Q. You’re relatively new in your position, are you excited about the promotion?
Yes. I enjoy working in the rail industry. I’ve spent the last 16 months virtually full-on doing the periodic review for 2014-19 and it’s been very tense, not just for me but for people across the industry, but I’ve really enjoyed it. I enjoyed getting to the point where we’d taken our decisions and explained them and published it all. But now I’m moving into new areas.
Q. Such as…?
It’s all very well having made those decisions but now we’ve got to implement them, so I’ll be working on monitoring NR’s financial performance over the coming period. I’ll also be working on access policy [to the rail network] and dealing with our work on consumers.
Q. ORR was critical of NR’s underspending to the tune of £1.2 billion late last year. Is that pattern likely to continue in the new control period?
If you look at NR’s total spend for CP5, it hasn’t underspent in total, but it has in some areas, so it’s a complicated picture, but most of the issue reflects the way it started the last control period. In 2009-10 it said ‘We don’t know how we’re going to achieve these efficiency targets’ and we saw a big decline in things like volume of renewals spend. Over time, the company built it up but it but was still behind at the start of this year in terms of maintenance renewals. Looking forward, that’s the sort of planning we don’t want to see happening in CP5 because it’s very difficult for the supply chain, for train operators and for everybody, because if you have a dearth of work then try to ramp it up it causes problems. So we’d like to see a more even spread of work, and that’s one of the reasons why in the periodic review we said we really want NR to say, upfront, what volumes of work need to be done in each area, and then basically to work to that plan. We’re not saying it can’t change that plan if there are good reasons, but sticking to it gives everybody more certainty, and I think NR would agree that will help avoid some of the problems we had previously. Having said that, NR is getting a lot better in this area and is more prepared in terms of how it’s going to achieve efficiency savings; it doesn’t need the whole period to think about that as it’s done a lot of the groundwork already. So in that sense its far better prepared and that’s good news for all of us.
Q. The RMT blamed NR’s underspending on maintenance and renewals to the cuts made by yourselves, and said ‘ORR has got a nerve complaining about the impact of cuts on the one hand and then doling out another bunch with the other’. What do you say to that?
Safety is integral to everything we do. I still hear people saying it’s not right to have both areas within one organisation, but having done one periodic review five years ago when we were just an economic regulator and one where we were both, I have no doubt whatsoever that it’s better to cover both. And maintenance is a classic example of that. We had a really big internal debate about what efficiencies could be achieved and if they could be achieved safely, and if you look at what NR proposed in terms of maintenance, we decided to make virtually no changes because we didn’t think the company could safely achieve any greater efficiencies. I believe we’ve really taken that into account and I feel satisfied with that.
Q. You’ve demanded a further £1.7 billion of cuts from Network Rail from 2014, saying the new period represents a ‘fresh start’. You say ‘stretching targets and new incentives will get the industry working closer together in the communities they serve’. Is that realistic?
In a number of areas we didn’t think NR had justified the money it had asked for – around spend on IT, buildings, R&D, where we thought it hadn’t made a well-argued and wellevidenced case. If you look at what happened between the draft and final determination, NR came back and said, ‘Hang on a minute, you’ve got that wrong.’ And in some areas we put a bit more money back in the system because we did listen and we addressed the situation in a robust and pragmatic manner. In other areas we felt we couldn’t take a final view on how much money NR should spend, especially around enhancements, because a lot of the schemes aren’t very welldeveloped, so we’ve said we will give it more time to make a final decision on costs in those areas. I think this approach gives the whole industry some space and time to work together to achieve an efficient outcome. Obviously we won’t know for another year how well that has worked but I personally think it was the right thing to do.
Q. What does Network Rail get right and what does it get wrong?
If you look at what’s happened over the last control period, it’s very easy sometimes to forget the success stories because they don’t attract as much attention, so I’m pleased you put the question like that. I’ve got a chart showing around £9-10 billion of enhancement projects and we’ve got them labelled by green, amber and red. Green means ‘Delivered on time’ and you can just see a mass of green. Amber is ‘Ok but open to doubt’ and there are a few ambers. And there is one red. Now that’s a real success story. To deliver that scale of a programme in a very complex operating environment is a real achievement. On the other hand, as we’ve said publicly, NR is going to fail to deliver the targets we set for long distance train performance and we’ve already said we will impose a penalty for that. You can argue about why it hasn’t been delivered but that’s an area where in terms of the outputs we set the company, it wasn’t delivered, so there have been some real successes and some areas where NR hasn’t met the assumptions we made.
Q. Transparency has been a big area for NR for quite a while – how does it help ORR?
You can look at Network Rail’s delivery plan and see for each asset, volumes of work by area, and that’s good for us. But we’ve already had some of the Toc’s come back to us and say ‘Hang on a minute – why has that gone down?’ or ‘Why has that gone up?’ So it’s not just about us, it’s about the operators seeing all the data and asking questions. Some of them really do get stuck in. I’ve been in meetings where they say: ‘That’s interesting John, you know you told us this, but when I look at this here, why has it gone down then?’
Q. They don’t like being blamed do they…
No. They want NR to do their job and they want to do their job and cooperate together, which is entirely reasonable. There’s a lot of information in the public domain now and NR has been very happy to put all this stuff out there, but it’s now their jobs to make this work, it’s about moving on to the actual delivery of it, and that’s where we come in.
Q. One of your responsibilities is to make sure customers are better served. What did you think of the recent Which? report on passenger satisfaction?
The results were pretty unimpressive. It’s interesting to see the differences between the Which? report and Passenger Focus’s National Rail Passenger survey, and it does seem to come down to how soon after their journey you ask people and what you ask them about. But what we’re interested in, like the rest of our industry, is seeing satisfied customers – passenger and freight. In coming up with a robust final determination we can obviously set the scene for that, but we are also responsible for enforcing consumer law, and we recently produced a report on compensation and refunds. It was interesting to see how that was reported because what we wanted to show was that the industry is already working well to improve in that area, but actually passengers’ awareness of their rights is quite low. So they’ve got some helpful ideas and we want the industry to take the lead, and it has told us it would like time for its ideas to work, which is fine, and we will only come in again if we see they haven’t worked. We want the industry to get credit for things it has done well but obviously if things aren’t going so well then someone should tackle it.
Q. A couple of years’ ago, Justine Greening, the then Transport Secretary, talked about boosting the powers of the ORR in allowing it to perhaps directly police rail franchises, which went down like a lead balloon with Michael Roberts. Do you think whole industry efficiency can only be achieved when it is managed by one body?
We carried out a joint consultation with the Department for Transport about a possible expansion to ORR’s role, which concluded that wasn’t going to happen. But more importantly, that got me wondering if we were working as well as we could do with bodies like the DfT. We monitor Network Rail’s performance, the DfT looks at what Toc’s are doing and it struck me that a more fruitful approach would be to take a joint view with the DfT about how overall performance was working.
Q. How do you see yourself working with industry bodies like the RDG?
Now they’ve merged with ATOC I think they have the resources, and we’re about to have a discussion on transparency, which is an area of mutual interest, so we’re quite keen to see where RDG’s planning to go on that. But on the other hand, it’s an industry group and it has to have its own space, so we don’t want to be inviting ourselves over, but if it identifies an area we can help in or it wants to know if we would find something useful, then we would welcome that good engagement.
Q. What are you doing to ensure the long-term growth of freight?
One crucial thing around freight growth in the future – and I’m sure the freight industry would agree – is having some stability around the overall framework of charges and of plans to increase capacity. And I think now we’ve concluded the final determination, people can be clear about the charges as well as the planned enhancements, because there’s quite a big enhancement package in there that will benefit freight. So in that sense that’s a platform for the freight industry to build on, and we do have fairly regular on-going discussions with it about other areas where we can work together and potentially do things better – for example on the future impact of HS2. But in other areas it’s now about us monitoring NR to deliver, because within that package there is a lot of money for projects that benefit freight. The critical thing now for the projects is that we have to get the scope right; to get the costs right, and they’ve got to be delivered. So that’s something very tangible and it’s our responsibility to ensure it happens, and with that extra capacity then the freight industry has the ability to grow its business.
Q. As you approach the start of the CP5 process, what thoughts do you have on making the process on freight charging quicker, slicker and less damaging to confidence than over the current period?
The debate that went on over freight during CP4 about CP5 lasted a long time, and I recognise the impact it had on people. In terms of starting the next control period, we’ve already had quite a few discussions with RDG (Rail Delivery Group), because it said it would like to do some analysis of charges and incentives, and it wants to set out options and share that information with us. My response has been that we’re very keen to receive evidence-based pieces of work and ideas from the industry, and I’ve welcomed the RDG’s offer. Ultimately a periodical review is a statutory duty – only we can do one – and we’ve got to show ourselves to be prepared to listen to good ideas that are put forward , and if the industry thinks its work and ideas will make the process a better informed one then great, we’re ready to listen and we will take that into account. Looking back, the bit that was difficult, and that we can learn lessons from, was the part of the process where the freight industry was caught unawares by the way things were developing. The debate then dragged on and I understand why the industry said it was damaging, but I think the overall end point was a fair and pragmatic result.
Q. How do you think the Toc’s view you?
How I’d like them to view us is that we are respected for the work that we do and seen to be doing the work well. And that we understand the industry and are seen as a positive force. I think in terms of many areas of work that we do the industry does respect us. We had very good engagement with the operators about the periodic review on a whole raft of issues. Obviously they’re not all going to agree, that’s impossible, but I think people do respect that we try and look at the evidence. We listen and try to weight up views and adopt a professional approach. There have been areas where the Toc’s have been critical of us – we know that from our own surveys – sometimes they think we’re too slow, and there has been a perception that we’re trying to expand and take over in new areas when we shouldn’t do. I put that down as our fault as I don’t think we have explained clearly enough to people in some areas what it is we’re doing and why, and I see that as something that I’ll be responsible for trying to do better in the future, because if people have those perceptions it must be partly down to the way we’ve explained it, so we need to do better.
Q. What message would you like to get out to rail managers?
The issue that I would hope we the ORR and me specifically will get better at is that people still tell us that they don’t fully understand what the ORR is doing in certain areas, or why we’re doing it. They don’t understand why certain instructions are coming out or points are being made, and that’s not a feeling I’m comfortable with. So if we’re not getting the message across clearly then we need to be willing to listen and take that on the chin and think about how we can do better. I’d like to think we will get consistently clearer to people because ultimately we have a role here, and like everyone else we take a professional pride in our work.
Q. What would your ideal scenario for the future be?
The railway as a whole has grown during the recession so it’s been a real success story. Sometimes when I mention this to people who don’t work in the industry they still don’t realise that. I expect the industry to continue to grow, I think costs have been brought under control and we’re going to see a more efficient railway with more satisfied customers. All the groundwork has been done to allow that to happen.
Q. Can you tell me a bit about yourself – do you love trains?
In the days before proper childcare I used to spend quite a bit of my time in signal boxes with my dad who was a signalman. I’m absolutely certain that would not be allowed on current UK safety legislation and I’m not condoning it, but I used to sit with him a lot. Mum worked part-time at a school and when she worked I sat with dad. I actually trained as a health economist and assumed that was my future path. I joined the DHSS (Department of Health and Social Security) and thought they would give me a healthrelated position but I got put in charge of pensions. After that, I went to work for the DfT on road pricing in London. All that work was shelved – and I actually remember the secretary of state at the time saying ‘This is never going to happen’! I then left the civil service and worked as a consultant for six years building big forecasting models on how land use and transport patterns interact. But during that time I got a phone call from a bloke I used to work with who told me a new body called the Strategic Rail Authority had been formed and was recruiting. He said, ‘You should apply, you’re the sort we need’ so I did, and then along with everybody else, we were closed down. Fortunately, I’d had a lot of involvement through my work with the Rail Regulator as ORR was called then, so when a job came up I thought it sounded interesting and that’s how I ended up here.