Background
The Williams review was established to recommend the most appropriate organisational and commercial frameworks to support the delivery of the government’s vision for the railway. The government’s vision is to have a world-class railway, working as part of the wider transport network and delivering new opportunities across the nation.
See the Rail Forum Midlands response below:
Rail Forum Midlands (RFM) is the only regionally focussed trade association for the rail supply chain in the UK. Established over 25 years ago we represent and support some 170 organisations from major global players to small local companies. Membership spans the industry including infrastructure clients and contractors, rolling stock OEMs, leasing, consultancy and asset management companies together with railway systems designers, manufacturers, digital and services organisations. We also have both passenger and freight operators as members.
We provide a number of services to members:
- Representation to government at national and regional level;
- Connecting businesses across the supply and value chains to promote opportunities and encourage collaboration;
- Developing and supporting regional skills development initiatives with schools and the FE sector;
- Supporting SME business growth and promoting export opportunities.
Our response is structured to address the specific issues posed by the review team; we have sought to keep this as succinct as practical.
Commercial Models for the Provision of Rail Services that Prioritise the Interests of Passengers and Taxpayers
- The current semi privatised model has delivered significant benefits to both customers and taxpayers, however, the fragmented structure of the industry and current franchise system do not fully align goals and objectives and do not put the customer (passenger or freight) at the heart of decision making;
- As technology drives ‘track and train’ closer together clearly aligned and mutually beneficial goals are needed across the whole industry/key players to ensure that passenger expectations are not just met but exceeded, thereby positioning rail as a transport system of choice and to deliver better value for taxpayers. This includes government/Network Rail, TOCs and RoSCos supported by procurement processes and contract terms that include suppliers;
- Leadership and management of organisations across the industry is arguably more important than formal structure with the need to create a collective culture that puts customers at the heart of what we do.
- Commercial models must be sustainable taking account of the long life of assets such as rolling stock whilst ensuring that appropriate incentives are in place to drive development of improved products and services for passengers throughout the life of the asset;
- The needs of freight both now and into the future must be taken into account when devising any new structures. Rail freight has a crucial role to play in helping the UK meet long term carbon emissions targets and air quality measures;
- Commercial models should encourage a more balanced approach to ‘risk and reward’. Traditional approaches to prescriptive specifications coupled with maximising risk transfer and contract management style add costs, reduce productivity and stifle innovation. A more balanced approach driven by more flexible procurement models, output based specifications and shared risk and reward could deliver huge benefits to both taxpayers and customers.
Rail Industry Structures that Promote Clear Accountability and Effective Joint Working for Both Passengers and the Freight Sector
- Current industry structures and hence responsibilities are fragmented or complex leading to little effective joint working. For example the current franchising process provides few, if any, cross industry incentives or requirements on operators to maximise or optimise use of the available national fleet;
- Within Network Rail partial devolution has led to the potential to ‘muddy’ rather than clarify accountabilities. Decision making and accountability needs to be in the right ‘place’ and at the right ‘level’ with safeguards in place where a broader e.g. national approach is required;
- Under the current industry structure there is no point at which everything comes together to a single point of accountability. There is therefore merit in considering the creation of a ‘single guiding mind’ (potentially encompassing the System Operator) and independent of government.
A System that is Financially Sustainable and Able to Address Long-Term Cost Pressures
- The need for a longer term approach to investment planning (infrastructure and rolling stock) together with a smoother work profile has been raised for many years by ourselves, other trade associations and individual organisations;
- The Control Period (CP) approach coupled with short term government intervention on specific projects and Network Rail’s framework contract methodology leads to significant peaks and trough. This so called ‘boom and bust’ has hugely detrimental impact on supply chain companies leading to lack of investment in technology, skills and innovation thereby reducing productivity and increasing costs. Government’s view that certainty is provided by the value of the Network Rail CP settlement is too simplistic – individual companies will only invest when they have real value contracts on which to base their decisions;
- The current order book for new rolling stock together with delays and changes to the franchising timetable has created a similar ‘boom and bust’ scenario in this part of the industry also. Whilst the introduction of significant volumes of new fleet over the next 2-3 years will provide industry challenges in its own right the impact on existing midlife fleets and the refurbishment market (which employs several 1000’s of people across the UK) should not be ignored and an approach which provides a smoother approach to rolling stock investment would be welcomed by the rolling stock supply chain, in particular the significant number of SMEs in this market;
- Longer term aligned/integrated infrastructure planning and passenger operations providing a more holistic view might help the above but such an approach on its own is unlikely to ‘solve the problem’;
- DfTs new approach to enhancements in CP6 is likely to impact on the visibility of the future pipeline which in turn will have the opposite effect to that which is needed. This has the potential to lead to a loss of skills and capabilities in the supply chain.
A Railway that is able to Offer Good Value Fares for Passengers, Whilst Keeping Costs Down for Taxpayers
- The concept of ‘value’ is vitally important in considering this aspect of the review with short and long term issues needing to be balanced. For example today’s fare versus investment in longer term sustainability and improvements. Understanding the relative ‘value’ that passengers put on all aspects of their journey now and how this might change in the future are important;
- Opportunities for real cost savings do exist: smarter procurement, including a move to whole life costing, output based and performance based specifications provides one such opportunity. In addition changes to current working practices could have significant benefits and lead to savings for the taxpayer; examples include current approaches to track possessions, upskilling of staff and reducing the volume of rework undertaken at the design stage;
- There is a view that the current Network Rail approach to having large embedded tier one contractors with very large framework contracts is also stifling innovation and making it difficult for SMEs to compete to offer better value products and services;
- Whilst absolute standards and common approaches are important in maintaining both safety and integrity of the railway and its systems in some non-safety critical areas this may be keeping costs artificially high. An approach that is proportionate to the risk involved may provide a better approach.
Improved Industrial Relations, to Reduce Disruptions and Improve Reliability for Passengers
- In general the nature of the relationships between employer and employee have changed over recent decades and are set to change perhaps more so in the coming years. The rail industry has not kept pace with these changes and therefore faces an uphill task to build trust with some members of the current workforce;
- There is a need to build relationships and trust between companies, trade unions and individual employees to create an environment that embraces common objectives (e.g. around customer service) )and pride in the industry. This can only be achieved by strong leadership and engaged employees.
- Significant emphasis is required on workforce development at all levels to address this and the wider challenges faced by the industry.
A Rail Sector with the Agility to Respond to Future Challenges and Opportunities
- The rolling stock leasing market is proving to be agile in response to the need for new technologies. This is evidenced by recent announcements by both Eversholt and Porterbrook surrounding development of hydrogen fuelled trains. Such agility is possible because of the long term privatised model within which they work and this may provide helpful learning points for other parts of the industry;
- Network Rail processes and procurement ‘one size fits all’ practices can act as a barrier; more flexible and streamlined approaches would be welcomed;
- SMEs are by nature agile and mechanisms to ensure they can contribute and thrive across the industry are required. This in turn has the potential to lead to greater levels of export and benefits to UK plc;
- The industry in general does not welcome change or challenge. Leadership across the sector must work to create a culture that both welcomes and encourages constructive challenge by which we can learn and improve;
- With the introduction of more and more digital technologies current planning processes that are geared around long term 30+ year asset life (e.g. signalling) need to be fundamentally reformed – both at government and industry level. This issue in isolation is very significant providing a key driver for the wider review and need to modernise the industry.
Closing Comments
RFM hopes that the above comments are useful to the Review Team and we would welcome the opportunity to explore the issues raised in more detail over the coming weeks and months. For further information please contact Elaine Clark, General Manager RFM on elaineclark@midlandsrail.co.uk or 07890791373.
