By John Hughman, 17 February 2012
Dutch firm Abellio – a subsidiary of its state-owned rail operator Nederlandse Spoorwegen – took over the running of my line last week from previous operator National Express. Anyone expecting an overnight transformation to the smooth running we have been led to believe is the norm on the continent will have been sorely disappointed – my first train was cancelled; the second 20 minutes late before signalling problems outside of Liverpool Street brought an early termination of the journey at Stratford. There have been minor delays throughout the week, and standing room only on many journeys.
The inauspicious start to the newly named Greater Anglia franchise can hardly be blamed on Abellio, of course, given the rotten weather and its short involvement in the line – after all, it’s not its fault that after 150 years or so we haven’t, it seems, yet learnt how to operate a railway in a few inches of slushy snow, and it is Network Rail – not Abellio – that looks after the signalling equipment that caused the delay.
What week one’s problem highlight, though, is that the success of Abellio’s foray into Britain’s railway system is in a large part out of its hands, at least in the short-term. There is no ‘Passport to Pimlico’ style switch that immediately turns of the bad weather that train operating companies usually find to blame for slow running (or too good, because in my commuting experience heat is equally disruptive).
Nor will years of apparent underinvestment in infrastructure or rolling stock be reversed in an instant. “For at least a couple of decades we took a holiday on renewing our railway tracks before and after privatisation”, said Network Rail chief executive Sir David Higgins in a recent interview with the FT, the result being that our railways are slower, more expensive and less comfortable than those in Europe, as revealed by think tank Just Economics in a recent report. “People go to Switzerland and ask why can’t we have the same service? That is because for the last 50 years they have worked relentlessly and make sure their railways are easy to maintain”, says Sir David. Abellio, though, has just 29 months before the new Greater Anglia franchise is retendered, surely not enough to bring about any substantive changes to the operation.
While Just Economics’ conclusions on the state of Britain’s railways are hardly earth shattering, it is perhaps more surprising to the average commuter that in fact the public transport shambles is possibly not the result of under-investment. Britain spends £10b a year running its railways – although that hasn’t changed in a decade, it’s still more as a proportion of GDP than any other European country except Italy. That suggests the problems faced by Britain’s railways are instead either the result of mis-investment, or, more likely, downright wasteful expenditure.
That makes commuters extremely cross, because we know that it means a large part of the hefty season ticket prices we’re buying goes straight out of the bottom of a very leaky bucket, and isn’t, as we’re told, funding the improvements to the service we desperately want. I pay a not insignificant £3,500 a year, and often find myself standing all the way into London, because all of the spare seats are occupied by the suitcases of tourists coming into London from the passenger ferry terminal at Harwich. Why our operator hasn’t managed to introduce longer trains with luggage racks in the seven years I’ve caught the same train I’ll never know – but it’s easy to believe that the commercial needs of those operating the lines or supplying the rolling stock (usually a different company) have for years taken precedence over those of the passengers.
It’s no surprise, then, that angry commuters are also inclined to ignore the fact that on some measures Britain’s railways aren’t actually doing that badly after all. In 2009/10, 91.5 per cent of the UK’s trains ran on time, that is, arriving at their destination within 5 minutes of their scheduled time – that’s not far short of the 93 per cent achieved by NS in Holland on the same measure, and a notable improvement on the 86.1 per cent achieved in 2000/01 before speed restrictions introduced in the wake of the Hatfield crash.
But commuters don’t care, because personal experience tells them firstly not to believe the figures – statistics lie do they not, and our trains were definitely late a lot last year - and secondly, even if the figures are accurate, so what if the trains just run on time? After all we’re paying British Airways prices and getting a Ryanair service, and we’ll be paying even more next year thanks to what the government has described as the “ridiculously over-generous” financial settlement agreed between the rail regulator and Network Rail and the knock on effect on ticket prices. And in fact, if we look beyond the headline figures provided by Network Rail, it seems the performance is as bad as ever - according to the rail regulator's latest quarterly monitor, the length of delays is still well above the targets it's set and passenger satisfaction continues to deteriorate, with no improvement in sight. "In December 2011 we concluded that, having failed to deliver the 2010-11 target, Network Rail was not likely to deliver the requirement for 2011-12. Nor had it produced robust evidence to show how it was planning to achieve the target" said the report.
Is rail really getting better?
Knowing the inevitable recrimination they face for problems they can do little about, why on earth do foreign operators want to get on board the UK transport industry? After all, even though most of the time we know transport problems aren’t the operators fault, we’ll give them both barrels anyway. And it’s not like previous foreign forays into the UK market have always been massively successful; passengers on the South Eastern and South Central Networks will have painful memories of the few years in which the service was operated by France’s Connex – now part of Veolia - which was unceremoniously sacked from the routes for financial mismanagement long before its franchises were due to expire.
That, though, is one of the few occasions upon which major action has been taken against a TOC by the rail regulator, and a cynic may suggest that’s one reason why operators like Abellio and Deutsche Bahn (which bought Arriva in 2010 and is tipped to do well in the next round of franchising) are happy to get involved in the UK's rail nightmare. In short, to take further financial advantage of British rail travellers, in a way they can not at home, invest the bare minimum to hit over-generous SLAs (or not, because there are few meaningful penalties for missing them anyway), and rake off the profits to invest in providing a better service to the people that matter most to you i.e. passengers in your domestic market.
An optimist, on the other hand, may say that while making money is just as important to NS as it is to, say, First Group, foreign operators know they can, given the right industry structure, achieve decent returns at the same time as delivering service improvements, because there are many, many efficiency gains to be had within the UK’s rail network. According to the UK rail regulator, Britain’s railways are as much as 40 per cent less efficient than their European counterparts – frighteningly, no one seems to know why, but once again fingers point to a cumbersome industry structure and a regulator that has been asleep at the wheel in making sure the industry delivered on its promises. “It is disappointing that after 10 years in existence the Regulator still does not understand the reason for the gap”, said last year’s Commons report into value for money on the railways.
They also know that there seems to be, finally, a clear political will to redress the shortcomings that have held back railway improvement for a decade. Last year's McNulty report "Realising the Potential of GB Rail", commissioned by the Secretary of State for Transport but produced independently, presented a series of recommendations that could improve efficiency by 30 per cent by 2019.
Closer scrutiny of the Regulator’s performance and methods also seems to be having an effect, especially when it comes to dishing out salaries and bonuses to its senior executives. “The Regulator’s assessment of Network Rail’s performance should directly inform the level of bonuses paid to its executives”, said the commons report. “The high level of performance pay and bonuses enjoyed by previous rail executives is simply unacceptable given their inability to meet the efficiency target.”
Thankfully, that gravy train, at least, already appears to be coming off the rails. Sir David Higgins and other Network Rail’s senior executives have voluntarily agreed to forego this year’s payout, which seems an appropriate sacrifice given the ongoing disruption UK’s commuters can expect to face this year, and for another 29 years of sustained investment that Sir David believes it will take to get the shambolic organisation he inherited a year ago back on track. The current vituperative public mood surrounding civil service bonuses means no bonuses next year unless there have been a demonstrable improvements in railway efficiency.
And the more efficient the railways get, the better it is for all concerned. For Higgins and co who can justify their bonuses. For operators who benefit from lower increases in the track costs they’re charged by Network Rail, and less of the expensive disruption that creates such friction with their customers. For the taxpayer who is no longer hit with ever escalating subsidies, and for passengers, who can expect a better service without above-inflation fare increase year after year after year. A better service, with more capacity and more reasonable prices, could even help to encourage the ‘modal shift’ from road to rail that’s seen as often cited as a crucial component of unblocking Britain's increasingly congested transport system.
Jim won't fix Britain's trains
True, making this a reality is still some way away - closing a 40 per cent efficiency gap doesn't happen overnight, and although it has already been decided that Network Rail will be split into several smaller more manageable areas, and that Train Operating Companies may even be given a greater role in managing the infrastructure upon which they run their services, there's nothing to suggest that the regionalisation of Network Rail will prove any more successful than its centralised incarnation, especially as fragmentation is seen as one of the biggest barriers to efficiency that the UK rail network faces. "Closing the GB rail efficiency gap is a massive task that will require change in almost every facet of the railway and concerted efforts from everyone who works in the industry", concluded the McNulty report, which sounds like a big ask to me, and suggests that things won’t get much better any time soon. It remains to be seen how many of McNulty's recommendations the government adopts when it publishes its policy paper next month.
I’m prepared to take a long term view on this, though, because I can't imagine that state-backed foreign operators can do a worse job than the shareholder driven mob I've had to put up with for years. And after a decade of disruption, if the likes of NS and DB can help implement fresh ideas that improve such an important component of Britain’s prosperity, then I'm prepared to cut them a bit of slack for now. If there's one thing that certainly won't fix the railways, its more short-termism.
