Conceding that extra involvement by local authorities will need careful thought, Bray continues: “There are all sorts of issues about playing a greater role; safety and everything else. Let’s not be ‘gung-ho’ about it. There is potential for our cities to play a greater role in delivering selected enhancements when the alternative doesn’t look too good. Stations is a critical area and segueways into topics like housing and demand; serving housing developments and also potential developments around stations (on rail land).
“Then you get to what role the city region can play in that, joining the dots between those in a way that rail engineers in London may not be so focused on. No criticism of them but it’s not their job to think of those things in a way we clearly have an incentive to do. We need to try to get the industry away from this in and out of London focus. I’m not saying that’s not important to the city regions - they certainly are, but so are links between other cities and within cities themselves.”
Hansford acknowledges a number of barriers which currently discourage third parties investing in rail infrastructure projects. Among them, the lack of clarity on whose job it is to remove those barriers. Consistent with what the members of Urban Transport Group told the review, Network Rail is seen as being “unable and unwilling to provide certainty of project costs” and lacking interest in “helping third parties to achieve a cost-effective result”. Agreements required by Network Rail to protect its assets and infrastructure can be “disproportionately onerous” on third parties for low-risk projects.
In a fully contestable market Network Rail’s various route departments should be able to compete with third parties with alternative solutions and funding contributions to find the best solution with the least amount of public subsidy, the report says. The example of the Stockley Junction to Maidenhead electrification (part of Network Rail’s work for Crossrail) is touted as a way different contracting strategies can bring benefits - where the private sector can assume more responsibility for delivery rather than a traditional ‘hub and spoke model’ whereby Network Rail acts as a hub and manages third party contractors as the spokes. Currently there is “a lack of considered choices between different contracting options” preventing the private sector delivering at lower costs.
Twelve recommendations are made in total. Most, unsurprisingly, fall at the door of Network Rail. Others require the Government to take a lead. The 12 are grouped into four themes; (i) Delivering more value for money, (ii) broadening third party investment, (iii) enabling third party projects and (iv) oversight arrangements.
In more depth, to deliver more value for money, Network Rail is asked to develop commercial capability to execute alternative designs and delivery options for infrastructure projects, and to demonstrate its commitment to a contestable market. To bring more third parties to the table NR and the Government are asked to develop transparent principles for considering contestability and to develop a forward view of the timing and scale of the opportunities to invest in rail.
Enabling third party projects depends on further overhauls of Network Rail’s corporate culture; behavioural changes are required to create a “welcoming, predictable and trusting environment providing more cost and risk certainty”.
A transparent process should be created to enable third parties to challenge additional project requirements so they can be fixed before funding commitments are made. There is just a single recommendation regarding oversight arrangements so more contestability is delivered; it should be built into existing governance structures, a process that Hansford expects will involve not only Network Rail, but likely the Department for Transport and the Office of Rail and Road, too.
Mike Ashworth is the strategic director of economy, transport and communities for Derbyshire County Council. He also chairs the Transport Board of ADEPT, the Association of Directors of Economy Planning and Transport. His recent experience of working with Network Rail includes the construction of a new station at Ilkeston on the Erewash Valley line, some 50 years after the previous one was closed. “It’s a modest project around the £10m mark,” he says. “We opened it in April and it’s proved to be a massive success, but picking up some of the points that are made in the Hansford Review, there is a lot that rings a bell about enabling third party projects.”
Such as? “With generous help from the Department for Transport and the new stations fund, the County Council took on the project sponsor role and put in £3m of its own money, with no immediate prospect of getting the benefit back,” says Ashworth. “There are social benefits but not any financial benefits for the council in terms of that investment. Network Rail didn’t take any of the risks associated with delivery.”
Ashworth believes Network Rail saw the bigger picture, buts adds that when it was dealing with the contractual arrangements “it got complicated”. For him, it’s Section 8 of Hansford’s report that hits the spot, talking specifically about third-party funders requiring certainty of costs and confidence about delivery timescales.
“The process is very well encapsulated by the review,” he says. “Broadly speaking it’s very good, very detailed. We are still experiencing some difficulties about finalising all the costs of Ilkeston. They are minor snagging costs, but we need that surety because we have approvals for a set amount of money. I don’t think there will be more money coming from government.”
So, if you could ensure one part of the review was adopted, one thing you could fix, what would it be?
“It would be helpful in advance of these processes if Network Rail recognised there will be third party funders - and actually make sure we have a well understood point of contact who will do all the coordination with the various bodies within Network Rail to ensure a project is delivered appropriately and on time,” says Ashworth.
An issue of communications primarily then? “I would say so. And a bit of a cultural change in certain areas of Network Rail. At a higher level. They got what we were trying to achieve and were well versed in the new stations fund but as a small example it would be good to know that throughout the organisation of NR they were all trying to sing from the same hymn book and get things delivered on time and to cost and there was a potential sharing of the risks.”
Since opening in April 2017, Ilkeston is on course to be used by 150,000 passengers in a year. Would the County Council be ready to repeat the experience? “I think during the period where we were getting towards delivery I would have said ‘No - the last thing we want is to be taking on another project like this’. They took a long time to deliver,” says Ashworth. “It wasn’t all Network Rail’s fault by any stretch of the imagination, but I’m a civil engineer. This was simple. Practically speaking the piling work was straightforward. To have almost four years of process to get to completion... it was a frustration.
“But you look back and reflect and realise it is all worthwhile because of the social value of what you achieve. We have got other locations in Derbyshire and I guess all over the country where my colleagues working as Directors of Place would like to see similar sorts of stations or infrastructure put in.”
He applauds the review for recommending a stop to speculative schemes. “It would be helpful for Network Rail to do some work to identify locations where there was real merit, so they were on the front foot, looking for potential sites for stations where they might be beneficial,” says Ashworth. “As a highways authority, we’re always looking at because we’ve got that information on our network - we know where we are with transport planning. I’m not sure if that’s true with Network Rail. I think they are more reactive.”
July 2017 was a month of rail stories that stirred headline writers - the route of Phase 2b of HS2, the cancellation of electrification along the Midland and Great Western Main Lines, Tram-Trains ’major cost and timetable overruns among them. These are topics which immediately generate a public reaction. By contrast Network Rail’s press release of July 31 did not garner much reaction; the announcement of sweeping reforms to “enable companies to become heavily involved in delivering railway investment projects” not perhaps something to spark the imagination. However, this was NR’s Hansford response, which promises fundamental transformation “because potential investors will have a choice over who delivers projects for them”.
Several immediate reforms were laid out; publishing a regular pipeline of third-party project opportunities, creating “third party champions”: to work alongside delivery bodies and investors, creating a clear service level agreement for third parties, introducing flexibility to railway standards without compromising safety, and a reward scheme where money saved by innovation is shared between Network Rail and the innovator.
Chief Executive Mark Carne was quoted as saying: “By welcoming open competition into the core of our business we will increase the pace of innovation, creativity and efficiency and could deliver even more improvements to our railway and for the people that use and rely on it every day. I am determined to create an environment where innovative third-party companies can compete for and directly deliver railway projects. These reforms mark the next stage of Network Rail’s transformation having already decentralised into nine devolved individual businesses.”
Alongside warm words from industry leaders welcoming the changes was confirmation of a two-year deal with Resonate to introduce a digital traffic management system on the Great Western Main Line. The private company will pick up “much of the cost” for installation and operation. Any resulting savings in compensation payments to Train Operating Companies will be shared between Network Rail and Resonate.
Concluding Hansford’s report is an upbeat paragraph: “The review panel drew considerable confidence from the successes already achieved in introducing contestability in other examples in the rail market, most notably HS1, Crossrail Limited and HS2 Limited. The point being that if such major projects can be successfully brought to fruition through different delivery models, then there really is no limit to what may be achieved by introducing contestability into Network Rail’s projects.”
The modern railway is apparently built on paperwork. Reviews have come and gone, fading into the rear-view mirror as the need to function from day to day consumes attention. That won’t stop potential project sponsors looking for the changes Network Rail has promised on the back of Hansford.
Shifts in culture and structural reform will take time to permeate through such a large organisation. A decade from now we might be able to judge success as projects delivered on time, with budgets unbroken and third parties satisfied. To get there will require investors and innovators to feel confident, not only that they have been heard, but listened to.
