NEWS that passenger ridership on Britain’s railway network had recovered to 70% of pre Covid pandemic levels in the second week of October was welcomed by attendees of the Rail Industry Association (RIA) annual conference in London on November 5, including Mr Andrew Haines, chief executive of infrastructure manager Network Rail (NR).
Ridership remained at around 70% until early December when concerns about the spread of the Omicron Covid variant and a new round of work from home instructions from the government prompted the figure to fall back to 55% during the week of December 9.
While an encouraging improvement, the numbers are inflated by a higher proportion of weekend and local traffic. This had recovered to 90% of prepandemic levels, according to figures presented by the Rail Delivery Group at the end of October, with overall journeys increasing by 26% since August 22. Commuter traffic remains at 45% of all journeys in these figures, and Haines was unsure whether this segment will make a full recovery, a scenario he actually welcomed.
“We have seen better than prepandemic levels of patronage among people that are taking staycations,” Haines says. “That’s a big cultural shift for us across the industry, because we have treated commuters as a cash cow. We have basically relied on them just turning up because the economy is very city centre focused, which was just driving more and more demand.
“I don’t think we will get commuters back to where we were pre-pandemic, and I don’t think we want them if I am really, really honest. Driving peak demand in any business means you have peak costs as well. And that probably doesn’t make a lot of economic sense.”
Instead, Haines favours a system where demand is spread throughout the day, avoiding artificial peaks. He drew comparison with Japanese railways which he says record high levels of patronage day in, day out. “That’s what a really successful railway in Britain would look like,” he said and urged rail operators and retailers to be more welcoming and to think more like their customers in order to drive modal shift. “In this new scenario we’ve really got to fight to get a different type of customer,” he said.
Finances
Of course, reduced traffic means reduced revenues. Haines says at current levels, NR is bringing in £10m less every day than it was two years ago, which equates to £3.5-4bn per year. The British government has stepped in to make up for this shortfall during the pandemic, contributing £16.9bn to the rail sector in the 2020-21 financial year, an increase of £10.4bn. Train operators received £10.2bn as passenger revenue plummeted while NR received £6.6bn, an increase of £1.4bn. But this level of support is not likely to continue forever, a scenario Haines said the sector should be ready for and requires “a fundamental reset of mind”.
“Even if we make inroads into that in the next few years, that is still going to be a multi-billion-pound additional deficit,” Haines said. “That means we have got to be leaner, we have got to be simpler, we’ve got to be smarter.”
Haines encouraged the suppliers in the room to present technologies and solutions that might offer these efficiencies, particularly in delivering the digital railway. This led to a number of questions from audience members on how SMEs might play a bigger role, including by overcoming NR’s seemingly disproportionate reliance on Tier One suppliers.
Haines said improving access is one of his pet projects. He said that around a third of NR’s work is now carried out by SMEs and that there are incentives in the system to encourage growth. However, he recognises that the Tier One’s ability to match NR on white collar activity means they have a strong chance of securing contracts, which they can often end up subcontracting out, meaning NR potentially ends up paying more.
Photo: Network Rail
“That’s why we are working on some fairly radical and different approaches,” Haines says. “The model of the lean client is something we hope to deploy to the regions in Control Period 7 (CP7). That’s the sort of thing that I genuinely believe will allow us to demonstrate greater efficiency and help make the case for a better railway… we know how to spend the money, so we can either use it to generate better outcomes or we will end up with a smaller role.”
Haines pushed back against claims that the five-year funding cycle means that NR has limited ability to respond to new developments and technologies in the market. He pointed out that the CP6 funding settlement has around £2bn in risk funds held back to deal with shocks like climate change or new opportunities that might arise. He again encouraged suppliers to push to make contact and to use organisations such as RIA to break down any barriers. “If you have got a really good business case you should be able to talk with us now,” he said.
“Our future will undoubtedly be different from our past. We want to demonstrate proudly to everyone that we have an opportunity to be a fundamental part of the green economy.”
Andrew Haines, chief executive at Network Rail
Haines did however express concern about NR’s involvement in Europe’s Rail, the second iteration of the Shift2Rail European research initiative, of which NR was a founding member. Britain’s continuing fractious departure from the European Union (EU) has cast doubt on future participation, in particular the possibility that Britain might withdraw €15bn in funding for Horizon Europe initiatives.
“We are not where we would have wanted to be on that,” Haines admitted, adding that being part of a European research framework and network is “profoundly important” to NR. He said it is an issue that he alongside officials from the Department for Transport (DfT) and other departments are trying to get over the line. “The good news is that the government recognises that and values that. Of course it is not a sufficiently big enough issue to make all the other Brexit issues go away, and I don’t expect it to.”
Changes in travel patterns will not necessarily mean a rethink for maintenance strategies. Addressing a question from IRJ, Haines said that more people still travel during the week than at weekends meaning that while weekday closures are attractive to NR - a seven-day closure of the West Coast Main Line (WCML) in 2021 saw the completion of 52 weekends of work - they are still not practical.
Four priorities
Haines outlined four priorities for the post pandemic railway. The first is to welcome passengers back by offering a railway system that people want to use, which could go some way to addressing the revenue challenge.
Secondly, he says not to lose sight of safety, the importance of which was demonstrated in a collision at Salisbury on October 31 when poor railhead adhesion caused two trains to collide in a tunnel. Haines said the industry’s tendency of talking up its “brilliant safety culture” is often wide of the mark, pointing out that there are still too many instances of people on track that are not supervised and where safety lapses and breaches do occur. “That being a fundamental part of our DNA should never be taken for granted,” he said.
The third point is to drive a leaner cost base. NR’s Project Speed, developed jointly with the DfT, is central to this approach. The programme’s mantra of Swift, Pragmatic, Efficient, Enhancement (Speed) aims to lower project costs and speed up delivery and this is an area where Haines admits he feels frustrated due to the level of “heavy lifting” required. “We have a huge amount of political involvement, we have a cumbersome organisation in NR, which isn’t sufficiently agile, and we have learned behaviours from operators and the supply chain,” he said.
Project Speed encourages the use of innovative construction methods and removing complexity from planning processes. Haines refers to the reopening of the Exeter - Okehampton branch line on November 20, which was delivered “in half the time and half the cost of a couple of years ago.” Presentations during the RIA event revealed that among the innovative cost-saving approaches was the use of track only suitable for the lighter weight vehicles that will use the line. Similar methods are likely to be deployed on other upcoming Restoring Your Railway projects to reopen disused lines.
On overall project investment, Haines admitted the number of future projects would be less than previously envisaged. This was confirmed in Britain’s Integrated Rail Plan (IRP) for the Midlands and North, which was finally released by the government on November 18. IRP scales back plans for the eastern leg of HS2, a dedicated high-speed rail line from Birmingham to Leeds, in favour of upgrades to existing infrastructure. It is a similar scenario for the Northern Powerhouse Rail (NPR) scheme, with plans for a new Manchester - Bradford - Leeds high-speed line dropped in favour of upgrades to the existing Trans Pennine route. In total the government says IRP, which includes investment in HS2, will result in a £96bn spend on Britain’s railway infrastructure, including £54bn of new spending.
“We need to retain our focus on the efficiencies we can gain, the safety improvements and passenger benefits we can achieve. That will stop us from turning inwards.”
Andrew Haines
While concerns remain about future connectivity, Haines said this investment remains unprecedented. He also reiterated his view of the government’s strong commitment to rail but conceded that there is no blank cheque for investment. “Whatever you think about the prime minister’s politics and his approach, he is probably more interested in public transport than any prime minister in my lifetime,” Haines said. “We shouldn’t discount that. And the way we build that with him is by doing that really efficiently.”
The fourth point is railway reform. The Williams-Shapps Plan for Rail, announced on May 19 2021, provides the foundation for the establishment of Great British Railways (GBR). As well as prompting the end of the passenger franchising system, this new centralised body will absorb NR and will have responsibility for integration, planning and network management as well as owning infrastructure and collecting fares revenue when it comes into force in 2024.
The GBR Transition Team launched a call for evidence for a 30-year Whole Industry Strategic Plan, which will guide delivery of GBR, on December 9. Haines says GBR will adopt the regional structure used by NR so customers should see little change in their work. He also expressed his hope that the unprecedented settlement of £360m to enact ticketing reforms and rollout mobile ticketing will restore passenger “trust” and might serve to attract more people to use rail.
However, many questions remain on how GBR will function, including on how it will integrate current DfT and RDG responsibilities. Haines urged against unnecessary change and warned that the transition to GBR should not result in impasse from the industry. On the contrary, he says the situation resulting from the pandemic means it is essential that the entire sector “keeps their eye on the ball.”
“When I started here, we had the luxury of passenger numbers and we could look inwards a little bit,” Haines said. “We don’t have that luxury anymore… in the post pandemic world the only thing we have to fear is not fearing, in the sense that we have a fantastic opportunity if we recognise the significance of the game changes that are coming. We need to retain our focus on the efficiencies we can gain, the safety improvements and passenger benefits we can achieve. That will stop us from turning inwards.”
After an eventful 2021, where the government finally published the Williams-Shapps plan and IRP, expect events in 2022 to add more meat to the bones of these key initiatives. News in December that the treasury was set to block future investment on electrification just weeks after committing to the Midland Main Line programme in IRP, indicates that support for further electrification remains one of the battlegrounds in the coming weeks and months. Haines, though, was clear on the importance of rail in the decarbonisation of transport, which he described as “a fantastic opportunity to grow”.
“Our future will undoubtedly be different from our past,” Haines said. “We want to demonstrate proudly to everyone that we have an opportunity to be a fundamental part of the green economy.
