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15 May 2019

Williams Rail Review update 4 - RDG calls for "generational upgrade", while passengers tell Williams that travelling is the luck of the draw

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This is the fourth in our series of updates on the Williams Review of the rail industry (the Review). In this update, we consider what has happened over the last few weeks including:

This is the first in this series of updates on the Williams Review since author Darren Fodey was promoted to being a Partner within the Stephenson Harwood rail team. We are delighted – congratulations, Darren!

“Generational upgrade” necessary: RDG submission to the Review

The Rail Delivery Group (RDG) has published its latest submission to the Williams Rail Review, generating significant attention in the mainstream press by calling for a "generational system upgrade" for Britain's railways. Whilst highlighting a number of noteworthy successes of the railway since privatisation, it recognises that the Review offers an opportunity for fundamental reform. The RDG says that, while not all of its members "agree on the detail of all individual elements" of the submission, its proposals are made on behalf of all members, and "there is support for the principles outlined." This is something which made the headlines, with newspapers claiming that the RDG submission was not universally approved by its members – and Network Rail in particular.

The RDG's submission, entitled Changing Track – Proposals for a more customer-focussed, joined-up and accountable railway, says that "[t]here is a real and widespread desire for change," and that it is time for "fundamental change, not tinkering around the edges, or worse, inaction". The submission identifies eight proposals for change, which "can deliver passengers' priorities and help rebuild trust." These are:

  1. Deliver easier fares for all: Consistent with its previous submission, RDG believes that fares regulation should be updated to make it better value for money and easier to use and manage demand.
     
  2. Put a new independent organising body in charge of the whole industry: Remove the railway from politics and create a new independent body to ensure coordinated decision making across the industry, whilst ensuring it is held to account.
     
  3. Introduce responsive, customer-focussed ‘public service contracts’, replacing the current franchising system: These would be more akin to the TfL concession model, with an integrated body operating services or with “customer outcome-based” contracts incentivising innovation and good performance.
     
  4. Give customers more choice of operators on some long-distance routes: Competition on longer distance routes can drive innovation and more customer choice, with demand shaping the market.
     
  5. Make sure track and train are all working to the same customer-focussed goals: Targets and incentives need to be aligned across the whole industry and from the top to the bottom of each and every railway organisation, ending what RDG describes as the “blame game”. Interestingly, vertical integration of activities within one entity is not considered to be the solution, although partnership and alliancing would remain a method of delivery of RDG’s proposals.
     
  6. Bring decisions about local services closer to home: Larger city regions should benefit from local transport bodies being devolved power to design and specify local services.

  7. Enhance freight's central role in delivering for Britain's economy: Freight needs to form the core of the government’s business, environmental and strategic policy making, with a national framework sought.

  8. Invest in our people to deliver positive long-term change for our customers: A new approach is needed to working with the unions, governments and the industry which works for those within the industry: providing skills, resources and rewards needed to drive change.

Perhaps unsurprisingly, the RDG's submission has elements in common with both TfL's and Virgin Trains' submissions, which we discussed in a previous update. Proposal 4 aligns the principle (albeit not necessarily the detail) with Virgin's views concerning long-distance competition, whereas Proposal 6 is consistent with parts of TfL's submission advocating "metroisation" and local accountability.

In RDG's view, the level of prescriptive detail contained in current franchise specifications "creates barriers to implementing new products for customers, and barriers driving better value for money or growing the industry." Instead, the RDG recommends outcome-based agreements, which leave "flexibility for the operator to determine how those outcomes should be delivered and able to respond to changing customer needs."

We welcome RDG’s aspirations for the industry and this offers a little more detail about what, in practice, needs to be done. However, whilst the principles are welcome, detail is light on how the principles will be delivered. This will remain a challenge for the Review as they consider the future shape of the industry and, just as importantly, how we will get to that reformed model.

Click here to read RDG's submission.

Public trust in the railway: passenger research

The Review commissioned research into passenger perceptions on the rail industry and has published its results on 29 April 2019 in a presentation called "Trust in the rail sector". It paints a challenging view of the railway industry from the passenger’s perspective and makes for difficult reading, although it does set out what “success” might look like.

According to the Review, trust in the railway is low – passengers perceive the industry as not being able to run a quality rail service and, perhaps more critically, not wanting to do so. Passengers “have little knowledge of who is responsible for running the railway” and consider themselves to be “lucky” when they have a good journey. The passenger view is that there is a lack of accountability and leadership – with insufficient communication when things go wrong.

“Placing customers at the heart of the system” – a refrain we have seen from other stakeholders as part of the Review – is highlighted again as a necessity, with the day-to-day customer experience needing to be valued. Priority needs to be given to fixing problems perceived to be within the control of rail operators – such as overcrowding and engineering problems. Visibility, passenger communication, celebrating successes and avoiding a “blame game” are measures proposed to help encourage trust. Fares structures and pricing also need to be made simpler and more transparent – an issue highlighted by the RDG on a number of occasions. The need to avoid the railway becoming a “political football” was identified by some respondents, feeding into discussions about whether an independent body is needed for the sector.

With plenty of industry stakeholders contributing formal responses to the Review, there is a risk that the voice of the passenger could be lost. This research reminds us of the day-to-day experience of some of those for whom the industry is operated and where they see the industry doing better. As well as highlighting problems, a series of practical steps are offered as to how the industry can deal with the challenges faced. This can only be a positive.

Click here to read the "Trust in the rail sector" survey results.

Talking points

  • Independent passenger watchdog London TravelWatch (LTW) has published a further submission to the Review in response to its recent further calls for evidence. Much like RDG, LTW points out that the needs of passengers vary greatly, calling for an appreciation that passengers have differing journey types and lengths, frequencies of travel, and personal and mobility needs. There is also a need to appeal to those who currently do not use the railway. Particularly interesting is LTW’s suggestion of the need for clarity “on the balance between ideological drivers: clarifying the balance between the railway as a public service and as a private enterprise” and the balance between risk and reward. Echoing TfL's submission, LTW also notes that there is significant room for improvement in South London, which has historically poor rail and tube access and recommends further devolution to TfL. Click here to read the submission.
  • Sir Richard Branson has publicly called for all outstanding franchise competitions to be cancelled, pending the outcome of the Williams Review. He points out that "[w]hen the Williams Rail Review was announced, the government rightly cancelled the Cross Country competition." Branson wrote on his personal blog that "It is something of an open secret in the industry that four … current franchises are now also struggling. And that’s before the £750 million risk of split-ticketing and potential £7.5 billion of pensions risk are applied across the industry. There is also the risk of new open access operators taking significant revenue from franchises.” Click here to read Sir Richard's blog post.
  • In an opinion piece for The Telegraph, former Secretary of State for Transport Sir Patrick McLoughlin urged the Review to look to the longer term and commented “Placing delivery of local services in the hands of local bodies as the industry recommends would create greater accountability and build on the devolution movement by bringing decisions about the railway closer to the communities it serves. In addition, greater competition, where conditions support it, will give people more choice about how they travel and a service better suited to their needs.”

With just two weeks remaining for submissions to be made, we are now approaching our final stop. If we were asked to summarise in three words the key messages which have emerged from industry stakeholders so far, they would be “passengers”, “risk” and “devolution”. Whether these are the same words Keith Williams would choose remains to be seen.

Links to our previous updates are below:

  1. Williams Review: where are we now?
  2. Objectives, structure, devolution and the supply chain
  3. Freight, “metroisation” and “radical” reform

Please let us know if we can assist you in making your submissions.

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KEY CONTACT

Darren Fodey

Darren Fodey
Partner

T:  +44 20 7809 2388 M:  +44 7920 201 290 Email Darren | Vcard Office:  London

David Stephens

David Stephens
Associate

T:  +44 20 7809 2268 M:  +44 7702 155 640 Email David | Vcard Office:  London

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