Future of rail: setting out the strategic priorities for the rail sector
Discussing how the rail network can plan for growth, improve accessibility for all and support continued economic growth.
It is such a pleasure to be here this morning.
I’d like to thank the Institute for Economic Affairs and Marketforce for the opportunity to address today’s (5 December 2013) conference and Christian for his kind words of introduction.
Fifty years ago the strategic priority for Britain’s rail sector was how best to manage decline.
And I am delighted to say how times have changed.
Today, the principle challenge for the UK railway is how to grow in a sustainable and profitable way.
With the recovery well under way, the Chancellor will use his Autumn Statement later today (5 December 2013) to set out the next steps we are taking to tackle the deficit, rebuild the economy and rebalance growth between north and south.
So today (5 December 2013) I want to set out how I think the rail industry should plan for growth.
How it can get the best return from our record investment.
How it can improve accessibility for all. An issue which is very dear to my heart.
How it can improve value for money for taxpayers and farepayers.
And how partnership must be at the heart of the railway’s future.
The rail network is, as some people have called it, the original World Wide Web.
Moving the essential building blocks of the economy - people, goods, and ideas - across the country and across the globe.
And that’s as true today as it was then.
But we face 3 big challenges over the coming years.
The first is, as the economy returns to growth, the need to meet increasing demand.
Since privatisation passenger numbers have doubled and freight traffic has risen by 60%.
There are 4,000 more services a day than 15 years ago.
In the next 5 years alone we expect a further 14% rise passenger numbers and 4% more freight.
So thanks to your initiative and ingenuity we’re moving more people on the railways than any time since the Second World War but investment in infrastructure simply hasn’t kept up with demand.
That’s left millions of people crowded in and standing up on the way to work.
It has created unnecessary delays due to congested lines and unavoidable repairs and held back the economy, particularly in the north of England.
And that brings me to the second significant challenge: we need to deliver better value for money for the taxpayer and the farepayer.
By 2010, the operating costs of our railways were amongst the most expensive in Europe.
When people need to make savings at home, they feel the cost of their commute and expect to get better value.
When household budgets are tight, we need to justify every penny of taxpayers’ money that we are investing in the railways.
Rail subsidy for England and Wales is now falling and we’ve capped the most significant regulated fare increases.
Underlying costs need to fall further still, so we can limit the costs of the railways both for passengers – and for hard pressed taxpayers.
Finally, we have a very significant challenge in ensuring that everyone is able to benefit from our railways.
In the last 10 years the number of journeys made using the Disabled Persons Railcard has increased by more than 150%.
Record numbers of trips are now taken by disabled people.
While this is a success, there are still real problems getting around for too many. Such as people who may have a disability, such as a visual impairment, or parents with a child in a buggy.
There is something fundamentally unfair when a disabled passenger has to travel beyond the mainline station they need, simply to change trains, and travel back again in order to reach the correct platform.
To meet these 3 challenges we are investing in the most significant rail modernisation programme for a century.
Between 2014 and 2019, Network Rail will spend over £38 billion running and expanding our railway.
That will see the electrification of over 850 miles of rail, compared to just 9 miles between 1997 and 2010.
There will be a multi-billion pound deal to replace intercity rolling stock and we will see an extra 140,000 places on peak services by the end of the decade.
I’m glad to say that investment will see significantly more trains fitted with waste retention tanks.
I hope that will inspire faster retro-fitting of older stock, so we can end the utterly disgusting practice of dumping waste on to the tracks.
In London Crossrail, which will open in 2018, will boost London’s rail capacity by 10%.
And we’ve extended funding for the Access for All programme by £100 million over the next 5 years.
The final determination of Network Rail’s funding for 2014 to 2019 by the Office of the Rail Regulator is the green light to the proposals we set out last year.
In short – together - we are getting the railway moving in the direction that it needs to go.
But while the public have recognised the need to invest record amounts in our rail infrastructure, they need to be sure that we are spending their money wisely – particularly when times are tough.
As I have said, improving the accessibility of our railways is high on my list of priorities.
I’ve already met senior representatives from across the transport industry earlier this week to discuss what more can be done.
I know progress has been made to ensuring stations are accessible to all and that all rail vehicles will be accessible by 2020.
But are we happy that today just 1 out of 2 stations are accessible to disabled people and manageable for parents with buggies?
I think we need to be more ambitious.
We have added £100 million to Access for All and this will allow us to do another 30 or 35 projects - but more than 200 stations have been nominated for improvement by the industry which tells me you have the appetite to do more.
We need a change in the culture.
All infrastructure work carried out at stations needs to comply with the EU rules designed to ensure stations are accessible.
This doesn’t need to be done in a tick box kind of way.
Experience shows it doesn’t need to be a big deal or add significant costs to a project. It just needs careful thought and designing in from the start.
We also need to go further to improve partnership working.
Partnerships between government and the sector and co-operation between companies and Network Rail.
We welcomed the establishment of the Rail Delivery Group last year. It has helped set the direction of travel.
We want strong industry leadership.
Some would argue that co-operation between operators in the Rail Delivery Group was anti-competitive.
The truth is far from it.
It provides a much more effective framework which I am certain will continue to benefit from excellent leadership from Tim O’Toole and Michael Roberts.
But we need to develop better partnerships elsewhere.
That means we need to move beyond the old ideological approach to the private and public sector.
Christian’s engaging books have done much to chart the history of Britain’s railways.
A history that demonstrates there’s no logic in the old Manichean worldview that the best service is either public or private.
In the nineteenth century the laissez faire approach resulted in rapid growth followed by huge duplication and waste.
Increasing government intervention was followed by nationalisation.
But, by the 1980s, stop-start investment meant that British Rail had become a byword for public sector inefficiency.
Then we tried Railtrack and that proved to be fundamentally flawed.
So we need a blend between public and private sector delivery.
But it isn’t as simple as that.
When I served on the Board of Transport for London I saw first hand the chaos that came from a rigid, inflexible approach to public / private delivery.
Put simply, the Tube public private partnership (PPP) was the worst of both worlds.
It wasn’t really a partnership, in fact some people described it as an argument.
Inflexible contracts stifled private sector innovation but still left taxpayers on the hook when it went wrong.
Costing Londoners millions and resulting in years of unnecessary delays.
The lesson is that government must develop a long-term, strategic partnership with industry.
Public and private sector pushing together. Not pulling apart.
The experience of rail franchising since privatisation is, thankfully, different from the Tube PPP.
Fundamentally it works.
But Richard Brown’s review made clear that we do need to continue to improve partnership working between the department and those operating franchises.
For example, franchise management needs what he called, “a mature… relationship which seeks to grow the value of the franchise to the benefit of both parties”.
But the review also found that you as an industry held back from suggesting improvements in the past because of concerns about the department’s likely reaction.
I want to be clear that the department will not be a brake on your innovation.
The review also set out that franchises need to do more encourage better co-operative working between the train operators and Network Rail.
The experience in Wessex shows that, when train operating companies and Network Rail work together, it can break down some of the silos that frustrate passengers and save money at the same time.
The decision to enter into any long-term relationship needs to be taken by those involved. Later today (5 December 2013) Tim Shoveller will set out what’s needed to make that work.
There’s a huge amount of work going on in the department and in industry to get the franchising process moving along smoothly.
Following your discussion today (5 December 2013), I want you to tell me what further incentives are needed for successful alliances to take place and where there are unnecessary blockages in the way of doing that.
But even this ambitious package of improvements will not provide us with the space we need to grow in the longer term.
Major routes like the West Coast line will be swamped by 2025 if we fail to act.
That’s why all the major political parties are committed to building a new north-south high speed line.
I know some say, perhaps even in this room, that we could spend the money better by patching up the current lines.
But that would be like insisting people keep their dial-up phone connection in the era of broadband.
The truth is we simply can’t carry on mending and making do.
As many of you who work on the track will know, we are essentially trying to patch up a Victorian system.
If we tried to create the capacity we need by upgrading the 3 current main north-south lines, we’d be facing up to 14 years of weekend closures and it still wouldn’t result in half the additional capacity HS2 will provide.
That would be a recipe for a nightmare.
Last week we introduced the Hybrid Bill to the House of Commons. At 50,000 pages, weighing in at 2 tons, it’s a seriously detailed piece of work.
Though most people tell me they only need to read around 100 or 200 pages to get what they need.
But it is so detailed because no-one should doubt our commitment to getting the detail absolutely right, making all the information available to the public and all of that is part of our commitment to the success of the project.
The fact is HS2 will boost capacity, cut journey times, free space on the existing network - for commuters, regional rail and freight - and is absolutely essential if we are going to successfully rebalance the economy between north and south.
I know from my recent visit to the north and the Midlands that local authorities and local enterprise partnerships are tailoring their investment plans to maximise the economic opportunities that HS2 presents.
Thanks to you, Britain’s rail network is a huge success.
Passenger numbers have grown faster than any other country in Europe.
We have a safety record to be very proud of.
Over the coming months I want us to work together to establish what more is needed to develop better long-term partnerships between public and the private sectors.
I want to facilitate better co-operative working between operating companies and Network Rail.
And I want to help you provide a growing rail network, accessible to all, which in turn supports continued economic growth.
Thank you.