Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by the Strategic Rail Authority (TYP 45)

  The Government's 10 Year Plan sought to reverse almost three decades of limited funding and investment, declining market shares of both passenger and freight coupled with a massive and uncontrolled increase in private car usage, and provided an integrated approach to public transport and an increasing role for the railway. The accidents at Ladbroke Grove, Hatfield and Selby, the widespread disruption to the network that followed Hatfield and the placing of Railtrack in administration have combined to damage confidence in the railway. Accordingly, the Strategic Rail Authority's (SRA) short term priority is to stabilise the industry and improve industry performance. The SRA's medium term strategy is focused upon the delivery of the 10 Year Plan core targets.


What assumptions should be modified or challenged?

  The 10 Year Plan focuses upon the achievement of an increase in passenger kilometres by 50 per cent from 2000 levels, an increase in rail freight tonne kilometres of 80 per cent over the period, and a reduction in overcrowding. The SRA expects that the measures set out in its Strategic Plan will achieve these targets, including an increase in passenger kilometres of between 40 and 50 per cent by 2010.

  Measures will be taken to reduce overcrowding on all 10 London commuter train operating companies (TOCs), and this should result in improvements. While it is difficult to give precise figures to 10 years hence, most London TOCs will be within target and further measures will be considered for any that might not meet the target.

  Freight growth is planned to reach 80 per cent once the investments set out in the SRA's Freight Strategy[26] are implemented.

  Railway projects have long lead times, and the current investment planning framework is not fit for purpose. We need to secure the level of private sector involvement and finance envisaged in the Strategic Plan; and the creation of a suitable framework will be a priority during 2002.

How important are the assumptions to the outcome of the plan? What remedial action is necessary if assumptions or targets need to be changed?

  There are elements of the SRA's Strategic Plan which are wider than the 10 Year Plan core targets. In order to deliver on the targets in the plan, it is necessary that there should be a significant increase in confidence and stability in the industry to encourage investors to commit the substantial quantities of private capital which, together with public funding, are essential to the delivery of this Plan.

  The 10 Year Plan and Strategic Plan assumptions included the continuation of existing policies on fares (ie increases in regulated fares being limited to RPI-1) and on capacity utilisation (eg Passenger Service Requirements) and overcrowding standards. The SRA will consult later this year on a review of its policies in these areas and its capacity allocation strategy on which these policies collectively bear.

  The SRA will monitor changes in the external environment and rail industry performance to assess whether its targets are likely to be met and what response is appropriate.

Are the skills and capacity available to deliver the improvements suggested?

  The rail industry needs more specialist and managerial skills, and to make better use of those it has already. Experience and skills have been lost as companies have downsized, while recruitment and training in railway skills have often been poorly organised. The private sector has brought in some new ideas and approaches to the railway, but progress has not been consistent throughout the system. A more professional and systematic approach to management is needed, in particular for front line staff.

  The SRA will spearhead a skills drive within the rail industry, including the establishment of a "National Rail Academy", making £500,000 available to develop a number of training initiatives during 2002-03. The SRA will take the lead on proposals for a National Rail Academy, to promote the development of the key skills and competences to run a railway on a safe and effective basis. As well as encouraging the industry to give full support to the Rail Industry Training Council (RITC), the SRA will become a member of the RITC. The joint action plan by the SRA and the Department for Education and Skills (DfES), Framework for Skills for the Rail Industry[27], sets out a broad ranging strategy to help push skills up the agenda for the rail industry, based around six strategic themes. Franchise replacement will also be used to promote training wherever possible—for example, the Midland Mainline franchise extension deal includes a commitment to establish a Customer Services Academy.


How will the current situation in the railway industry affect the need for and provision of private and public sector finance?

  Resolution of the administration of Railtrack and the determination of any related financial and structural reforms are necessary to provide long term stability and confidence for private investors to take a stake in the major infrastructure improvements needed to upgrade the network. Skills shortages also need to be tackled and the SRA's Strategic Plan outlines initiatives being taken to this end. The SRA has re-launched the franchising programme with the aim of achieving simplification both in number of passenger rail operators (notably concentrating one operator on each of the London terminii) and between train and track operations by closer co-operation between the parties.

  A new procurement framework for enhancement projects is being developed with the Government, which includes looking at all stages of enhancement from prioritisation and initiation through development and implementation to operation and maintenance. The new framework will introduce new risk-taking project partners through Special Purpose Vehicles (SPVs). In essence this means creating companies to undertake the design building and finance of enhancement projects.

  To persuade the capital markets to form a positive judgement about the new framework, and to attract investment in long term capacity and growth, the SRA and Government will provide further clarity and confidence over future work load, work type and its timing, building on the project priorities identified in the Strategic Plan.

  There is increasing evidence that the private sector faces a number of difficulties in supporting the risks involved in the early stages of the project development process. The initial stages of engineering development, railway timetable planning and implementation planning are very important in the development of any project. They help de-risk the project by identifying a buildable, deliverable programme of works that can be practicably implemented whilst the railway remains operational. The Strategic Plan assumes, therefore, that the public sector will need to support much of the early stages of certain projects.

Is the balance and phasing of investment across funding areas correct?

  A significant investment programme is needed and the SRA has the lead role in making it a reality.

  Major investment must be directed where it is likely to be most effective in addressing the core targets. In terms of increasing passenger volumes, this means focusing investment on the main routes serving London, both inter-urban and London commuter. In terms of reducing overcrowding, meeting the target will require longer trains, longer platforms, and increased track capacity on London-area TOCs. The Freight Strategy will be taken forward, with enhancements to the network to increase reliability and capacity, targeted grants, revenue support and funds for innovation.

  Existing public financial support to regional networks is concentrated on maintaining service levels rather than developing new infrastructure.

Are more flexible financing arrangements required to deliver major local schemes?

  Major infrastructure projects help remove capacity constraints on the network and improve quality. Inevitably, they concentrate on investment on certain parts of the network where the biggest improvements can be made. They can also take many years to implement. It is essential that these projects should be complemented by local improvements throughout the network focusing on short term delivery. Several programmes have been put in place to achieve this goal.

  "Incremental Output Statements" were designed by the SRA following detailed consultation with stakeholders and the industry to specify track and signalling schemes at over 100 locations to provide improved capacity, journey times or reliability, and the upgrading of 1,000 stations with improved facilities such as waiting rooms, toilets, security and information systems. The definition and funding of the schemes is well advanced, and discussions are in hand with Railtrack and the Administrators to ensure they are taken forward. The programme is designed to be fully completed in 2007, at a capital cost of around £700 million.

  The Rail Passenger Partnership (RPP) programme provides funding to assist new or enhanced rail services and facilities which contribute to the Government's wider objectives but which typically are not able to earn commercial returns. The programme is driven by proposals from local stakeholders and hence reflects genuine local requirements. It has proved to be a particularly effective way of stimulating improved integration with other forms of public transport. Around £45 million has already been approved for 41 schemes, with a further 35 schemes currently being assessed. New stations, new passenger lines, new train services, extended car parks, improved station facilities and cycle parking and passenger information systems have been provided. The RPP budget originally agreed by Government was £105 million for three years only. The programme was recently re-launched with funds increased to £430 million for the next 10 years.

  A new Rail Performance Fund is being established worth £400 million over 10 years to co-invest with rail companies in short-term schemes to improve reliability for passengers. This will enable SRA to fund up to 50 per cent of such schemes thus facilitating a total expenditure of £800 million.

  The SRA will make available additional funding to ensure TOCs are resourced, where necessary, to implement the requirements of the Disability Discrimination Act (DDA) on access to stations. This funding will be available throughout the time needed to implement the DDA, a process that will take a number of years, given the age and condition of many of the existing stations. In partnership with key stakeholders, criteria are being produced to allocate funds and optimise the value of the outputs flowing from them, and details of a funding mechanism are being developed. A further announcement will be made later this year.

  Small scale schemes designed to deliver early benefits to freight will be funded through a £300 million Freight Small Schemes Fund. These could include early work on gauge enhancement, branch line re-openings, loop lengthening and small network improvements to increase capacity, improve reliability and promote efficiency. The initial focus will be on schemes which can be delivered in a short (two to three year) time frame, those which can be carried out at the same time as renewals which are already planned and those which place least pressure on scarce technical resources.

  If additional public or private funds can be made available to the railway and supply side shortages are resolved, then more can be achieved—particularly in terms of the wider goals of the 10 Year Plan. The SRA is therefore working on a greater range of projects than can currently be implemented, so as to have schemes available to bring forward as resources allow.

  The process of prioritisation and consultation will be a continuing one and the Strategic Plan will be revised each year, partly to reflect that. In particular, it will need to take account of changes in the industry, the outcomes of Multi-Modal Studies, Regional Transport Strategies and the responses of stakeholders.

How do the emerging multi-modal studies affect the 10 Year Plan?

  Most of the projects that emerge from the studies are initial ideas that will require a significant amount of additional development work through further feasibility assessments, detailed design, Transport and Works Act submissions, construction, &c. It is thus unlikely that many of the large scale Multi-Modal Schemes (MMS) projects could be delivered within 10 years. The 10 Year Plan therefore, does not include a specific budget for MMS projects. The rail-based outputs from the MMS are not included as separate projects within the Strategic Plan. It should be stressed however that many studies have assumed a level of development on rail projects that includes many of the Strategic Plan projects.

Should the plan represent a better balance between large and small schemes, and between infrastructure, management and operations?

  The SRA recognises that some small schemes can deliver significant benefits and improvements to the railway network, and has established the Rail Passenger Partnership fund, the Rail Performance Fund and the Incremental Outputs Statements scheme to deliver relatively small scale improvements to the railway network to complement the larger projects needed to remove bottlenecks and deliver major upgrades of the network.


Are the targets and dates for their achievement well designed (ie is reducing congestion the right objective?) What other targets, if any, should be included?

  The Strategic Plan accepts the targets for rail and sets out priorities for action which, if implemented, should achieve the core targets within the time-frame.

Should a more regional approach be adopted for target setting?

  A particularly key role in the forward planning of the railway is being played by the devolved authorities in Scotland, Wales and London. They have been working with the SRA and the rail industry to identify projects that contribute to the delivery of regional, as well as national, priorities. Key projects for Scotland are being considered and the Scottish Executive will issue Directions and Guidance to the SRA; Wales now has its own franchise; and the Mayor for London is about to issue Directions and Guidance to the SRA. The SRA also has specific duties to work with local and regional planning authorities to help integrate spatial and transport planning.


How well does the plan balance social and environmental policy with efficient investment?

  A cost effective and efficient rail network will be attractive to car users and therefore contribute to the Government's environmental objectives by facilitating modal shift.

  Socially necessary passenger rail services are protected by the Passenger Service Requirement. These are part of franchise agreements. The SRA's Strategic Plan makes no assumption that the broad quantum of these services will change. The SRA, however, is required to produce a strategy for capacity allocation which will seek to balance all the objectives for passenger and rail freight. The SRA will launch a consultation exercise later this year as part of this process.

  Rail requires less land than road to move equivalent volumes and is more efficient in terms of energy consumption than air or road. Half of all train kilometres run are by electric trains, whose energy sources produce far fewer harmful greenhouse emissions than other modes.

Does the plan set out a balanced approach to all modes (eg walking)?

  The SRA has a major role to play in delivering the Government's targets, and the development of improved facilities for passengers is at the centre of the SRA approach. A key element of the SRA's approach is to improve access to the railway. Many such schemes are delivered through replacement franchise agreements and the Rail Passenger Partnership fund: expanding car parks, park and ride schemes, integrating bus links (as well as development of through ticketing opportunities, improving integrated access, waiting facilities &c), improvements to taxi access, and access to stations for those arriving by foot and bicycle.

Are there any conflicts between the Plan and the policies in the White Paper—"A New Deal for Transport"?

  The priorities in the Government White Paper included:

    —  promoting the use of the railway within an integrated transport system;

    —  ensuring that the railways are planned and operated as a coherent network, not merely a collection of different franchises;

    —  ensuring that rail transport options are assessed in a way which constitutes good value for money and optimises social and environmental gains;

    —  taking a view on the capacity of the railway, assessing investment needs and identifying priorities where operators' aspirations may conflict with one another; and

    —  supporting integrated transport objectives and provide for the first time a clear focus for the promotion of rail freight.

  These objectives are consistent with the 10 Year Plan, and the delivery of these objectives are central to the Strategic Plan.

What impacts will policies in the European White Paper on Transport have on the Plan?

  The main thrust of the European White Paper on Transport is for action to achieve modal shift from road to rail and tackling transport bottlenecks, a new set of Trans-European Networks (TENs) projects, and liberalisation of freight and passenger services.

  The SRA welcomes the emphasis on rail in the White Paper, and the investment to relieve rail bottlenecks, but, in responding to the consultation on the EU White Paper, will raise concern that, despite the drive to concentrate on completion of the 1996 Essen List (which includes the West Coast Main Line and designated freight links), there are no projects for the UK in a project list for revision in 2004.

26   Strategic Rail Authority: Freight Strategy (Strategic Rail Authority, London May 2001). Back

27   Framework for Skills for the Rail Industry, RITC, London April 2001. Back

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