Steve Murphy is the CEO of MTR UK. He joined MTR in 2014, as Managing Director of MTR Elizabeth line. He subsequently became CEO of MTR UK in 2020
Sam Sherwood-Hale spoke to Steve Murphy, CEO of MTR UK about environmental sustainability, Big Data and MTR trenolab
SSH: How did you get started in the industry?
SM: I started my career with British Rail, as a Graduate Trainee, just as the industry was being privatised. It was a great time to be in the industry with such seismic changes taking place across the sector and gave me the opportunity to not only learn a lot, but to add new perspectives and try out different things. While learning from the past is an essential element in any career – it is equally important to question how we can do things differently and to innovate.
I joined MTR in 2014, as Managing Director of MTR Elizabeth line. I subsequently became CEO of MTR UK in 2020.
SSH: Tell us about your career before you joined MTR UK?
SM: My first management role was as Marketing Manager for Chiltern Railways. My career to-date of 30+ years has included senior posts at Chiltern Railways, Iarnród Éireann (Irish Rail), the Arriva Group and London Overground Rail Operations Limited (LOROL).
SSH: What challenges have you faced in the industry?
SM: The nature of the rail industry demands constant change and innovation. Part of my job is to lead change and improvements that benefit our passengers and stakeholders while also ensuring our people are taken care of. It is a privilege to be challenged in this every day!
SSH: What success have you experienced in the last twelve months and how do you measure success?
SM: Success only comes about through leading a team effort. There are many areas of the business where we are demonstrating this but I’m particularly proud to have led a team responsible for the highly successful passenger launch of Europe’s biggest infrastructure project – London’s Elizabeth line, now the most punctual and popular rail line in the UK, according to ORR statistics.
In a transport business, a crucial way to measure success is in customer satisfaction. Ultimately, that’s what drives repeat business, profitability, and shareholder value. I’m pleased that we have a positive track-record in that area! After driving improvements during the phased opening of the Elizabeth line, our trains had an average 94.4 per cent punctuality during the summer of 2022, compared to 87.6 per cent for all London and Southeast Operators.
SSH: What does sustainability mean to you?
SM: One definition of sustainability is that it is about maintaining and improving our way of life whilst respecting nature and avoiding the long-term depletion of natural resources. From a business perspective, this means recognising that environmental, social and governance (ESG) issues are vital considerations for companies operating and making business decisions.
With increasingly stringent regulatory requirements for risk management and disclosure and increasing stakeholder expectations, ESG is no longer optional, but a prerequisite for companies to maintain their social licence to operate. MTR has set several environmental and social objectives to embed ESG principles across its business to create long-term value for its stakeholders and the cities it serves. These include:
- Environmental sustainability – One of MTR UK’s key areas of focus. Across all our business units, we seek to improve the way we interact with the environment around us and ensure our business keeps sustainability at the forefront of all we do.
- Social inclusion – We look to provide key transport links and develop supporting infrastructure to enhance the lives of the customers and communities we serve. The company supports social inclusion by committing to providing a safe, accessible, and sustainable transport system for all. Improvement works to stations, and trains can provide fit-for-purpose and easy access facilities for people with additional needs, luggage, and small children. We apply the same rigor with our internal team, where equality, diversity and inclusion underpin all we do.
- Advancement and opportunities – Economic sustainability runs through our business processes and ensures we make considered decisions in line with our ecological and social values. MTR has sustainable financing thanks to its Rail plus Property (R+P) business model. We aim to develop integrated communities along rail lines that generate diversified revenue streams, including property development.
From a social perspective, urban mobility is closely linked with social inclusion. MTR’s aspiration is to keep cities moving by managing our business sustainably with best-in-class governance and helping individuals and communities thrive.
SSH: How has technology developed since you started in the industry?
SM: There has been a quantum leap in information available – ‘Big Data’. We are ensuring that MTR leads the way in delivering innovative technologies to the UK market in areas as diverse as performance modelling, capacity analysis and passenger behaviour analytics. For instance, MTR trenolab is a newly established Joint Venture, that will use technology to revolutionise timetable planning. MTR trenolab merges the best in modelling software technology with the best in industry operations experience to provide a new level of analysis to reduce the performance risk associated with introducing new timetables. There’s a difference between planning software – which allocates timetable paths, and modelling software, which looks at real life implications – such as the impact that one late train might have on another.
Our driver Academy uses virtual and augmented reality for operational training, and this will be developed across the business.
SSH: What are some standout projects you’ve been involved in over the years?
SM: At Iarnród Éireann (Irish Rail) I led a team that delivered a 15 per cent increase in punctuality on all intercity routes, secured over £300 million of investment in new rolling stock to completely replace the existing Intercity fleet, and increased customer satisfaction on Intercity services to record levels. Our investment and efforts created the fastest passenger growth – 15 per cent – for any European railway at the time.
As MD of London Overground, I raised punctuality from near the bottom of UK train operators to the top, achieving 96.5 per cent, increased customer satisfaction to the highest level of any UK train operating company. I also project managed the implementation of the new East London line – one of London’s biggest ever rail projects. One of my career highlights was leading the team to deliver outstanding performance as a key part of the 2012 Olympics Transport plan.
SSH: What would you say is the most exciting technology in the industry?
SM: It’s impossible to narrow this down to just one. But going back to ‘Big Data’ as one example – analysis will, for the first time, allow us to understand passenger needs and actual behaviours. This will inform future investment decisions as well as future timetables that will ultimately deliver positive benefits to our customers. I’m delighted that MTR trenolab is at the forefront of this thinking.
SSH: How can the industry tackle its skills shortage and how do you recruit/retain/ train your staff?
SM: We are in an era where ‘bad news sells’, and unfortunately rail transport has made itself an easy target for the media. We need to make the sector more attractive to a wide range of people. Improving perceptions – starting with school age children – is important, when so many positive things are happening. By modernising and embracing new technologies, we can make it an attractive place to work and an option for them to consider.
Similarly for graduates or those looking for a career change or for a change of employer, we need to demonstrate such innovation and change. For instance, on the Elizabeth line we demonstrated a modern and innovative system, with innovative, forward-thinking people. There was a huge amount of recruitment needed; we started with no employees and now have nearly 1,300.
We have developed engaging and innovative training and development, with our in-house specialists working with industry to produce new apps and methods that maintain engagement and a high level of knowledge retention.
Our initial focus was on training drivers, and because it enables remote learning, our system was a success, despite the blight of Covid elsewhere. As the world becomes more digitally-integrated, rail needs to embrace such change – to train and retrain, to address the skills shortage, and to maintain interest.
Employees and potential employees are increasingly looking for companies that share their ESG (Environmental, Social, and Governance) values, and that are committed to reducing waste and pollution – as well as to making a positive impact on society and the environment.
Companies that prioritise ESG practices also are often seen as more ethical and trustworthy by customers, investors, and the media – which can lead to increased loyalty and positive ‘word-of-mouth’.
Future employment strategy must increasingly emphasise sustainable practices that will benefit society and the environment while generating long-term profits for the business
SSH: What do you think is one of the biggest challenges currently facing the rail industry?
SM: One of the most important, defining challenges for railways around the world is performance/reliability – this should be a constant, all-consuming obsession! If your railway is unreliable, every day should be defined by plans to improve. If you are running a reliable railway, it’s all about how you maintain that and mitigate the ever-present and changing risks to performance. As a specific example, when starting London Overground in 2007, that railway had the lowest customer satisfaction ever recorded, on the back of dreadful day-to-day performance. The excellent management team I led were obsessive and ruthless about changing the unreliability of the railway, as were our partners in TfL – every day we implemented ideas to improve performance and then developed new ideas – a great many of these came directly from frontline colleagues. In this sort of environment good leadership refuses to allow any distractions to the team in the pursuit of better reliability.
SSH: Where do you think the industry will be in the next ten to fifteen years?
SM: In the next ten to fifteen years I’d love to see a railway carrying double the number of customers today and with a significant part of its funding being independent of government and derived from a different use of railway assets – I see our London Liverpool Street station project being a crucial pioneer in developing this independent funding capability for the railway.
The reason doubling the number of customers is both achievable and desirable is that rail’s current market share of all UK passenger journeys is only around two to three per cent – less than half of many of our European neighbours. Efficiently building this sort of demand will re-establish rail as a major success story and at the forefront of the UK’s plans to achieve its national environmental and carbon reduction targets.
The industry quite clearly needs to have creative and innovative funding models to be sustainable and if it is to develop to suit the needs of the UK economy and a growing, mobile population. Our highly successful Rail plus Property (R+P) model enables MTR to build new railway lines and plan and create integrated commercial and residential communities around existing railway stations. MTR has used this model for over 40 years and I am very keen to see it developed here in the UK. Our model connects communities, whilst contributing to lower government spending through more efficient land utilisation and reduced spend on railway infrastructure.
We’ve delivered over one hundred million feet of rail plus development in Hong Kong. Now – in partnership with Sellar (one of London’s leading property developers) we are proposing to revitalise London Liverpool Street station. The proposed plans will turn a challenging and overloaded passenger experience into something that better serves everyone – whatever their mobility and personal requirements. Liverpool Street is London’s third-busiest station, and is set to get busier. The plans will include an enhanced concourse to sustain future growth, with new commercial, retail and leisure facilities too. Most importantly, this development will be delivered at no cost to the taxpayer or rail user. I believe that this model can be utilised in many parts of the rail network – even opening up opportunities for new lines and connections.
SSH: How can we get more use of the rail assets and what is your vision of rail in ten or twenty years?
SM: In the short-term, the ground-breaking approach delivered by MTR trenolab offers operators the opportunity to deliver more capacity and more reliably, on existing railway assets.
As a railway company, if your entire model is ‘I’m going to go to government and ask for more money to do what I want to do’ … it’s not sustainable. Wherever possible, rail must find private sector solutions to grow and be successful. MTR’s highly successful Rail plus Property (R+P) model enables MTR to improve infrastructure and to build new railway lines and plan and create integrated commercial and residential communities around existing railway stations – at no cost to the taxpayer.
Established over 40 years ago as a way of financing MTR’s first railway line, the Rail plus Property (R+P) model helps to fill funding gaps for new railway lines and generates revenue for railway operations through land and property developments adjacent to, and above, the railway. We’ve recently started to employ this model in a joint venture, to deliver a transformational scheme at London’s Liverpool Street station.
Not just a source of railway financing, elsewhere the model has become a critical part of a city’s urban-development approach where well-planned, high-quality communities can flourish. MTR’s Rail plus Property (R+P) developments support thriving communities and local businesses through improved accessibility, greater connectivity, and enhanced public and green spaces.
SSH: How can we make the rail industry a place people want to work in?
SM: By making it exciting, innovative, and rewarding – and by showing what a great future it can have driven forward by the right people. We also have a responsibility to ensure we continue to drive equality, diversity and inclusion to support and retain the great people already within our industry and to attract the diverse leaders of the future our industry needs. Ultimately rail will have a far larger role to play in the success of the UK. Who wouldn’t want to be part of that?
SSH: What are your views on collaborative working?
SM: Is there any other kind? Every organisation needs a leader, but part of that role is to inspire and bring out the best in others. At one end of the scale, it is important to avoid the inertia of ‘decision by committee’ and ‘groupthink’ – but at the other end, it is essential to foster new ways of thinking and to encourage people to inspire the best in each other.
SSH: How do you make your business a good place to work?
SM: Lead by example, share a vision and common purpose, and trust people to use their initiative and to make the right decisions. There’s something very wrong if you have people hanging around ‘waiting to be told what to do’. That’s not why we are all here. We are here to find solutions to difficult challenges, and to keep going until we do.
SSH: What do you expect to be the biggest challenges that come from this transformation of the railway industry?
SM: We must get away from ‘normalising the abnormal’. It is very easy for some internally – and for our political masters – to accept long-term train delays, Industrial Relations unrest, and a variety of other challenges almost as ‘occupational hazards’. We are here to restore the railway. If we make the trains run on time, we then have more time to think strategically and plan for the future. It’s a virtuous circle – and the least that passengers should expect!
SSH: At some point, every company will face the question of how to continue maximising earnings from their current business practice whilst also investing enough in innovation so they can turn a profit in the future. How can a company achieve the necessary creativity to innovate without compromising their existing business?
SM: It is important to employ people not only with the right skillsets, but with the vision to see how these may need to change over time. If a company stands still, it will be overtaken. And if an industry stands still, it won’t be sustainable. Historically, the rail industry has been mixed in how it responds to customer needs and changing circumstances. However, there are numerous examples of the importance of focusing on longer-term vision. For example, during my time at Chiltern Railways, we challenged the ‘status quo’ of the steady-state railway, by effectively creating a new mainline railway between London Marylebone and Birmingham. At the same time, we upgraded services on the route for traditional ‘Home Counties’ commuters. By investing in infrastructure, listening to our customers, and concentrating on detail, we delivered a clean, punctual service that people wanted to use.