Connecting People:: A Strategic Vision For Rail
Connecting People:: A Strategic Vision For Rail
November 2017
Connecting people:
a strategic vision for rail
Presented to Parliament
by the Secretary of State for Transport
by Command of Her Majesty
November 2017
Cm 9519
© Crown copyright 2017
Copyright in the typographical arrangement rests with the Crown.
This publication is licensed under the terms of the Open Government Licence v3.0 except
where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-
government-licence/version/3
Where we have identified any third party copyright information you will need to obtain
permission from the copyright holders concerned.
You may re-use this information (not including logos or third-party material) free of charge
in any format or medium, under the terms of the Open Government Licence. To view this
licence, visit http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/
or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or
e-mail: [email protected]
ISBN 978-1-5286-0125-2
CCS1117439540 11/17
Printed in the UK by the APS Group on behalf of the Controller of Her Majesty’s Stationery
Office
Contents
Foreword 5
Executive Summary 7
Our vision for rail 10
1. A more reliable railway 11
A more integrated railway 12
Network Rail transformation 13
Joining up track and train 15
Digital Railway 17
2. An expanded network 19
Expanding commuter routes 20
Opening routes to unlock housing and development 22
Building a new generation of high capacity railways 22
The next generation of schemes 24
3. A better deal for passengers 27
Smart ticketing 28
Fares reform 29
Compensation and redress when things go wrong 29
A more accessible railway 30
Better use of technology 31
Serving communities 32
How we deliver passenger services 32
Our future approach 33
Rail freight delivering for the economy and environment 38
4. A modern workforce 40
Industrial relations 40
Skills and training 41
5. A productive and innovative sector 42
A more innovative rail sector 42
Building a sustainable railway 43
Increasing exports and investment from overseas 43
4
Foreword
When Britain’s railways were privatised in the 1990s it was against a background of
what many people regarded as terminal decline. Previous attempts to stem losses
and stabilise the railway – from Labour’s nationalisation in 1948, to the infamous
Beeching cuts in the 1960s and later reorganisation under British Rail – had all failed.
By comparison, opening up the railway to private operators, working to requirements
set by Government, was an emphatic success. Passenger journeys – which fell by a
third between 1960 and 1995 – have since doubled. We have one of the safest
railways in Europe, and other countries are now adopting Great Britain’s rail model in
their own markets.
The railway as a partnership between the public and private sectors has delivered
significant improvements, bringing the best of both worlds, introducing private sector
skills and driving investment for passengers and rail freight.
However, growth has brought its own challenges. Today, Britain has some of the
most congested and intensively used railway lines in Europe. Rising demand is
putting significant pressure on the railway infrastructure. That is why the Government
is investing record sums to increase capacity, boost reliability and improve journeys.
Along with flagship schemes like HS2, Crossrail, and the Great North Rail Project, we
are modernising the existing railway fabric, upgrading stations, and introducing new
trains and carriages across the country. We recently announced that we expect
around £47.9bn to be spent on the railway between 2019 and 2024, of which we’re
providing up to £34.7bn directly to deliver a more reliable railway.
Our investments will meet demand for more capacity on the network, adding new
links, restoring lost capacity and connections, and supporting the Government’s
Industrial and Housing Strategies. This will include continuing to look at opportunities
to restore capacity lost under Beeching and British Rail cuts of the 1960s and 1970s,
where this enables new housing or economic development, or eases congestion
elsewhere on the transport system, and offers value for money. We will also bring
more private sector finance, funding and expertise on board to help provide capacity
for the future.
We have laid a firm foundation of investment, but challenges remain. Passenger
satisfaction compares well with other countries overall, but average figures hide
variation and overall satisfaction with train services is low in many areas. Network
Rail has delivered a number of large scale investments in a challenging environment,
but some major projects like the electrification of the Great Western Main Line have
been beset by problems. Overcrowding on the busiest services is an increasing
issue. Infrastructure problems and congestion on the network and on stations have
affected service reliability.
5
Our next priority is therefore to address the historic structural issues which have
prevented the railway from offering outstanding customer service, efficiency and
value for money. Instead of one team working together to deliver for railway users
and solve problems when they arise, the Network Rail team and train operators have
too often worked in isolation and without shared objectives and the degree of co-
operation that could make a difference, meaning performance for passengers is not
as good as it could be.
Our plans go further than ever before to tackle these problems, get private and public
sectors working more closely together to increase performance, and rebuild the
railway around the customer. This document sets out our plans to end the
operational divide between track and train. It announces significant changes we will
make to improve the commercial models we use to contract for passenger services.
And it sets out how we are investing in expanding the network, and looks to the next
generation of schemes.
We are requiring faster improvements in customer service and passenger
experience, including using digital technology to revolutionise ticketing on the
railways, and improving redress when things go wrong.
We look to the industry to offer quality careers, training and skills, and a greater stake
in the success of the railways for the people who work on them. And we are working
with the industry to target innovation, realise the full potential of new technologies,
support suppliers and put the sector in a strong position to export and invest as we
look to a future outside the European Union.
If the first stages of the Britain’s railway renaissance were reversing decades of
decline, and securing the long-term funding to modernise the infrastructure, then the
next stage – outlined in this document – will change the way the industry works. This
will be a process of evolution rather than revolution, in order to avoid the danger of
reorganisation becoming the sole focus of the sector, at the expense of the
passenger and freight customer. But it is now time for real change, so that the
industry works for its customers and funders, meets the challenge of growth that lies
ahead, and delivers value for money for passengers and the public and attracts
responsible private investment.
The key themes of our vision, reflected in the chapter headings, will be familiar to
many readers – they highlight plans to deliver a more reliable, more competitive,
growing railway which offers a better deal to passengers. But achieving these
objectives will require a transformation in the industry and the way that services are
run: joined up management; simpler, more accountable structures; regional teams
focused on very clear goals; and breathing new life into lines closed at a time when
the fortunes of the industry were very different from those of today. This is a strategy
for an expanding, modern railway that is dedicated to improving services for the
customer.
6
Executive Summary
2. An expanded network
The surge in demand over the past 20 years means we need to invest in capacity. To
rebalance the economy and create more homes we also need to forge new links
between places, spurring development and economic growth.
We are expanding commuter routes, for example through Crossrail, the
Thameslink programme, and the Great North Rail Project (a vast programme
of improvements across the North), delivering new trains, new services, and
creating room for hundreds of thousands more passengers.
We are opening routes to unlock housing and development. We are
establishing the East West Rail company to restore the Oxford to Cambridge
rail link, closed in 1967, and provide a major boost to the region
We are building a new generation of high capacity railways. HS2 will be a
transformational new backbone for the network, as well as freeing up capacity
elsewhere, and we have committed £300m towards linking HS2 with future
Northern Powerhouse and Midlands rail projects.
We are working on the next generation of schemes with Transport for the
North on Northern Powerhouse Rail and with Transport for London (TfL) on
Crossrail 2.
We are introducing a new approach to making investment decisions with
clearer decision points and a greater focus on the desired outcomes of
investment. We are also looking to the next generation of schemes which
meet our objectives and offer value for money. These include proposals to
restore lost capacity.
7
3. A better deal for passengers
Private sector competition and skills have delivered improvements for passengers
and value for taxpayers. We now need to make sure we have the right controls and
incentives on each part of the network to improve the customer experience on an
increasingly busy railway.
We are working to make smart ticketing available across almost all of the
network by the end of 2018, and extending discounted rail travel.
We are making sure passengers get a better service when things go wrong, by
working with the industry to improve compensation arrangements and
establish a new ombudsman to handle passenger complaints. We are
committed to improving accessibility, and making better use of technology
for passengers, including Wi-Fi and mobile connectivity.
We will take measures to secure the maximum benefit for passengers from
railway stations across the UK. We are also consulting on the future of
community rail, a local partnership approach.
We will be implementing new models for passenger services, tailored to the
circumstances of each franchise: a new generation of long-term integrated
partnerships between track and train, with a ‘one team’ culture supported by
regional brands; a new role for train companies to influence infrastructure
enhancements; use of management contracts where appropriate; and some
smaller, more locally-focused train companies.
We have started with the competitions already underway. South Eastern and
East Midlands will feature ‘one team’ working between train operators and
Network Rail. The West Coast Partnership will design and operate the first
HS2 services to complement services on the West Coast Main Line - and we
will consult on additional destinations for the next Cross Country franchise.
The next generation of contracts will bring further changes. We are consulting
on the future of the Great Western franchise, including whether to create a
separate franchise for the West of England; we are developing plans to launch
the East Coast Partnership as the first of the new generation of long term
regional partnerships bringing together the operation of track and train under a
single leader and unified brand, and we are in discussions with the existing
operator about delivering for passengers on this route in the short term; and,
with the completion of the Thameslink Programme we intend splitting the
Thameslink, Southern and Great Northern franchise as planned, including
potentially transferring some services to Transport for London, for example the
West London Line.
We have been working closely with the industry to implement our Rail Freight
Strategy, including issuing clear guidance to the regulator to support the growth
of the freight sector. We have also committed to providing continued funding
for improvements to the rail freight network in 2019-2024.
8
4. A modern workforce
We want to see improved skills, diversity, training and development in the rail
workforce, and staff sharing in the success of the railway.
We will require future train operators to develop effective ways to link staff
reward to the success of the business to ensure staff are incentivised on
delivering for passengers, and set out plans for ensuring sufficient staffing in
key roles.
We are supporting industry initiatives, including the Transport Infrastructure
Skills Strategy and Rail Sector Skills Delivery Plan, which aim to increase
skills and diversity.
We have created the National College for High Speed Rail to deliver the
modern world-class skills the workforce will need, and are also working with the
industry to improve the training and recruitment of train drivers.
9
Our vision for rail
Near term
Our near term priority is for Modern customer service for passengers: smart technologies for ticketing,
better customer service and improved compensation arrangements, a new ombudsman to resolve
delivering planned disputes, improved Wi-Fi and mobile connectivity, and better accessibility.
upgrades, with the industry Committed network upgrades: Thameslink, Crossrail, Great North Rail
getting a grip on cost. Project and others, and improvements delivered via franchises: new trains,
upgraded stations and new services.
Improving efficiency, increasing value and tackling cost.
Building on the railway’s record of safety and security, including emerging
risks.
2019 – 2024 (Control Period 6)
A more reliable, efficient A step-change in renewals to maintain safety and improve reliability:
and modern railway efficient asset stewardship on an increasingly busy network.
delivered by joined up local The next generation of passenger service contracts: sustainable
teams commercial contracts, securing joint working and quality for passengers.
A new generation of long-term integrated regional rail partnerships,
working to aligned objectives, focussed on passenger needs.
New connections and new capacity, delivering today’s projects and
advancing the next generation of rail schemes.
New partners for infrastructure development, design and delivery and
encouraging and facilitating market-led proposals for rail enhancements.
New sources of funding and financing unlocking improvements.
2024 – 2029
A step change for rail, with HS2 Phase 1 reshaping the network, with new journeys and new capacity,
current reforms and HS2 supporting the economy and unlocking housing.
delivering better journeys, ‘One team’ models delivering results across the network, with passenger
better services and support operations and infrastructure management working seamlessly together.
for the economy. Reliable services, more connections and a high-quality offer for
passengers across the national network.
Digital solutions, better technologies and good use of data in operations,
analysis and decisions.
Rail freight sector is growing and supporting our communities and
economy alongside passenger rail.
An innovative sector investing at home and competing abroad.
The railway beyond 2030
Today’s policies are guided Railways leading the way for customer service in the transport sector,
by our vision for the future: responsive to customers' needs, offering integrated, accessible services
a world-class railway, across modes, for people to travel in the way that suits them best.
working as part of the wider Advanced commercial, contractual and delivery models refined for
transport network, bringing individual markets and circumstances, with integrated ways of working.
new opportunities for the Rail fulfilling its full potential to move freight and goods, relieving
nation. congestion on the road network and supporting a low-carbon economy.
New connections, more capacity and more journeys across the network,
with the complete HS2 network, East West Rail and other new links
transforming journeys, supporting housing development and driving
economic growth.
10
1. A more reliable railway
1.1 Our railways are more intensively used today than at any time in our history. More
people want to travel, but on densely used parts of the network, squeezing more
trains in can lead to more delays and slower service recovery when things go wrong.
1.2 People rightly expect the railway to offer a good service, and get them where they
want to go. Evidence from the passenger watchdog Transport Focus shows that
passengers put a high priority on reliability and performance. Disruption to services,
and frustration when it is handled badly, are the top drivers of dissatisfaction.
1.3 In response, the industry has to strengthen its focus on core railway activities –
maintenance, operations and renewals of track and systems. It needs to get the most
out of the existing assets as well as building the capacity needed to meet demand.
1.4 The industry has to work differently, joining up across track and train to work as
single local teams, who put passengers and freight customers first. And it has to
adopt modern digital technologies to make best use of the network.
1.5 By investing in an overhaul of the network, and making sure the teams running the
railway are talking to each other and working collaboratively when things go wrong,
we will build the foundation for more reliable services and quicker service recovery.
1
The Scottish Government separately sets and funds the outputs it wants for the network in Scotland.
11
1.9 We will work with Network Rail and the independent regulator, the Office of Rail and
Road (ORR), to get the most from the money that taxpayers, passengers and freight
customers put into rail. We want the ORR to provide a strong efficiency challenge,
and the industry to respond accordingly.
1.10 The railway also has to build on its record of safety and security, and we will work
with Network Rail, the ORR, the British Transport Police and others to ensure risks
on the railway are managed effectively, within the context of an open transport
system and all the challenges it brings.
2
Mizutani, F., Smith, A.S.J., Nash, C.A. and Uranishi, S. (2014), ‘Comparing the costs of vertical separation, integration and
intermediate organisational structures in European and East Asian railways’, Journal of Transport Economics and Policy, 2014
12
Network Rail transformation
Box 1: Learning the lessons from reviews
1.17 The centralised structure of Network
Rail has historically made it difficult for In 2011 Sir Roy McNulty produced a report looking
its regional route teams to respond to at the efficiency and value for money delivered by
customers, and made it harder for them the industry, including via its structure, and made
recommendations for the future. Industry
to form effective alliances with
alignment was a key issue discussed in the report.
operators. Network Rail has recognised
McNulty concluded that closely uniting track and
this and has over recent years
train in meeting the needs of passenger and freight
undertaken a programme of change,
customers could reduce costs.
transferring more authority and
accountability to its route teams. He suggested that reunification should take
different forms depending on the most suitable
1.18 The deeper devolution of Network Rail approach for each area. One form he proposed was
into more autonomous route businesses alliances between Network Rail and train operators,
is at the core of Network Rail’s which could include the teams unifying to form a
programme of transformation. This single operating unit able to work together to deal
direction of travel was endorsed by the with day to day operational issues, as well as to
review carried out by Nicola Shaw in plan work on the network together.
2016, who recommended it was
accelerated (see box 1). This will put He also proposed joint venture arrangements,
more power in the hands of the route where the infrastructure manager and train
staff who work most closely with their operator form a joint company to operate the
railway, and he ultimately recommended piloting a
customers.
situation where some parts of the network are run
1.19 A number of changes have already by an integrated regional rail company, through a
been made, with more to come. Now we concession of infrastructure management and train
will see Network Rail route management operations combined.
teams making them work, building long
Experiences so far on the network from the ScotRail
term relationships with the train alliance and South West Trains demonstrate that
operators they work with, and becoming getting close financial alignment right is challenging.
more accountable to the users and However, the new relationships created across
communities they serve. track and train have helped both sides understand
1.20 As part of this the Network Rail centre is the full picture and work across the divide, putting
transferring more authority to its route passengers first.
businesses to allow them to operate In 2016 Nicola Shaw, former CEO of High Speed 1,
autonomously and efficiently, making and now UK Executive Director of the National Grid,
their own choices and being judged on produced a report into the structure of Network
how well they perform, while Rail.
maintaining critical safety practices and
She endorsed Network Rail’s move to a much more
an overall view of system operation.
devolved structure, with separate route businesses
1.21 This work will continue at pace, acting as effectively autonomous companies, each
supported by the ORR, which is given its own regulatory settlement by the ORR.
transforming its approach to regulation This would place responsibility for planning
to complement Network Rail’s reforms. maintenance, and upgrades to the network in the
The ORR will be regulating each hands of local teams who best know what to do to
Network Rail route separately from improve performance and efficiency. It would also
2019, which will increase accountability, allow for better benchmarking and drive
enable better benchmarking between competition between routes. Shaw recommended
routes and increase transparency of this process be accelerated and taken further.
individual route performance. The
Secretary of State for Transport also issued new guidance to the ORR in July 2017
13
underpinning Government’s desire for strong, effective, independent regulation to
support reform.3
1.22 We will work with Network Rail and the ORR to strike the right balance between the
benefits of autonomous routes and the benefits that a larger company can bring,
including efficiencies of scale. This will involve new customer-driven targets and
internal measures to make sure Network Rail’s routes deliver what their customers
want, while allowing for benchmarking between routes and for innovation and
competition to thrive.
1.23 The railway remains a national network, and more autonomous routes with closer
local relationships must not come at the cost of network-level planning, integration
and oversight. The needs of cross-country services and freight customers, which
travel through multiple routes, must also be represented. Network Rail has listened to
concerns and created a virtual Freight and National Passenger Operators route to
look after those customers.
1.24 Network Rail is also bringing greater focus to its system operation functions, which
include network-wide capacity analysis, timetabling and longer-term strategic
planning. This is an important opportunity. The System Operator in Network Rail
develops options and strategies to inform funders about change and investment
choices, with a focus on maximising the economic benefit of the whole railway. It also
leads work to integrate new rail schemes with the rest of the network, to allocate
capacity fairly, and to design robust and effective timetables that deliver good
performance and work for passenger and freight operators.
1.25 To do its work successfully, the System Operator needs to coordinate evidence and
understand customer needs, drawing on the expertise that sits within the freight and
passenger operators, rolling stock companies and infrastructure businesses.
1.26 These network-level functions within Network Rail will be regulated separately in
future, to bring greater transparency and to drive up quality. Network Rail is also
developing a governance framework to provide oversight and assurance of the
System Operator’s work. We will work closely with the ORR to ensure the network
continues to meet the needs of all of its customers and to ensure Network Rail’s
System Operator brings a new rigour and capability to making best use of the
system. In our work with the ORR, and as a funder and customer, we will look to
Network Rail to ensure the System Operator:
Acts with fairness and impartiality, and builds trust with its customers.
Works in the public interest, advising and supporting Government in achieving our
goals for passengers, citizens, the economy and taxpayers.
Improves the quality and transparency of information and analysis to help the
industry, government and other funders take better decisions.
Develops timely, high quality support for third party investors and developers,
including guidance or other tools to bring more partners into infrastructure.
Works in a balanced way with the Network Rail routes and other infrastructure
operators to promote local leadership while protecting system-level benefits.
3
https://www.gov.uk/government/publications/railways-guidance-to-the-office-of-rail-and-road
14
Joining up track and train
1.27 The franchise competitions and contracts of the future will introduce more integrated
working between track and train, building on the direction set out by Sir Roy McNulty
in his report of 2011 (see box 1).
1.28 Reforms will build on the best of the public and private sectors, with private sector
involvement bringing innovation, investment and competition. Our reforms will ensure
that the railway is run by an integrated local team of people with an absolute
commitment to meeting the needs of their passengers, while securing the best value
for farepayers and taxpayers. Future contracts will:
Create one-team working locally, with the right incentives for train operators and
Network Rail to co-operate on reliability and high performance.
Present a single accountable face of the railway for passengers.
Adopt joint branding and identity where appropriate, giving joint teams a shared
culture and giving passengers a better sense of who to hold to account.
1.29 Joint working between track and train
companies will take different forms
Box 2: Joint working on Southern
tailored to each area, including new joint
operational teams, short-term task Following Chris Gibb’s report into the failure
forces to manage improvement, or of Southern Rail to deliver an effective service
longer-term contracts and agreements. in 2016, steps were clearly needed to
transform joint working across the region.
1.30 We will formalise the creation of new, Although Chris Gibb identified trade union
tailored alliances on franchises as they action as the main cause of the disruption, he
come into effect, building on the also set out plans for much greater integration
experiences in Scotland and learning between Southern and the Network Rail
the lessons from the first generation of team.
alliance contracts. The next of these
new alliances will be on the South The result was that the day to day operations
Eastern franchise once the Thameslink of both organisations were brought together
works are completed (and we have now into a single control centre at Three Bridges.
issued the Invitation to Tender for the There is now joint planning of the peak every
franchise), and on the Midland Mainline, day to deal with any issues arising from
problems on the route and more co-
once the new franchise launches in
ordination of work on the line. The industry
2019. We will encourage bidders on
has also established joint oversight of the
these routes to include features such as
railway as it prepares for the launch of new
shared strategies to improve
services and fleets in 2018.
performance on the network, joined-up
leadership, and joint operational teams.
1.31 There is now close working in place on the Western route, including an
independently-chaired joint track and train Route Supervisory Board that brings
together the train operators, Network Rail’s route team and passenger
representation. Route Supervisory Boards have been announced for the East Coast
Main Line, West Coast and West Midlands, Chiltern, and the network in Wales, and
there are plans to have them in place on all routes during 2018.
1.32 Since we announced our intention to join up track and train in December 2016 we
have learned from the experiences of earlier alliances, and developed new
approaches which we have started to roll out in our franchise programme.
15
1.33 Passengers will quickly see the positive impacts of these revised approaches to
operating rail services:
South Western: First MTR, the new operator from August 2017, will oversee a
£1.2bn 7-year investment programme which will deliver direct benefits to
passengers. Network Rail and First MTR have signed a formal alliancing
agreement to create various joint teams that will be essential to delivering the
improvements passengers expect.
West Midlands: Abellio, which commences services in December 2017, will co-
locate its control teams with those of Network Rail to ensure smooth operations,
and set up a joint communications team to provide accurate real-time information
on the move. Abellio have a number of obligations focused on better engagement
with Network Rail to work jointly on delivering enhancements across the network.
1.34 Most future contracts will be shaped around the creation of an alliance structure, with
alliance boards overseeing implementation. An overall route perspective will be
provided by a route supervisory board including operators, passenger
representatives and the Network Rail route. We will create the right incentives at
stations, as well as for train services.
1.35 We believe there are opportunities for going further in some parts of the network, and
we are therefore developing different options to deliver deeper and more effective
joint working. In particular, Great Western – covering commuter routes from West
London into Paddington, and towns and cities including Bristol, Cardiff and Plymouth
– could offer significant opportunities for integration given the alignment between
Network Rail and the operator on the route, and their established record of close
working. Innovation in this area could offer significant benefits for passengers.
Alongside this publication we launch a consultation on the future of the Great
Western franchise seeking views on these and other issues.
1.36 This joint working is being reinforced by the creation of shared metrics for the whole
operation of a particular part of the network. Historically, Network Rail and train
operators have had different objectives for performance and reliability. Network Rail
will now set its goals based on genuine and effective engagement with its customers,
joining up train operations and infrastructure, and focussing their efforts on the most
important actions for passengers and freight customers. We welcome the ORR’s
approach to supporting Network Rail scorecards as a tool for joint working.
16
Digital Railway
1.37 The use of digital technology is a huge opportunity for rail. These technologies will
help the railway of the future make better use of the existing infrastructure and
capacity to reduce the need for costly and disruptive civil engineering schemes, and
find much more sustainable solutions which are lower cost for rail users and
taxpayers. Investing in Digital Railway could also create high-value jobs, help
rebalance the economy and promote the establishment of a world class industry
capable of exporting globally.
1.38 New digital tools allow for more options to be considered when looking for the best
solutions to the challenges facing the railway. One of the options ready to be
deployed are new traffic management systems, which can be installed in signalling
centres to help drivers and control staff keep trains running on time, and speed up
recovery from service disruption. These systems are a priority because of their ability
to reduce delays and maximise the efficiency of our existing infrastructure.
1.39 Traffic Management can work
independently, or build on current
systems such as Automatic Route Box 4: Digital tools will make journeys
Setting. It will also enable the introduction better for passengers
of other new technologies, like connected Traffic Management: The “brain” behind
Driver Advisory Systems (c-DAS). digital signalling. It maximises the
1.40 The benefits of c-DAS are based on throughput that existing track can support,
getting a train to arrive at a given location and adapts the timetable in real-time as
at the correct point in time, travelling at operational conditions change, aiding a
the most efficient speed. This can avoid rapid recovery.
timetable conflicts with other trains, and it
Connected-Driver Advisory Systems:
can avoid the need to brake at signals,
Provides decision support to drivers, aiding
reducing wear and tear on the train and
performance, safety, and fuel efficiency.
the track, saving money and improving
reliability. The ‘connected’ part of c-DAS
European Train Control System (ETCS):
means that the information given to the Removes signals from the trackside, and
driver is based on the latest information places them in the driver’s cab. Allows trains
from the Traffic Management system, to run closer together, at their optimum
giving a real-time view of the railway, speed, while maintaining safety.
rather than the timetable and context as it
was at the start of the journey.
1.41 In addition to Traffic Management and c-DAS we plan to bring forward a new
generation of digital signalling (European Train Control System) to our railway,
moving signals from the side of the track into the driver’s cab on the train. This
transition will be targeted as current signalling systems come to the end of their
useful life, or earlier if it is the most cost-effective way to deal with capacity and
reliability challenges.
1.42 Network Rail’s Digital Railway Programme is providing cross-industry leadership,
expertise and co-ordination for introducing digital technology to rail, with Network Rail
routes leading on local delivery and reflecting local priorities, and working with
suppliers and train operators.
1.43 Government will fund deployment of digital technology where passengers can get
benefits, and where projects are affordable and value for money. To achieve this, we
have committed £450m as part of the National Productivity Investment Fund. Of this,
17
£84 million will be used to prepare a range of trains for the fitment of state-of-the-art
in-cab digital signalling equipment. Further funding released includes up to £5 million
each for the development of schemes on the South East Route and East London
Lines, and on the Moorgate branch, in addition to the digital schemes already being
developed for services between Manchester and York. Once these options have
been explored, we will decide which should proceed to design and subsequent
delivery. We continue to work with Network Rail to identify further opportunities.
1.44 We also will use the levers we have as franchising authority to join up across the
industry, ensuring train fleet fitment is aligned with infrastructure plans.
18
2. An expanded network
2.1 Britain’s railways have seen an extraordinary turnaround since the days of British
Rail. Throughout the 1960s, ‘70s and ‘80s, the history of railways was one of decline.
The Beeching cuts in the 1960s and other cuts in the years which followed saw the
systematic closure of a substantial part of the rail network, as well as downgrades
and partial closures of key routes, like the removal of capacity from the East Coast
Main Line. As the network shrank, rail experienced a steady decline in the number of
passengers and the volume of freight carried.
2.2 Few people in the sector anticipated the turnaround that followed. Over the
subsequent 20 years, passenger numbers rocketed, to the point that more journeys
are now made each year than at any time since the peak in 1919 - on a network that
is much smaller than it was then.
2.3 Passenger demand remains strong, and is predicted to grow. Despite some essential
improvements, like the modernisation of the West Coast Main Line, much of the
network has become more and more congested. Services on most commuter routes
into our major cities are full, and are getting busier. In 1997 London Waterloo
handled around 60 million passengers each year: today the number is close to 100
million. Commuter trains have always been crowded, but today many rail passengers
are standing for longer distances.
2.4 Our ambitions for the next rail funding period (2019 to 2024) are clear. Vital
maintenance and renewal is needed to keep people moving safely, deliver what
passengers want, and get the most out of the existing network. But we cannot focus
solely on reliability and safety for today’s railway. We need to look to the future,
ensuring rail continues to offer new opportunities and better journeys. That means
delivering the enhancements already on the way, working with our partners to
develop the next generation of improvements and reversing the historic contraction of
the rail network.
2.5 To address this growing challenge the Government has been pursuing the most
extensive programme of modernisation in Britain’s railways since Victorian times.
2.6 Recent franchises have included longer trains on Northern Rail, West Midlands,
South West, Southern and Thameslink. New Intercity Express Programme (IEP)
trains have begun to replace the ageing High Speed Train fleet, bringing improved
services and additional capacity between London and major UK cities including
Bristol, Leeds, Newcastle and Edinburgh. By 2021, there will be more than 5,500
new carriages on the network, with an average of 17 carriages being built every week
between now and 2020.
2.7 Flagship projects like Crossrail and Thameslink in London, the modernisation of
Birmingham New Street, and the electrification of the suburban network in
Manchester will change how people travel, and where they choose to live.
2.8 In the coming decade we will be expanding the network, selecting routes that benefit
housing and economic growth, relieve urban congestion and meet future demand.
19
2.9 We are investing in significant new capacity through major projects like HS2. The
East West Rail company will accelerate the restoration of rail services between
Oxford and Cambridge, which were withdrawn in 1967. We are restoring capacity to
the East Coast Main Line by providing an extra 12,200 seats through new Intercity
Express trains. And we have funded the reopening of a number of stations closed in
the 1960s, as well as building brand-new ones.
2.10 The rail projects underway and in development will restore lost connections and
make new ones. The best projects will reflect the way our towns, cities and lives have
changed in the last half century, and will recognise that new capacity will be needed
in new places. Our ambitions for the planned upgrade to the Transpennine route from
Leeds to Manchester are an example of strengthening connections, dramatically
increasing the number of seats and reducing journey times.
2.11 Despite the historic scale of our current plans, the expansions we are completing
now will not be enough to meet the future demand for capacity, and our ambitions to
connect our communities.
2.12 That is why, as well as investing in the network to keep people moving safely and
smoothly, we have to invest to develop the projects of the future, finding the best
ways to expand services and offer new and better opportunities for people and
communities, and offer great value for money for the taxpayer. We will make the
most of rail as part of the wider transport system to unlock housing developments by
providing the links to work, services or education that make them attractive places to
live. Getting this right will support the Government’s Industrial Strategy, making sure
that businesses have access to the infrastructure they need to move goods, and that
individuals have access to a broad range of opportunities.
2.13 The expansion of the network needs action on three fronts:
a. expanding commuter capacity in line with expected demand;
b. new routes which can provide strategic transport links or unlock significant
housing or economic development regionally; and
c. schemes to meet the biggest capacity challenges for the coming decades.
20
2.16 We are dramatically improving journeys for passengers across the North with the
Great North Rail Project. By 2020, passengers will benefit from faster and more
comfortable journeys, as well as new direct services across the north and beyond.
2.17 Brand new infrastructure including new track and signalling, will benefit passengers,
increase reliability and deliver new direct services. The train operators, Northern and
TransPennine Express, will deliver new trains, including more than 500 new
carriages, room for 40,000 extra passengers and over 2,000 extra services a week.
By 2020 all the trains will be brand new or completely refurbished, and all the Pacer
trains will be gone.
2.18 This investment in rail networks in the North of England has already delivered
improvements, with the fastest journey between Liverpool and Manchester cut by 15
minutes, new direct services between Manchester Airport and Glasgow, and
Manchester Victoria station upgraded.
2.19 Looking ahead, we are working with Network Rail and the region to develop options
for major upgrades between Manchester, Leeds and York to deliver more seats and
faster journeys, aiming to deliver phased improvements from 2022, including a target
journey time of 40 minutes between Leeds and Manchester. The Transpennine
Route Upgrade aims to deliver phased passenger benefits from 2022, building the
groundwork for dramatically improved journeys across the region with Northern
Powerhouse Rail (covered in more detail later in the chapter).
2.20 In London, where
demand pressures are
highest, Crossrail will
be fully open by the end
of 2019, supporting a
10% increase in
journeys through
London. The expanding
Thameslink services will
offer passengers trains
every 2-3 minutes in
central London at peak
times and enable direct
links between
Peterborough and
Cambridge to
Blackfriars and beyond.
2.21 The railway upgrade
plan has already
transformed stations like Birmingham New Street, Reading, Manchester Victoria and
London Kings Cross, and we are expanding the network by adding new stations.
Since 2015 there have been 19 new stations opened on the national rail network,
helping connect people to jobs, and relieve the congestion that slows down growth.
2.22 In July 2017 we gave the green light for five more new stations with funding from
Government and others, including Portway Parkway in Bristol, which will help relieve
traffic on inner Bristol roads, and Horden Peterlee in County Durham, which will
deliver improved access to employment opportunities in an area with low levels of car
ownership, making it easier for people to get around.
21
Opening routes to unlock housing and development
2.23 Rail services have the potential to unlock housing growth, as part of a wider transport
network. New connections and stations can support locally-led development and help
deliver more housing. There are also strategic opportunities to change local transport
patterns, and provide communities and people with new opportunities.
2.24 As a major public sector landholder, Network Rail is leading important work to
release rail-linked land surplus to rail requirements, some of which could facilitate
housing development and support the Public Sector Land for Housing Programme.
Increasingly, the focus is on innovative opportunities around stations, where
regeneration schemes can improve the passenger experience with high quality urban
design of appropriate density, and integration of different transport modes. This could
also potentially generate additional housing opportunities in high-demand locations.
2.25 We are already seeing significant schemes that create housing opportunities.
Manchester Victoria Fish Dock Housing Development: Manchester Victoria
Station has been transformed through a £44m refurbishment programme, and public
sector land identified as prime for development. Working closely with Manchester
City Council, Network Rail reached an agreement with a developer to provide office
space and residential units, alongside high quality public space, landscaping and car
parking. Construction is expected to start in late 2017 and to be completed by 2021.
New station funding for Reading Green Park: a station has the potential to unlock
7,500 jobs and 1,500 homes, serving an area currently only accessible by road.
Supporting housing in the Cambridge – Milton Keynes – Oxford corridor: the
National Infrastructure Commission (NIC) has found that a shortage of housing
represents a fundamental risk to the success of this area, and that the challenges of
poor East-West connectivity need to be addressed. The Government has responded
by committing £137m of new or accelerated funding to support development and
delivery of East West Rail and the Cambridge-Oxford Expressway, and will continue
to work with NIC and local partners on ways to secure housing delivery.
Cambridge South: one of the largest bio-medical campuses in Europe is being
consolidated in Cambridge, and a new station could provide direct rail links to central
London, Stansted Airport and regional housing development sites. Working in
partnership with local stakeholders, we are committing £5m to develop proposals.
Bicester Garden Town: Over the next 15 years, Bicester will be transformed, with
more than 13,000 new homes, 18,500 jobs, significant transport improvements and a
regenerated town centre. Bicester Garden Town is based on a clear vision, grounded
in close community engagement. Extensive consultation has been undertaken, a
comprehensive masterplan has been commissioned and home building is well under
way. The delivery of East West Rail will enhance the Garden Town’s connectivity and
support housing growth alongside other infrastructure improvements.
High Speed 2
2.28 Phase 1 of the new high speed network will open in 2026, with new high-speed trains
running from London Euston to Old Oak Common in West London, through to
Birmingham Interchange and a new Birmingham terminal. Trains will also connect
onto the existing rail network, running direct services to major cities and towns in the
Midlands, North and Scotland. Phase 2b of HS2 will open in 2033, providing more
miles of high speed track and new services that will connect London and Birmingham
to cities including Manchester, Sheffield, Liverpool, Newcastle and Leeds, and
improve links to Scotland. The detailed proposals for this second phase and the Bill
that will make the project possible were published by the Government in July 2017.
4
National Infrastructure Commission, Cambridge-Milton Keynes-Oxford Interim Report, November 2016
23
can significantly improve frequencies and journey times between major cities in the
North and to develop route options that provide value for money. This will build on
the upgrades and investment we are already making under the Great North Rail
Project to transform opportunities and services for people across the North.
2.33 The Government has committed £300m additional funding towards ensuring HS2
infrastructure can link up with future Northern Powerhouse and Midlands rail projects,
to link existing and potential new routes with the planned HS2 lines, subject to final
agreement on funding and supporting business cases for those routes. We are
expecting to receive proposals for Northern Powerhouse Rail from Transport for the
North by the end of 2018, setting out its preferred route options for the scheme.
Crossrail 2
2.34 Crossrail 2, a proposed new railway stretching from Surrey to Hertfordshire through
Central London, could relieve crowding and support the capital’s growth. It could offer
travellers on national rail lines a new route into London, helping to free up capacity,
and relieve pressure on the Tube network, while unlocking new homes along the
route.
2.35 We have to ensure we get any scheme right. We are therefore working with TfL and
the Mayor of London, including through an independent review of funding and
financing, to develop plans for an affordable scheme that is fair to the taxpayer,
where London pays its share. Learning lessons from Crossrail 1 and maximising the
benefits of the scheme will form a key part of this work.
24
vital work, helping them identify the upgrades that have the strongest case in
supporting the North’s long-term future.
2.41 We have provided Midlands Connect with £5m funding to develop a business case
for a Midlands Rail Hub, a programme of rail upgrades that could provide up to 10
more trains per hour into central Birmingham. It includes improvements to Snow Hill
and Moor Street stations, new lines to allow access to those stations from the South
West and South East, and upgrading key junctions. We are also providing £2m to
develop options to address key constraints on the Coventry – Leamington corridor.
2.42 There are many other opportunities to
Box 5: Network Rail and the investment
explore. Around the country, local pipeline
bodies and partners are actively
promoting a range of rail schemes. Network Rail needs to help local authorities,
private promoters and other developers make
2.43 Some examples of proposals currently progress on the most promising schemes,
being looked at and candidates for providing good quality information and analysis.
further consideration, include: Bristol
to Portishead and Bristol to Henbury Network Rail also has a vital role in the
(part of the MetroWest project development of schemes identified as priorities
promoted by the West of England by its routes and through the industry-led
Combined Authority); routes previously planning process, and has a role in leading the
closed to passengers under British Rail whole industry to make better use of capacity.
We therefore welcome the new focus on the
connecting Exeter to Okehampton
system operation tasks within Network Rail and
and Bere Alston to Tavistock
from the regulator.
(promoted by Devon County Council);
reopening the Ashington-Blyth-Tyne Our new pipeline approach to managing railway
line to passenger services (promoted upgrades will see Government as funder work
by Northumberland County Council); jointly with Network Rail and other potential
and opportunities around infrastructure providers. Following the lessons
Birmingham (being considered by learned from issues in the current rail funding
Transport for the West Midlands). Plans period, this new way of working provides
are also being developed for four new oversight, transparency and clear decision points
stations in the West Yorkshire area: for progression.
Elland, Thorpe Park, White Rose and We will have a relentless focus on the outcomes
Leeds Bradford International Airport for rail users, passengers and freight, and
Parkway. All need further development, prioritise activity to support them based on the
and as with all schemes will need to benefits they will bring. We will set out a Rail
demonstrate a strong business case Upgrade Plan in due course that will define
where they are seeking any available these priorities and the steps we are taking to
Government funding. deliver them, taking account of the range of
approaches available; from infrastructure to
2.44 We have already provided funding to
timetabling.
progress the East West Rail project,
and development funding via the This fundamental change will allow us ensure
Strategic Freight Network Fund for the that our overall upgrade plan for the railway is
development of a project to improve rail deliverable and affordable, including where
capacity through the Ely area in capital investment adds to the maintenance and
Cambridgeshire, in conjunction with upkeep costs of the network. Only activities that
funding from New Anglia Local meet our priorities and can achieve real
Enterprise Partnership (LEP) and improvements for rail users and citizens at good
Greater Cambridge Greater value will be funded from development into
Peterborough LEP. design, and into delivery.
25
2.45 Government wants to see a renewed focus on unlocking funding from developers
and other potential beneficiaries.
2.46 The construction of a new rail station at Barking Riverside and the extension of the
existing Gospel Oak to Barking rail line to the site shows how a project can attract
significant private investment, with £172m of the £263m cost of the scheme being
met by the developers, Barking Riverside Limited. Contributions will also come from
TfL’s Growth Fund, which funds schemes that have direct impact on unlocking
housing and employment growth. The new rail services will unlock construction of
10,800 new homes, along with a new school and healthcare facilities.
2.47 We are developing guidance for investors and developers to ensure that the process
for taking forward proposals and engaging with Government is as clear and
transparent as possible.
2.48 We also welcome work such as the Campaign for Better Transport’s recent
‘Expanding the Railways’, which provides a guide to help local authorities,
developers and communities build a business case for schemes.5
2.49 We recognise that it can be challenging to make a case for transport projects that are
intended to create new journeys or enable new housing developments compared to
projects where very high passenger demand already exists and where the national
economic benefits may well be higher. We want to ensure we consider the full range
of contributions that specific schemes can make to society and the economy. From
promoters, we therefore need to see a clear strategic focus and good evidence about
the opportunities being created and the benefits delivered.
2.50 We have also announced the development of a Rebalancing Toolkit, a new
assessment standard for Government decisions that will require transport investment
programmes to be judged in part on how they contribute towards creating a more
balanced economy, as part of the overall assessment of their strategic case. This will
ensure rebalancing is considered more consistently and transparently when we take
decisions. We want rail investment schemes to demonstrate a well-rounded business
case which delivers for taxpayers, communities and the economy, while supporting
our strategic goals and productivity across the UK.
5
http://www.bettertransport.org.uk/sites/default/files/research-files/expanding-the-railways.pdf
26
3. A better deal for passengers
3.1 The railway is a customer service business, and passengers must be able to see that
their interests always come first. To be a success, railways must deliver what
passengers want, and be trusted to get people where they want to go. This is at the
heart of the Government’s approach.
3.2 Delivering rail services for passengers through franchise agreements with private
sector partners has been hugely successful over the past 20 years. However it is
right that we continue to evolve our approach to adapt to changing circumstances
and changing passenger needs and expectations. This chapter explains how we will
do this during this Parliament, including our plans to improve the passenger
experience, and explains Government’s new approaches to franchising that will
ensure passengers’ interests are at the heart of the way the railways are run.
27
Smart ticketing
3.3 Britain’s rail ticketing system remains Box 7: Competitions bringing change for
archaic. In a world where shopping is passengers
often done by contactless card or by
mobile phone, queuing for a paper ticket Abellio will commence operating the West
from a machine no longer offers the Midlands franchise in December 2017. It will
convenience that people expect. deliver investment of nearly £1bn for 400 new
carriages to be rolled out by 2021 and space for
3.4 In most major cities internationally, smart an extra 85,000 passengers on rush hour services
ticketing is the norm. Yet in the UK in Birmingham and London.
progress has been far too slow outside
The South Western franchise, awarded to First
Scotland and larger cities including
MTR in March 2017, will deliver £1.2bn of
London, where Oyster, contactless cards
upgrades. The operator is creating more seats on
and mobile phones provide cross-modal
peak trains, better services and new facilities.
ticketing. Commitments include 90 new trains, a major
3.5 The paper ticket needs to be largely upgrade for Southampton Central Station, 1,500
consigned to history, and we have set a new car parking spaces and better waiting areas,
goal of securing smart ticketing across new shelters and extra seats at stations across the
almost all of the rail network by the end route.
of 2018, while maintaining suitable The East Anglia franchise was awarded to Abellio
provision for users for whom smart East Anglia from October 2016. They are investing
technology is not suitable. £1.4bn to replace the entire train fleet by 2020.
3.6 The future of smart ticketing is likely to This will lead to more than 1,040 new state-of-
take two forms. For shorter distance the-art carriages, over half of which will be built
journeys, it is likely to take a similar form by Bombardier, securing 1,000 jobs at its Derby
as in London, with an option of smart factory. Commitments include 90 minute journey
cards (using the technology developed times between London and Norwich, free Wi-Fi in
by Integrated Transport Smartcard all trains and stations, and 32,000 more seats on
Organisation, ITSO Ltd.), contactless services arriving at London Liverpool Street in the
cards, or a mobile phone acting as a morning peak.
contactless card. Our goal is to ensure The Northern franchise was awarded to Arriva
that across regional and urban commuter Rail North Ltd from April 2016. They are delivering
areas smart ticketing is able to deliver investment of £400m in 281 new carriages, adding
the kind of pay as you go structure that is an extra 2,000 services and investing to provide
used in London, with the systems 37% more capacity during the morning peak
automatically charging fares at the period into the five major commuter cities of the
appropriate level. North.
3.7 Over longer distances, pay as you go is The TransPennine Express franchise was awarded
not a plausible option. Passengers will to First Trans Pennine Express Ltd from April 2016.
need to continue to buy tickets in They are delivering investment to provide 220
advance, but this will increasingly be new carriages, additional services to Scotland,
done over a mobile device rather than discounted advance fares for 16-18 year olds and
from a ticket office or printed at home. jobseekers, and 9,000 more seats into
The current systems being rolled out use Manchester, Leeds, Sheffield, Liverpool and
a barcode to allow a ticket to be read, Newcastle during the morning peak.
either by a gate reader or staff member,
but ITSO Ltd. is working to bring forward technology to allow the use of the wireless
capability in most smartphones.
28
3.8 Our aim for 2018 is that, by the end of the year, both ITSO and barcode tickets will
be accepted for travel on almost all of the network, and operators and retailers will be
able to offer a smart ticket that meets passengers’ needs. We also expect much of
the industry to offer smart cards that can be held in digital ‘wallets’ on mobile phones.
3.9 Pay as you go ticketing is already available on some commuter routes in the South
East for rail-only journeys. By the end of 2018 we expect to see other parts of the
network developing a similar service. The next step is then to secure interoperability
between those operators and with locally-led multi-modal systems, including TfL.
3.10 We have set objectives for 2018, as part of a longer-term process of reform driven
partly by technological advancement. We are working with the industry to determine
what the next generation of smart ticketing will look like and how best to deliver and
fund it. We expect in the medium-term wider use of mobile phone-based ticketing,
and in the longer-term to explore options that don’t require a physical check of
tickets.
Fares reform
3.11 We are working with the rail industry to develop and test potential reforms, and we
will review rail ticketing with the aim of removing complexity and perverse pricing. We
want to find the right solutions to simplify fares structures, and improve passenger
satisfaction and confidence that the price they pay is fair.
3.12 We recognise that working and commuting patterns have changed, and therefore in
all recent franchise competitions we have included a requirement to offer part-time
commuters alternative products that reflect how often they use the network. We will
continue to require bidders to offer similar products as franchises are re-let.
3.13 We will also work with industry to extend the benefits of discounted rail travel to
ensure those aged 16 to 30 can access appropriate concessions. This will include
the introduction of a new railcard for ages 26-30, which we anticipate will increase
the number of journeys taken. Further details will be announced in agreement with
the industry and will be implemented from Spring 2018.
Delay Repay 15
3.15 Passengers should be fairly compensated when things go wrong and be able to
claim compensation quickly and easily. Government has been working with the rail
industry to make improvements to current compensation arrangements. Passengers
are more willing and able than ever to claim fair compensation if their train is late or
cancelled.
3.16 The Delay Repay compensation scheme is currently in place on most franchises. In
its original form it offers compensation for delays from 30 minutes, and we are
improving the scheme by rolling out Delay Repay 15 (DR15), which pays
compensation for delays starting from 15 minutes.
29
3.17 We introduced DR15 on Great Britain’s largest rail franchise (Govia Thameslink
Railway) on 11 December 2016 and it is part of the new South Western and West
Midlands franchises. DR15 will be contracted as a requirement for all other
Department for Transport franchises when contracts come up for renewal. We have
also asked a number of train operating companies for proposals to implement DR15
before their contract expires, and will introduce DR15 if the proposals are affordable
and represent value for money for taxpayers.
31
Serving communities
3.30 We want to get the most from the national station estate. This includes more than
2,500 stations and ranges from major city terminals to remote rural halts. Given the
potential of stations to act as catalysts for economic development and community
regeneration we will encourage local authorities, Local Enterprise Partnerships, and
other partners to become more involved in making better use of stations to deliver
improvements for passengers and facilitate opportunities for new housing and other
amenities. We will consider a range of options for managing station facilities and
services.
3.31 We will also be encouraging greater engagement between the railway and the
communities it serves. Community rail is about building trust with customers and
communities through the work of community-focused organisations, including
community rail partnerships, station adopters, and rail user groups. The Government
is currently consulting on the future of community rail, which has been transforming
hundreds of stations and services on rural, semi-rural and some inner-city lines for
the last two decades.6
3.33 The franchise model is a partnership between the public and private sectors and has
helped to deliver significant benefits for Britain’s railways, including record levels of
growth, performance, safety and customer satisfaction. The success of franchising
lies in its inherent advantages as a commercial model:
Dynamism in responding to and supporting customer demand – the
franchise market can respond quickly to meet and grow passenger demand
backed up by recent record levels of private investment.
6
https://www.gov.uk/government/consultations/future-of-community-rail-strategy
32
Innovation – competition between rival bidders has attracted the best performers
with new ideas from around the world. Train operators have strong commercial
incentives to attract customers, including from other transport modes, and need to
develop new and better service offers to achieve this.
Public accountability to ensure everyone can benefit – rail is a natural
monopoly in many of the key markets it serves, with huge social, economic and
environmental benefits. So it is absolutely right that Government retains sufficient
control over services and fares, as well as operator profits, through franchising
contracts. These contracts allow Government to ensure the provision of socially
and economically beneficial services that the market would not otherwise provide,
and protect passengers by regulating certain fares.
Rebalancing the economy – franchise payments from the most heavily-utilised
parts of the network fund services in other regions, therefore maintaining the
national network and providing a range of economic and social opportunities.
3.34 However, to respond to changing circumstances and passenger expectations we
must continue to evolve our approach to franchising. In particular we need to:
Build public trust by delivering for passengers, taxpayers and wider
communities. Passengers rightly expect the industry to deliver the basics:
services that are reliable, safe and at a fair price; help when things go wrong;
clear and accurate information; and staff and systems to help them make their
journeys. This includes passengers who rarely use rail, have specific needs or are
disabled. But we also expect rail businesses to go further, to better engage staff,
industry partners and local businesses and communities and to continuously
invest to improve the passenger experience. Our vision is for rail to set the pace
for the wider transport sector in putting customers first.
Ensure that our approach is commercially sustainable and manages
financial risk and reward fairly and sensibly. Train operating companies have
strong commercial incentives and an excellent track record for attracting more
passengers to the railway, but forecasting revenue within any market remains an
inexact science, particularly over the long term, with factors such as wider social
and economic trends playing a part. We need to strike the right balance of risk
and reward to protect taxpayers’ interests whilst also attracting investors. And we
need to consider how to maintain that balance through periods of uncertainty or in
the face of unexpected events.
Be adaptable to different local needs and circumstances. More than ever we
need to be able to adapt our approach and tailor solutions to meet the different
challenges and opportunities across the varied markets that make up the rail
network. The inherent flexibility of the franchise model allows us to do this.
34
A new generation of commercial models
3.41 Our approach will also mean using a new generation of commercial models for
franchising, bringing together aspects of the following where appropriate:
There will continue to be situations where transferring the majority of revenue
risk to train operators over the medium term will be the right option. In these
situations it will allow the right balance of risk and reward for investors and so
create the right conditions to get the best deal for taxpayers and create strong
commercial incentives for train operators to meet passenger needs and grow the
market. Following the Brown Review in 2012 (see box 9), we introduced risk-
sharing mechanisms to reduce operators’ exposure to changes in wider economic
factors outside of their control. We have also developed the forecast revenue
mechanism with industry to manage financial risk should future growth
significantly under or over-perform expectations. Franchises which have such
protection will also have contractual responsibilities to ensure that they continue
to deliver quality services to passengers and to grow their businesses.
In other circumstances there are significant challenges to predicting the impact of
change on rail revenues, such as during major infrastructure upgrades.
Alternatively, a direct commercial incentive for a train operator to grow its market
could compromise passengers’ interests in heavily captive markets. Transferring
revenue risk to the private sector in these circumstances could lead to poor value
for money. Here we will take a different approach. For example, we are already
making use of management contracts instead of a traditional franchising
approach, including for the Thameslink upgrade programme and elements of the
West Coast Partnership for the delivery of HS2. We want to build on this, working
with industry and passengers to develop this model so that we can best
incentivise our commercial partners to deliver greater quality, manage costs and
grow the market while Government retains revenue risk.
We will also develop a commercial model that best supports longer term and
more integrated partnerships between track and train. Train operators are best
placed to know how their customers want to use the network and identify the
changes needed to enhance performance. The train operator will actively
collaborate with Network Rail to bring a clear operator and passenger view to
planning infrastructure management and developing plans for future route
infrastructure. Bidders will need to develop credible plans and this will form part of
a revised bid assessment process. To fully realise this relationship a longer term
contract (up to 15 years) will be used, and we will consider the scope for
contingent extensions beyond this if this will unlock new benefits for passengers.
Periodic reset points, combined with the use of the appropriate risk transfer
mechanisms, could ensure that financial uncertainty over such an extended
period is manageable for all parties and protect the interests of taxpayers and
passengers in the light of changing circumstances. It remains the Government’s
view that the vast majority of infrastructure risk should lie with Network Rail. There
may be small scale opportunities to share risk to improve the efficient delivery of
infrastructure but these will need to be designed on a case by case basis.
Protections for other passenger operators and freight operators will be
maintained, including via the processes and work of the System Operator and the
independent regulator, ORR.
3.42 These new models give us a range of options for how the public sector and private
partners can work together on each franchise. We will work with industry via the RDG
35
and other stakeholders to develop these concepts before their introduction. We must
secure a healthy long-term franchise market and realise the full benefits of
competition, by continuing to manage the bidding process and costs efficiently and
effectively, to ensure franchise competitions continue to attract a range of bidders.
Beyond this, we will undertake detailed design work ahead of each franchise
competition, drawing on significant market engagement, to develop tailored
approaches best suited to each individual franchise market to secure the best
outcome for passengers and taxpayers.
3.43 There will continue to be a complementary role for wholly private open access
operators. However, the public procurement of train service operations through
competitions and contracts will continue to be our central policy, given its record in
protecting passengers, making best use of intensively-used infrastructure and
regulating key fares. The ORR is developing proposals to ensure open access
operators make an appropriate contribution to network costs. We believe that open
access rights should not be granted where they would have a significant negative
impact on the performance of existing services, nor where the service would have the
effect of primarily abstracting value from franchised services without serving new
markets.
38
freight charges, and asks ORR to take all appropriate steps to support the growth
and development of the rail freight sector.
Freight Operators have given up 50% of their unused freight paths, creating
capacity for other operators to allow the rail network to be used more efficiently.
3.49 As set out in the recently published Clean Growth Strategy, we are also working to
enable cost-effective options for shifting more freight from road to rail, including using
low emission rail freight for deliveries into urban areas, with zero emission last mile
deliveries.
3.50 The Department’s Ports Connectivity Study is examining port surface access and
connectivity in England to identify improvements that support economic growth and
help inform transport investment decisions. This will make the case for improved
freight connectivity, including rail freight connections, to and from English ports.
3.51 The NIC has also announced a new rail freight study into the future for freight.7 The
study will review options to improve the existing infrastructure and recommend ways
to use new technologies and processes to transform how freight moves by road and
rail, in towns and cities, cross-country and into and out of ports and airports.
7
https://www.nic.org.uk/news/new-study-will-examine-future-freight/
39
4. A modern workforce
4.1 Innovation and modernisation have a vital role to play in supporting a growing and
increasingly passenger-focussed railway. To deliver these outcomes the industry
needs a long-term strategy for building and developing its workforce. This will require
the right incentives for staff at every level, the continuous development of new skills
and a diverse workforce. The challenges and opportunities presented by modern
technologies and ways of working are already shaping the way passengers make
journey decisions, and they will shape how the workforce develops.
Industrial relations
4.2 We will work with the rail industry leadership to ensure it develops long-term stable
and constructive relationships with its workforce and their representatives. Rail sector
staff lead on the relationship with passengers and are critical to the delivery of our
vision for rail. Positive relationships with staff are important to support not only the rail
businesses themselves, but also staff wellbeing and morale.
4.3 Through the use of our franchising programme and via the industry’s formal bodies,
we will introduce a range of measures aimed at putting long-term industrial relations
onto a sustainable footing and laying the basis for better staff engagement, including:
Staff rewards and incentives: we recognise how critical the industry’s workforce
is for the success of the railways. In future competitions, we will challenge bidders
to identify mechanisms to enable staff to share in the success of the business,
whilst ensuring value for money for all stakeholders, including taxpayers.
Full staffing: we will look for bidders for future franchise competitions to set out
plans to ensure that key roles upon which the delivery of the train service
depends are resourced to a level that enables the resilient operation of the
railway, without the need for extensive overtime or rest day working. We want to
promote both employee wellbeing and optimise performance and reliability.
Leadership: we will introduce obligations into new franchise agreements that
promote effective, modern leadership, to improve staff engagement.
Diversity and skills: we will use our franchise competitions to support our
ambitions to improve the diversity of the workforce, encourage the development of
new and transferable skills, and promote flexible working.
High quality jobs in the longer term: we recognise that people employed in rail
want continued good quality work in future. We will work with the industry and its
stakeholders to ensure alignment between future roles and the necessary skills
development of people at all levels.
40
Skills and training
4.4 Being good at what we do right now is not enough to deliver the railway of the future.
The infrastructure and operational models that the rail industry will rely on in the next
decade - and beyond - will enable it to grow and improve in ways that were not
possible previously.
4.5 We support the important industry initiatives underway to transform the rail workforce
such as the Transport Infrastructure Skills Strategy (TISS), delivered by the Strategic
Transport Apprenticeship Taskforce (STAT), and the Rail Sector Skills Delivery Plan.
4.6 The Department for Transport and train operators are agreeing a range of ambitious
targets for apprenticeships in franchise agreements. The new South Western
franchise includes significant commitments around skills and apprenticeships,
including at least 100 new apprenticeships to be offered by the operator each year.
4.7 This agenda is ably supported by the creation of new, world class infrastructure skills
colleges, including the recently opened National College for High Speed Rail, which
will provide cutting-edge technical and professional courses and produce a new,
diverse generation of high-tech engineers and technicians. The Tunnelling and
Underground Construction Academy, built and established by Crossrail in 2011, was
instrumental in meeting the skills needs of the Crossrail project. It has now been
transferred to TfL to continue to provide training for the key skills required to work in
tunnel excavation, underground construction and infrastructure.
4.8 The railway workforce has served the rail network with distinction for many years.
Together we must now look to the future to understand the challenges and
opportunities it presents. We will work collaboratively to develop a modern skillset.
We are working closely with industry to develop high quality apprenticeship
standards to ensure a pipeline for the future. To ensure we are at the forefront of
development of digital technology, we will work with industry and academia whilst
strengthening research and innovation in the field.
4.9 We want to see modern training techniques much more widely available – enabling
experienced train drivers to gain broader route knowledge through state of the art
simulators, for example.
4.10 Our work with the industry will improve the recruitment, training and management of
the driver workforce. Drivers represent one of the key resources for rail, and the
industry, through the RDG, is supporting their training through the establishment of
the National Train Driver Academy. The Academy, which is due to begin operations
in April 2018, will bring together existing industry training resources and promulgate
best practice and innovation in training techniques. In parallel, it will be developing
new apprenticeship standards for the train driver profession and working to increase
the supply and diversity of qualified entrants to the workforce.
41
5. A productive and innovative sector
5.1 The rail industry and its supply chain in Great Britain employ up to 216,000 people
and generate up to £10.1bn of gross value added each year, according to industry-
commissioned research.8 A productive, innovative rail industry is essential to deliver
our ambitions for the railway and for the UK economy overall.
8
https://www.oxera.com/Latest-Thinking/Publications/Reports/2015/What-is-the-contribution-of-rail-to-the-UK-economy.aspx
42
5.7 We will continue to work with the rail industry to develop and communicate our vision
for innovation in the rail sector, identifying and prioritising strategic priorities to enable
higher levels of uptake of innovation. We will use our procurement and policy levers
to ensure that approaches to innovation are improved throughout the sector.
43
CCS1117439540
978-1-5286-0125-2