FORMER secretary of state for transport, Ms Anne-Marie Trevelyan’s confirmation to the Transport Select Committee (TSC) on October 19 that a Transport Bill would not be heard in this session of parliament, which is due to conclude next spring, was another blow to a rail sector desperately seeking a sense of direction.
The Transport Bill was expected to include key legislation to establish Great British Railways (GBR) as a new governing body for the country’s railway. Previous transport secretary Mr Grant Shapps spoke earlier this year of the necessity of the bill entering parliamentary process in September if GBR was to take over in April 2024 as planned. Trevelyan confirmed that this will not happen.
GBR was announced by the government in May 2021 and was heralded as the biggest change to the sector in 25 years. It was the result of the much-anticipated Williams-Shapps Plan for Rail, a 30-year plan for Britain’s railway, and will facilitate integration by owning the infrastructure, collecting fares revenue, running and planning the network, and setting most fares and timetables. Critically, the introduction of Passenger Service Contracts (PSC) would offer a long-term replacement to the franchising system, which was brought to a shuddering halt by the pandemic and was felt by many to have run its course.
At its heart, GBR is intended to create a simpler, better railway for everyone, and as we reported last month, solve issues that the industry “has been moaning about for 30 years” since train operation and infrastructure management were separated on April 1 1994.
It is no surprise then that news of its delay has been met with disappointment by the industry.
Rail Industry Association (RIA) chief executive, Mr Darren Caplan, described GBR as the mechanism to deliver clear strategic direction to the railway. “For the rail supply sector there is now a real concern that this delay will lead to a hiatus in work, hitting confidence and certainty in what are already difficult economic circumstances,” he said.
Mr Andy Bagnall, chief executive of Rail Partners, which represents train operating companies, said it was “critical there is not a long hiatus.”
The delay to GBR is perhaps the inevitable result of a perfect storm of issues currently engulfing Britain’s railway. Strikes, staff shortages, reduced timetables, an energy and supply chain crisis, uncertainty over future capital projects, and the continuing recovery from the Covid pandemic is an unenviable list. Add to this the generally poor customer perception of the railway as unreliable and expensive, and it is no surprise that industry morale is arguably at its lowest ebb for many decades.
Avanti West Coast
Events surrounding Avanti West Coast in recent months epitomise the wider challenges the industry is facing.
Avanti, a joint venture of the West Coast Partnership (WCP) of First Group (70%) and Trenitalia (30%), operates services on the West Coast Main Line from London Euston to Birmingham, northwest England, North Wales and Scotland under an Emergency Recovery Measures Agreement (ERMA) contract (see panel) agreed with government in September 2020.
However, the service was plunged into crisis when Avanti instituted an emergency timetable on August 14 in response to “severe staff shortages.” While three London - Manchester trains were operated during the peak alongside hourly Birmingham, Liverpool and Glasgow trains, just four trains per hour operated at other times. Avanti also withdrew trains from London to North Wales completely, introducing a Crewe - Holyhead shuttle.
Avanti, like many British operators since the pandemic, has been dependent on drivers volunteering to work extra hours to provide a full timetable. With nearly 600 drivers on its books, Mr Steve Montgomery, managing director of First Rail, says that notion that Avanti does not have enough drivers is a “myth.” Instead, a combination of the suspension of driver training during the pandemic preventing new recruits from joining the workforce and the high proportion of drivers classed as clinically extremely vulnerable, which prevented them from working during the pandemic and led to a loss of route knowledge, meant that Avanti had no choice to rely on drivers working overtime to make-up the shortfall.
Avanti said it was relying on this arrangement to run 400 of its weekly trains. But an industrial dispute over pay and conditions with the Aslef union, which represents train drivers, resulted in Avanti’s 569 Aslef members walking out on July 30 and again on August 13. Crucially, Montgomery says Avanti found that these drivers steadily began to refuse to work overtime or on their rest days at the end of July, resulting in the shortage and the introduction of the emergency timetable.
With many passengers booking trains up to three months in advance, the result was a “dreadful experience,” according to Montgomery, and widespread public anger.
“We are going through a lot of pain at the moment, but we will come out the other side of this less or not reliant at all on rest day working.”Steve Montgomery
After managing director, Mr Phil Whittingham, departed his post on September 15, Avanti reset its management team, bringing in significant resources from First Group to help deliver what Montgomery describes as a phased recovery as more drivers became available. This began with the addition of 70 extra London - Manchester services per week in September to offer two trains per hour for most of the day. Further services to and from Birmingham have also been added taking the daily total to around 180.
However, the reduced frequency means the situation for passengers has remained suboptimal, resulting in continuing pressure on the operator from local and national politicians - Labour leader, Sir Keir Starmer, said on October 6 that Avanti should be stripped of its operating contract.
Instead, the government extended WCP’s ERMA, which was due to expire on October 16, for another six months with the proviso that Avanti “do more to deliver certainty of service to its passengers.”
The DfT also confirmed that while continuing to assess Avanti’s performance, it will finalise the terms of an NRC to replace the ERMA. Rail minister, Mr Kevin Foster, told the House of Commons on October 25 that this work will also include preparations by the government-run Operator of Last Resort “if it becomes necessary for them to step in at the end of the extension period.”
Avanti plans to operate 264 daily trains on weekdays from December. This includes three London - Manchester services per hour, hourly Glasgow, Liverpool, and Birmingham trains, and the restoration of much its North Wales offer.
“From April we have had 100 drivers at various stages of being able to get back to driving,” Montgomery says. “So far we have put 70 people back into driving and before this December timetable we will have a further 30 that will be available to start driving, either qualified drivers who came to us but were unable to get training, new drivers who were unable to pass out in the last year, and drivers who lost route knowledge and are now returning.”
Foster told parliament that the plan “does not come without risk.” Indeed, the unions could yet kibosh Avanti’s plan by rejecting the suggested rostering and diagrams. Montgomery says negotiations are underway and he is hopeful of delivering the plan.
He adds that the situation is ending the railway’s more than century-long reliance on overtime. Transpennine Express (TPE), also held by First Group, has not been able to rely on drivers working overtime for around a year, according to Montgomery. Northern has not done so for six months. “We are going through a lot of pain at the moment but we will come out of the other side of this less reliant or not reliant at all on rest day working,” Montgomery says. “That will maybe normalise things for us all.”
Avanti is not alone in experiencing industrial relations issues. With unprecedented levels of inflation, disputes over pay and working conditions have sparked a series of strikes in recent months on a scale not seen since the 1970s; the latest walkouts by the RMT union for workers from train operators as well as Network Rail on November 3, 5, and 7 were announced just hours after Trevelyan’s TSC appearance. In total there have been eight days of nationwide industrial action since June as well as some local walkouts. RMT is currently surveying members to extend the action for a further six months.
Montgomery says negotiations are progressing, but he remains unsure of when a breakthrough will be reached.
The problems stem from the introduction of the NRCs. With the government contracting the train operators to run a service the terms of the negotiation have changed. It is no longer the operator’s cash on the line but the government’s, resulting in greater resistance to the union’s demands. The government’s insistence that it is not their problem to resolve has not helped matters.
The disruption caused by strike action is taking place in a market that has changed significantly since the pandemic.
Passenger journeys returned to an average of 75.8% of pre-pandemic levels between April and June while passenger revenue is at around 80%. The days of packed commuter trains running for two or three hours in the morning and evening peaks on five days per week have ended, Montgomery says. Instead, commuter trains are typically heavily loaded for an hour on three days a week. Business travel is similarly reduced but the operators have witnessed a surge in leisure use greater than was expected when the pandemic recovery got underway.
With the current cost of living crisis is adding to the uncertainty over levels of disposable income available to fund future leisure trips, the situation is continuing to evolve. Montgomery believes the delay to GBR could and should be used to analyse the data and carefully consider what the Passenger Service Contracts (PSCs) will look like.
He is unsurprisingly a keen proponent of the government allowing the private sector the space to innovate, something lost with the NRCs, and says the PSCs should reflect more closely the recommendations of the Williams-Shapps Plan to provide clear incentives for private operators to grow traffic and revenue.
“GBR doesn’t have to be a body that is all encompassing,” Montgomery says. “We have always expressed that view to the GBR Transition Team… There is a need for the private sector and the skills that grew revenue over the last 25 years. Many decry franchising but it did drive revenue.”
The argument for greater private involvement is reinforced by the performance of First’s open-access service Lumo, which since its launch between London and Edinburgh on October 25 2021, has carried more than 1 passengers. It has also helped to grow overall traffic. Rail now accounts for 57% of all London - Edinburgh traffic, surpassing air as the preferred mode, while fellow East Coast Main Line operator LNER is the first passenger operator to record an increase in journeys over pre-pandemic levels.
Montgomery reports that Hull Trains is ahead of its projected recovery at this stage while Renfe is the latest operator to flirt with entry to the market, announcing a partnership with Grand Union last month.
However, the decision by Netherlands Railways (NS) to sell its Abellio UK subsidiary and exit the British market and the recent announcement that Serco’s contract to operate the Caledonian Sleeper would end in June 2023, are the latest in a long list of failures. They exemplify the need to introduce conditions that are attractive to third-parties, which the current government clearly wants to run Britain’s passenger trains.
Like passenger operations, uncertainty over future infrastructure investment is continuing to cause concern for the wider industry.
The TSC raised the subject of the Rail Network Enhancement Pipeline (RNEP) to Trevelyan. Billed as a new approach for rail proposals that would be updated annually, the RNEP was published for the first and only time in October 2019. It includes projects worth more than £9bn for delivery in Network Rail’s current five-year funding period, Control Period 6, but some of these have now slipped, with the lack of progress regularly criticised by industry.
To mark the three-year anniversary of RNEP, RIA published its own RNEP, based on publicly available information, analysing all 58 original projects as well as eight that have since emerged. RIA classified them according to their status, finding 18 green or completed or confirmed projects, 21 amber where development is progressing, but delivery is not yet certain, and 19 red where there is no information about the project.
RIA says it is simply seeking visibility on what the government is planning for rail enhancement projects. “Real jobs, investment and even tax revenues from the rail supply sector rely on understanding the government’s intentions,” Caplan says.
When they will get the answers to their queries remains to be seen. The crisis facing the railway arguably mirrors the turmoil at the top of British government over the past 12 months or so. Mr Rishi Sunak became Britain’s third prime minister in just seven weeks on October 25, replacing Ms Liz Truss, who announced her resignation just 45 days in office after her economic plans unravelled at great cost to the British economy. Truss replaced Mr Boris Johnson, who resigned in July following various scandals that had distracted government for months.
With Sunak comes a new transport secretary. Just a week after her sole TSC appearance, Trevelyan was gone, replaced by Mr Mark Harper. He will be met by a rail industry desperately seeking direction and a new renewed sense of purpose. No easy task in the current climate.
Jargon buster: British operating contracts
Emergency Measures Agreement (EMA): Established with the English franchise operators on March 23 2020, they effectively suspended the normal financial mechanism of franchises where the operator assumes most of the financial risk, transferring all revenue and cost risk to the government. The operators continued to run the service for a set management fee.
Emergency Recovery Measures Agreement (ERMA): Ranging from six to eight months, the ERMAs were introduced for most operators from September 20 2020. They are similar to the EMAs in that the DfT is continuing to waive the operator’s revenue, cost and contingent capital risk while receiving any farebox revenue. However, the ERMAs have tougher performance targets and a reduced maximum management fee of 1.5% of the cost base of the franchise, compared with up to 2% under the EMAs. In place with: West Coast Partnership
National Rail Contracts (NRC): The DfT retains all of the revenue risk and all cost risk up to levels agreed with individual operators, which earned fixed management fees with opportunities to earn an additional performance-based fee. They are longer term agreements – the arrangement with GWR is for an initial three years with the option for a three-year extension. In place with: Thameslink, Southern, Great Northern, East Midlands, Chiltern Railway, West Midlands Trains, East Anglia, Cross Country, c2c, TransPennine.
Passenger Service Contracts (PSC): Will replace the NRCs. The terms are yet to be confirmed but according to the Williams-Shapps report they will include strong incentives for operators to run high-quality services and increase passenger numbers. They will be tailored to the operator and a particular route.
Operator of Last Resort: A business which operates a franchise on behalf of government when a train operator is no longer able to do so. In place with: Caledonian Sleeper, LNER, Northern, Scotrail, Southeastern, Transport for Wales.