesses need to believe that the railways can be relied upon. Rising ticket prices are only acceptable if they are being used to fund genuine improvements.

There are four key elements to restoring confidence in the ability of Britain’s railways to provide good services for a growing number of passengers who work more flexibly.

First, a lot can be done to improve the quality of services that passengers receive. Providing affordable and reliable wi-fi on board trains, delivering more accurate and timely information when services are delayed and increasing the number of cycle storage facilities at stations are low-cost measures that would go a long way towards making daily journeys more pleasant and less stressful. Even something as simple as fixing broken toilet doors would make a major difference.

Second, Britain’s rail system is generally short of capacity for only around four hours each day on the commuter trains serving major cities. A key aim of policy ought to be to spread demand outside of the morning and evening rush.

Nearly 80 per cent of IoD members regularly offer flexible working opportunities to their employees, allowing them to vary their hours or work from home, but rail ticketing systems still act as a significant barrier to modern working lives. Outside of the London travelcard zones, the only choice is between buying a full peak-time season ticket and queuing up at a ticket office or ticket machine each time.

Commuters who work from home one day a week are still better off buying a season ticket, but those who want to work from home two days a week would be forced to stand in line most days. Allowing tickets to be paid for with an Oyster card, a smart phone or a contactless credit or debit card, and offering part-time or off-peak season tickets, would help businesses to manage their staff in more flexible ways, easing the pressure on peak-time trains.

Third, improvements to existing services are not sufficient. Getting the big capital investments right will be a major challenge. Although modern ticketing systems should be employed to support flexible working, realistically they are only likely to reduce the growth of peak-time travel, not reverse it. According to Network Rail’s Route Utilisation Strategy for London and the South East, demand in the busiest rush hour is likely to rise by over a third over the next 20 years. The Thameslink upgrade will see considerable improvements to track and signalling to allow higher service frequencies at peak times, but more will be needed on other lines, including a major programme of rolling stock purchases.

Outside of London, the Northern Hub scheme will greatly improve rail travel between Liverpool, Manchester, Leeds and Sheffield, and the electrification of the Great Western and Midland main lines are welcome enhancements. But more can be done to increase train frequencies, improve reliability and reduce journey times on the West Coast and East Coast main lines. Removing bottlenecks and introducing in-cab signalling to allow trains to run at 140mph could increase capacity and allow journey times from London to Manchester to fall to around 1 hour 45 minutes and to Glasgow to 3 hours 40 minutes – half the journey time savings of HS2 at a fraction of the cost.

Fourth, the government risks making the mistake of proceeding with the biggest-ever rail investment in the UK before a decision on the status of Britain’s main hub airport is reached. If the Davies Commission recommends that Heathrow should be maintained or expanded, the southern section of HS2 should be re-routed to run through the airport, and a station and airport terminal on the Great Western Main Line should be built. This would bring almost every major city in England and Wales within two hours by direct train, transforming Heathrow’s surface connectivity.

At the same time, the Channel Tunnel is still half-empty, and plans to allow Deutsche Bahn to run direct services from St Pancras to Amsterdam and Frankfurt need to be carried out as swiftly as possible.

Paradoxically for an industry that travels at up to 186 mph – and potentially up to 250 mph – rail is a slow-moving beast. It took six years for Oyster ticketing to be extended to all rail stations within the London travelcard zones, and the amount of time the simple step of installing Oyster readers in commuter stations outside of London will take is anyone’s guess.

But in a time of scarce resources and increasing disquiet about fare rises, government and industry will have no choice but to improve the way they work together.

Corin Taylor is a senior economic adviser at the Institute of Directors