A blog by Anit Chandarana, Lead Director
29 September 2022
Earlier this week, I spoke at an event hosted at the Whitehall Industry Group. It was a well-attended breakfast session with even more people joining online and plenty of articulate questions about rail reform.
As I walked back to the office from the tube station, I reflected to a colleague some of the key points that we had discussed earlier in the morning – as well as thinking forwards to how we can demonstrate rail’s important role in supporting UK plc.
The most singular important takeaway I wanted to leave with the audience was to remind them of the scale of the problem that the railways are facing. As an industry there are few who would disagree that the rail system as a whole is not working and is fundamentally broken.
There may be a perception that the current issues are driven by Covid. But I wanted to be clear that the issues existed before Covid – even if the pandemic has left a difficult legacy which will not resolve itself. 97% of pre-pandemic rail users have returned to the railway but they are travelling less and differently. Revenues have plateaued at around 80-85%. Our marketing initiatives, such as the Great British Rail Sale, are aiming to drive this higher. This sale saw 1.3 million tickets sold and delivered £7m in passenger savings. And in partnership with RDG, last month we launched ‘Nothing Beats Being There’, the latest national marketing campaign promoting rail travel.
Rail is not currently working – for customers, the private sector or Government
Even pre-pandemic (2019) customer satisfaction reached its lowest level in a decade – according to Transport Focus, with more than one in five passengers (21%) not satisfied. In the same survey of over 25,000 passengers, less than half (46%) of passengers felt their journey provided value for money – which went down to less than a third (31%) for commuters. And these are not issues we have solved. Two-thirds of services being cut on the West Coast mainline show how we continue to let customers down.
I also spoke of the challenges in attracting the private sector back to the market. When it comes to train operators, Japanese, Dutch, and British players have all left the UK rail market. Neither they – nor other institutional investors – are likely to return without system reform. And yet we need market interest to spur competition – and they are telling us that we are not getting best value from the current £16bn spent in the private sector (or 80% of our total £20bn rail budget).
We also know that the railway is not working for the Government. According to the Office of Rail and Road, train companies as a whole had gone from paying £900m to the Government in 2015 to receiving £400m in Government support in 2019. In the last two years, rail has received £16bn in emergency funding. Without quick action, the £2bn per year black hole that has arisen from a post-pandemic reduction in passengers could get worse before it gets better.
Fixing the broken rail system – the Williams Review as pertinent today as a year ago
This all points to fundamental weaknesses in how the railway is set up. That’s why the Williams Review was launched back in 2018 and when published, it set out the biggest reforms to the railway since privatisation, across the whole rail system. Paramount among the changes it recommended was the creation of a guiding mind to bring the industry together where decisions are made across the system that are best for customers and taxpayers rather than the institutional silos that exist today.
So how are we putting customers at the heart of everything?
We know that we need to make it simpler and easier for people to buy their ticket because at the moment, it’s too complicated. And our customers know it. Here’s an example: I recently went to Manchester with some colleagues – and even amongst the group of four, we each had different fares from Piccadilly to Oxford Road. One stop, four different fares.
As an industry, if we can’t guarantee we’re giving customers the best deal, how can we expect them to trust us?
Better – contactless payments, personalised support and accessibility
Great British Railways will make the most of modern technology to simplify fares and tickets – making the railway easier to use with more contactless, pay-as-you-go technology, and making sure passengers get the best price for their journey. Passengers will also benefit from information tailored to their needs – at all stages of their journey. This will help restore trust and encourage more people to take the train.
Commercial mindset to reduce costs and increase revenues
For the first time as an industry, we will have the ability to see both sides of the profit and loss costs and revenues – for both track and train. What other major industry only has access to just one part of the profit and loss account? What business makes decisions based on operations but not sales (and vice versa)? With a five-year target to save £1.5bn, we are well on our way to delivering £200m in the first year.
Why rail reform is essential to support economic growth?
We are already working with the new Government, who remain committed to rail reform and will take forward legislation when Parliamentary time allows. We will continue to drive forward the benefits of rail reform – the need has never been greater. We also know that the new Government has been clear about its focus on driving economic growth. And we know how we can harness rail’s wider benefits to support this goal. When Britain’s railways succeed, Britain succeeds.
By the end of the year, we will have developed the first long-term strategy for rail to align the industry behind national priorities. Rail will not only contribute more to growing the economy, but also to decarbonisation and enhancing connectivity.
Starting with West Midlands and Manchester, we are working with metro mayors to deliver on our commitment to give local people a greater say in how rail is run, ensuring it better supports local aspirations for jobs, housing and growth. But the railways aren’t just about passengers. The biggest economic benefits from rail freight, for example, are derived in the North and the Midlands. Rail reform will also increase freight use across the country and deliver a trailblazing, intermodal freight interchange site, joining up rail with other forms of transport.