Working as one railway, evolving to improve for customers and the economy
Paul Plummer, our CEO, gives a speech to the Future Rail Infrastructure Summit about how the railway is changing to deliver more for customers, businesses and the economy.
I have been at Rail Delivery Group now for nearly two years. We have plenty of challenges to help bring together different parts of the industry so that it can be successful. And we certainly have more to do. But I believe we have made significant progress and I'm optimistic that this will become increasingly apparent. Much more importantly, I expect it to become apparent that the railway is doing what’s needed to improve.
Our primary job as the RDG is to enable railway companies to deliver for customers and the nation. For example, by sharing best practice, by enabling change so that different parts of the railway can collaborate effectively, and by informing government on key choices for the future.
The RDG also delivers directly on behalf of government and customers. To give you just three examples: We are coordinating the rail industry’s input to government’s response to Brexit. We are updating out-ofdate back-office systems while working to modernise fares and ticketing. And we are working closely with Government to set up a rail ombudsman to strengthen the independent voice of the customer.
Going forward, we have the opportunity presented by RDG’s partnership with Rail Supply Group to understand even better the supply chain perspective and to work together in presenting a clear and coherent view of the future.
I’d like to talk today about three broad themes.
The first theme is about the essence of today’s model for running the railway. And why it remains an effective, robust, stable and cost effective way for us to organise this amazing and complex public service. It’s about how the railway infrastructure fits into the overall system so that it is properly joined-up and focused on the customer to connect communities and businesses across the country.
This means that evolution is possible.
The second theme is about some of the challenges facing the railway both today and tomorrow. These challenges exist regardless of how the railway is organised. The need for planned investment in the railway infrastructure is a case in point but it only makes sense as part of a railway that is working together.
So, evolution is not only possible but it is necessary.
The third theme is about how the railway is already evolving in order to meet these challenges. We live in an age of such head‐spinning innovations and dazzling possibilities that no system, institution or company can remain static. The technological revolution, the changes in public expectations, and the need for obsessive focus on customers are why we are all evolving.
So, evolution is actually happening.
The Victorian legacy
We all know that Britain’s railway is a remarkable achievement. The imagination of the Victorian entrepreneurs and the genius of the engineers has left us with a transport system which remains the surging artery of the nation.
As any historian can tell you, the railway shaped the age: creating new industries, changing diets and boosting public health, bringing great prosperity, shaping our landscapes and our cityscapes. It caused the invention of so many things we take for granted today, from suburbs to timetables, from WH Smiths to fish and chips.
Britain’s railway is part of our shared culture, our collective memory, woven into the fabric of the nation. So every day we should recognise this legacy, and perhaps silently thank those on whose shoulders we stand.
But its not just the Victorians – it’s also those in the 20th and 21st centuries who continued their work. Today’s engineers, operators, customer-facing staff and their supply chains are uniquely skilled across the world at getting the most out of this Victorian legacy and building on it.
So we can be proud of what has been achieved in recent times too.
CrossRail and Thameslink are arguably on a par with much of the achievement and engineering skill of Brunel. Our plans for high‐speed rail are just as bold.
The Orsdall Chord may be on a different scale. But it is one of many great examples which we have been discussing for years and which are now happening because of the industry working together, as one railway with its supply chains.
We need to translate these great achievements into what it means for customers in terms of seats, journey time, frequency and their wider experience. So, we should all know that over the next 18 months there will be 170,000 more seats into London and 16 lines into London with more frequent services. This story is similar across the country.
This may be an infrastructure conference but we need trains to put on that infrastructure. The story here is a fantastic one. New trains are arriving up and down the country, including the West Country, Anglia, Wales, Scotland, the Midlands, Northern and Transpenine.
Communities, the economy and our people
Britain’s railway is ever more important to the economy and this is now more widely understood across the nation. We all know how important this is at a macro level and RDG publishes analysis of this contribution.
But real people see the difference even more in the way improvements in rail can change their own communities providing more opportunities for everyone. So we are working with the local teams to help tell this story.
Many people don’t realise that the railway and its supply chain support 240,000 jobs and pay £4 billion in tax to the public purse. And we are creating more, high skilled jobs by investing in skills at the cutting edge of technology while taking on tens of thousands of apprentices.
There is probably even less awareness that the industry has transformed its finances. It has gone from running a deficit which stood at £2 billion a year in 1997/98, to returning an annual net surplus of £200m back to government. This enables further investment for generations to come.
They say freight doesn't vote but voters need to know how critical freight is to their lives. Not just in getting the goods and services that they want to their homes and businesses but also by keeping more lorries off our roads.
So, in order to feel positive about the railway we shouldn’t need to look back into history through rose-tinted binoculars.
We can be proud of what’s happening today and help the nation to be proud as well.
Evolution is possible - by design
In recognising these achievements, we are keenly aware of the future challenges, and this brings me to the first of the themes I want to address. That is the essence of how we organise our railway and why it offers a great way forward.
There are many parts of the railway. That has been true throughout railway history. The way that these parts are organised today – our model - provides transparency around each of the parts. That transparency is really powerful and flexible.
It enables a clear focus on delivery of each part with the different skills needed; for example, to manage the infrastructure and to operate the trains.
It enables manageable sized business units to provide a strong commercial focus on customers. And thus promoting innovation and providing access to various sources to capital.
Fundamentally, this model allows sensible evolution to enable improvements for customers, communities, the economy and our people.
Evolution is possible - collaboration
Critically, however, this model - and any other model - requires collaboration between teams. It doesn’t matter who these people work for – what matters is that we create the conditions for success by working together, as one railway.
This collaboration means working together locally between Network Rail routes, train operators and their supply chains. It also means collaboration nationally to join up these local teams so the network operates in a seamless way while promoting local innovation within proper technical parameters.
We need to work every day to show to customers and the public that, we are one team, working together as one railway. If I may borrow a phrase from the USA, out of many, we are one. Each of us dedicated to the simple proposition that every customer has the right to a safe, clean train, which runs on time and is comfortable, at a fair price.
Evolution is possible - best of both
At school, my favourite book was Schumacher’s Small is Beautiful. Writing in the late 1960s and early 1970s, Schumacher railed against the prevailing tendency for ever‐bigger organisational monoliths in the private or public sectors.
He called it a ‘trend towards vastness’. He argued these vast entities become distant from the public, unresponsive to public needs, and nightmarish for the people working within them.
Instead, he says the ‘fundamental task is to achieve smallness within large organisations’. This allows us freedom to focus on problems, to allow innovation and to unleash human creativity.
I believe you can see some of this ideal in today’s railway, with its mix of small and large, local and national. It has matured over 25 years and can evolve further.
Today, we have a partnership of private companies and public bodies. This plurality of ownership brings different benefits into each of the core areas.
Our current model avoids the worst of two polar opposites – neither free market free‐for‐all, nor sclerotic, monolithic corporation. Instead it combines the best of both worlds.
The potential for profit enables innovation and investment, just like in any other sector of the economy. But profits are a result and not a right. Operators only get the chance to run a franchise if they offer the best value to taxpayers and even then they will only be profitable if they are relentlessly focused on delivering for their customers.
In this model, private sector delivery is combined with a strong public service ethos, within a framework of law and regulation set ultimately by Parliament.
In short, this involves private businesses, focused on customers but also delivering a public service for the nation. In many ways these businesses are effectively custodians of a national asset which belongs to future generations.
So, the model we have today works and can evolve to work even better.
Evolution is necessary - investing to improve
This brings me to my second theme. I believe it is a fact that there are numerous core challenges and other realities which need to be addressed, or recognised, regardless of how we are organised.
Yet these challenges are sometimes presented as reasons for radically different ways of organising – for nationalisation or the opposite.
So, let me make clear that no matter how the railway is organised, whatever the balance between private and public, the core challenges won’t go away.
There will still be the need to modernise, innovate and invest and simple solutions do nothing to address these challenges on their own.
It is also a fact that rail has already been transformed radically over recent decades. We should celebrate this transformation. But it is no reason for complacency or for us to stand still.
We should also be cautious about undermining what has been achieved and making matters worse. Radical change can have unintended consequences and any change needs to be managed.
The transformation of our railway brings with it another fact. Until recently the railway faced many years of underinvestment. And the growth in demand over the last two decades means it is now full and in some places crowded. We therefore need to continue investing. And this investment can itself cause disruption.
But it would be perverse to attribute crowding or disruption from well managed investment to the way we are organised, especially if it stems from historic underinvestment and more recent innovation which enabled growth.
Evolution is necessary - in partnership
The only thing that matters is that we organise ourselves in a way that enables continued investment and improvement to be achieved, now and for the long-term.
So this leads us to another fact. Rail is a key public service which can be, and is being, delivered effectively in partnership – but it must be organised effectively. We must work together, as one railway.;
The consensus about the need for investment is great and this investment can be delivered in different ways to bring benefits from innovation with alternative sources of finance being used to reduce the burden on taxpayers.
Rail is also critical to the lives of our customers. This means that fares have to be controlled. That’s entirely normal in other sectors such as energy, water and telecoms where regulation is necessary and we certainly need effective regulation which enables businesses to deliver what customers want.
Government has to make choices about how much railway the nation wants to buy to enable economic growth. The trick is to do this in a way which focuses on outputs rather than inputs so that it enables businesses to work out the best way of delivering.
Government also has to make choices about the balance between how much of this is paid for directly by customers rather than the taxpayer. This has always been true and it will remain true for generations to come. The trick is to do this in a way which enables sensible evolution of fares so that the customers see a stronger link between the service they get and the fares that they pay.
So, we have a model which works and has the flexibility to evolve. It also needs to evolve.
And for anyone who advocates any radically different system, I would simply point that none of the perceived problems would be solved by such changes alone. For example, none of the challenges we face today go away or become easier to deal with if we simply remove private companies from the mix.
When it comes to improving the railway, there are no quick fixes. But we do have a plan to fix it.
Evolution is happening - globally;
This brings me to my final theme - which is that the system is evolving!
It is now, as we plan to leave the EU and face an uncertain economic future under Brexit, that we most need stability.
The public tells us they want to see coherence, a railway which works together producing joined‐up services, ticketing and timetable. Not a period of upheaval.
If we were to close down the opportunity for Britain’s railway companies to seek investment from international investors, how would we meet the shortfall in skills and investment?
In virtually every area of economic life, we see trans‐national companies operating in the UK, just as British‐owned companies operate abroad. This is the hallmark of a globalised economy. In future, this will surely become even more important.
We should be proud that British transport firms and suppliers are exporting their expertise around the world. And we should be pleased to see international businesses who want to base themselves in the UK bringing skills and investment that we need.
Evolution is happening - here and now
Many studies of the railway have emphasised the importance of putting the customer at the heart of it. I think Nicola Shaw was spot on when she highlighted the need for a ‘line of sight’ between the customer and those delivering rail services. And this is beginning to happen.;
So Network Rail is transforming the way it is organised. Both train operators and suppliers are excited to see truly empowered route businesses with whom they can do business. It is also reassuring to see recognition of the need for an industry-owned system operator to joinup these local businesses and provide the analysis needed to support the case for investment.
Together with the conclusions from the Hansford review, this brings the prospect of different forms of partnership to deliver projects involving routes, operators, suppliers, developers, funders and financiers. That’s entirely normal in other industries and I’m sure it will become normal here.
Regulation is also evolving. To create a system of route based regulation which reinforces the line of sight to customers while protecting the interests of future customers.
The same applies to franchising and to freight where evolution is needed to establish a model which can continue to deliver sustainable improvements for customers and the economy.
Fares and ticketing is another example. The public tells us they want a simple, understandable system. Quite right. With the support of government, together we can untangle decades of old fares regulation that are a hangover from the previous system, and create a fairer, simple pricing structure that is fit for the needs of the modern passenger using a modern railway. This is what the travelling public wants.
Together, we are investing to connect Britain by moving more customers and linking more manufacturers to export routes with more freight capacity.
Together we are improving customer experience across the UK, including 6,400 extra services a day and 5,500 new carriages.
Together we are creating vibrant markets that will deliver more choice for passengers and fairness for taxpayers.
Together we can continue to reduce the burden on taxpayers, freeing up more to be spent on other vital public services.
Together we will invest in jobs, going further to create more long‐term skilled jobs with more apprentices from every community.
I believe Britain’s railway has a future which is as illustrious as its past.
We have the right plurality of businesses, delivering a customer-centric public service, for the nation.
The system must evolve to meet today’s challenges. It can evolve and it is evolving.
Working together as one railway, for the benefit of the whole of Britain.