Written evidence from the Association
of Train Operating Companies (ATOC) (TE 115)
As you know, ATOC represents the views of train operating
companies. I am grateful to you for the chance to submit views
in the light of this week's Spending Review which, from a rail
perspective, might aid your current inquiry.
We believe that rail plays an essential role in driving
sustainable economic growth. Our ambition, with our partners in
the industry, is to increase rail's significant contribution to
Britain's economic, social and environmental welfare. In the document
Planning Ahead 2010[318],
published in August jointly by ATOC, Network Rail and the Rail
Freight Operators Association, we set out how rail can do this
together with our priorities over the medium and long terms to
achieve that.
We very much endorse the opening premises in the
inquiry terms of reference, that a good transport system is a
pre-condition of the long-term economic growth required to drive
the UK's economic recovery, and that at a time of major public
expenditure cut-backs, it is vital that every pound is invested
to greatest effect. We also support the key recommendations of
the comprehensive 2006 Eddington study into transport and the
economy:
- Government should focus policy and investment
on improving existing networks in places important to our economic
success.
- The key strategic economic priorities for transport
policy over the next 20 years are congested growing cities[319],
key inter-urban corridors and international gateways.
- There needs to be a sophisticated policy mix,
including getting prices right across modes, better use of existing
networks and sustained investment (including smaller schemes[320]).
- The policy process needs to be rigorous, focusing
on objectives and ensuring that spending is focused on the best
policies.
- The delivery system, such as the planning process,
needs to be made ready to meet future challenges.
We believe the findings of the Eddington study remain
highly relevant and appropriate in 2010. Over the next 25 years,
the railways will need to provide capacity to accommodate twice
as many passengers as today: sustained public and private investment
is essential if we are to do this while providing attractive services.
The recent economic recession has had an impact on demand, but
in every quarter demand has grown in at least one part of the
rail market (whether commuting, regional or long-distance): stronger
demand during 2010 in all sectors has underpinned overall growth
at levels not seen since before the recession (see figure 1).
The pressure on public spending also underlines the
Eddington priority on ensuring that transport spending is focused
on the best policies: this is particularly important for our sector,
given that half the costs of the railways are currently met by
the taxpayer. We believe there are two important dimensions to
this:
- getting the most out of the current investment
programme
Sustained investment in maintaining and renewing
the network is a key priority (planned to be over £15 billion
in the current control period, CP4): failure to do so adequately
is a false economy and ends up being more costly in the long run,
although Network Rail must achieve or better its efficiency goals
in carrying out this work. Within the significant network enhancement
programme in CP4, particular priority should be given to schemes
which improve line speed (and so help generate revenue) and reduce
overcrowding (and so help our centres of economic activity), while
reviewing how other schemes are delivered to see if they can be
done more cheaply. In terms of rolling stock, there is likely
still to be a strong case for proceeding with at least some of
the vehicles yet to be ordered in the DfT's "HLOS 1300"
programme, given the ongoing level of passenger demand.
- promoting better value for money in rail through
wider industry reform
This area is currently being review by Sir Roy McNulty,
and in our view there are two major areas of opportunity. Moving
to longer, smarter franchises, combined with closer alignment
of track and train (for example, by devolving more authority and
resource to Network Rail route directors working in stronger partnership
with train operators[321]),
has the potential to achieve a number of things. It improves the
prospects for attracting private investment into the railways,
and by promoting a more customer-focused and commercial railway,
drives both greater cost-efficiency and improved focus on projects
which deliver passenger and revenue benefits.
In the recent Spending Review, the Chancellor gave
welcome recognition to the need to invest in the nation's infrastructure.
The ability of the DfT to fund capital investment in transport
seems to have emerged well compared with other Departments and
there is welcome reference to a number of rail improvements across
the country in the Spending Review. However, it is too early to
understand the full implications of the review for rail. Apart
from needing to understand better whether Network Rail's enhancement
programme for CP4 remains as planned, important decisions are
due to follow on replacement of the inter-city high speed fleet
and the related issues of electrification, wider rolling stock
deployment (the HLOS 1300 vehicles) and Thameslink.
Finally, while the relative priority given to transport
investment in the Spending Review appears consistent with Eddington,
public policy has moved on since 2006 in a number of important
respects. First, while Eddington was cautious about the merits
of high speed rail, the Government has announced its support to
develop a Y-shaped route linking the north and south of the country.
Second, while Government appears not to support widespread use
of congestion pricing on the roads (something highlighted in Eddington),
it has announced as part of the Spending Review an increase in
the cap on regulated rail fares (from RPI+1 to RPI+3) to take
effect from 2012. And third, it remains to be seen whether the
forthcoming publication of the National Infrastructure Plan and
changes in regional/local planning meet the challenges set out
by Eddington.
The Committee may therefore wish to consider whether
the time is approaching when Government needs to re-state its
overall strategy for transport, possibly next year once there
is greater clarity on the direction of rail industry reform and
on the outcomes of the McNulty review. Much of the focus of Government
policy since the General Election, for understandable reasons,
has been driven by the need to tackle the public spending challenge.
The need now is to build on that and develop a clear narrative
which takes stock of developments since Eddington and shows how
Government policies towards different transport modes are "joined-up"
in promoting economic growth, social progress and environmental
improvement. Far from being an academic exercise, this is essential
in ensuring there is a coherent framework within which the private
sector among others can play a full and effective part in delivering
Britain's transport needs.
October 2010
318 http://www.atoc.org/clientfiles/File/Planning%20Ahead%20(August%202010)%20(2).pdf
Back
319
See the Centre for Cities report recently commissioned by ATOC
on the value arising from five planned rail improvements to the
urban areas they serve - http://www.centreforcities.org/assets/files/pdfs/10-07-21%20On%20Track.pdf Back
320
The Committee has previously noted the June 2009 ATOC report Connecting
Communities which identified a business case for relatively
small capital schemes providing rail access to 14 communities
with a population of 15,000 or more Back
321
The ATOC paper on track and train alignment can be found at http://www.atoc.org/clientfiles/File/ATOC%20-%20Better%20Alignment%20of%20Train%20and%20Track%20-%20September%202010.pdf Back
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