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[119],
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[120], 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[121])
- 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 £15billion 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[122]),
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
119 http://www.atoc.org/clientfiles/File/Planning%20Ahead%20(August%202010)%20(2).pdf
Back
120
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
121
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
122
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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