what is happening right now?
“Progress is being made,” says Andy Bagnall, chief executive of Rail Partners, the small lobbying and advocacy organisation spun out of the Rail Delivery Group.
“A huge amount has been done since the White Paper. There are steps being taken to realise the vision. But we need to acknowledge the impact of events: the new political leadership, the industrial action, and all the things that distract Government.
“When you have political transition, it makes things harder. The way Government stepped in during the pandemic has also blurred accountabilities. It has thrown up questions about who is responsible for what. The union action has further highlighted this.
“The evidencing of what makes value for money is more onerous than when we were taking decisions as private companies about how our own investment and revenue were involved.
“There are two sets of decision-makers: the Department for Transport will take through the legislation, and GBRTT is doing the planning. It is less visible to a lot of people, but I can assure you a lot of work is going on, anticipating the legislation.”
Lees asserts that “train operating companies are the living dead” adding: “I have no idea why they have been reconstituted this way. In March 2020, it took just two weeks for all of them to collapse. Since then, we have had EMAs, ERMAs and now NRCs - too many acronyms - but essentially, they are just replicating the previous train operators with the revenue risk removed, even though four of the big ones are run by Government anyway. As a taxpayer, why am I paying for this inefficiency?
“This is not a recipe for getting us out of the mess we are in. That will only be achieved by generating more revenue. You can mess around all you want with costs, but you’re not really going to get rid of more than perhaps £1 billion of cost unless you start cutting large amounts of train services. On the other hand, the revenue line reached £10.9bn just before COVID. That’s not a natural ceiling, and it was based on overall seat occupancy of about a third. The industry should be focusing on that.
“We have just managed to bring Uber to the market. They have big ambitions. They have two million people using their apps. Their reach is really good. A lot of those people will be non-rail travellers. We haven’t got a coherent offer to give them, which is really frustrating.
“There are times of day, days of the week, geographical areas with capacity. The Uber app could do something really exciting with that.
“But where are the incentives? If there was more commission for targeting particular things that generated marginal revenue, filling empty seats, that would all be cream on top for the industry.
“But GBRTT is a silo, an ivory tower that isn’t talking to other people. And it tells us the data about empty seats is commercially confidential, instead of using that data to sell those empty seats.
“GBRTT is populated entirely by Network Rail and TOCs. Where are the retail and tech suppliers in their expert staff? Where are the people who can release big data?
We should look at what people are researching, not just what they actually buy. We process half a million journey requests a day: we are quite small. We know what people are searching for, when they are searching and when they want to travel. We should be using all these expressions of interest to influence how we arrange capacity. There are tools to sell empty seats. What we need are tools to incentivise organisations to sell that marginal capacity. These are not free things to do, but they are not costly.”
Freight
Rail’s freight businesses work to a different agenda. While the Treasury ploughed billions into passenger services, freight was not supported by emergency measures.
What the freight companies crave is certainty. Certainty of train paths, certainty of regulation, certainty of an industry structure that enables their shareholders to invest.
“The Treasury ploughed between £15bn and £20bn into the industry to keep it running,” says John Smith, the ever-outspoken head of GB Railfreight.
“Everyone was paid, even though the passenger service was halved. Then people went on strike for more money. I think that has caused momentum within the Treasury that they should not throw more money at the railway.
“And in that context, I think there is some uncertainty in Government about what GBR actually achieves, not least in terms of private sector involvement. Clearly, with passenger revenue now sitting on the Treasury’s books, there is very little incentive within the train operating companies to seek private investment or to drive the revenue up. That is reflected in the disputes that are taking place.
“The culture gap between the passenger operators and the freight operators is now getting wider. I despair at the revenue not being accountable to the companies which live or die by their ability to generate money.
“We’re spending our largest ever sum: £150 million on bi-mode Stadler locomotives - the next step to decarbonisation. To stimulate that sort of money at board level, I need stability.
“I need to protect our relationship with Network Rail, or whatever it becomes. The commercial interface between us and them, defined by legislation, is hugely important. Having clarity of capacity, and how we are charged according to performance regimes, enables my shareholders to choose whether or not to invest.
“When things like strikes get in the way of that, we have to be certain of being compensated if services we have been promised do not happen. We have to fight very hard to make sure that is retained.”
Developing new freight markets is arguably more challenging than passenger operators adjusting services to emphasise leisure travel.
GBRf has recently started carrying Coca-Cola from a bottling factory in Tilbury to Wakefield, replacing road haulage. It is essential that the cargo is loaded by forklift truck, for which standard containers are unsuited. With Maritime Transport, GB Railfreight has bought 50 containers and modified the floors, so that Coke bottles can be driven in and out, much as curtain-side road lorries are loaded.
“People are getting serious about the green agenda,” says Smith. “Rather than greenwashing, they’re willing to pay for the lift onto rail and the lift off it to a warehouse, instead of just using a door-to-door lorry.
“There is a bit of momentum, and it’s that sort of thing that GBR must be structured to encourage.
“At the moment, we are buoyant. We are seen as industry-leading. Rail freight is in a good place. When I started at Felixstowe, there were 12 trains in and 12 out. Today, it is 38 each way. I’m asking Network Rail how we can cater for 50. Or even 60. Can we get parcels back onto rail? Yes, we can. Can we get internal intermodal? We’re on it.
