Transport Committee - Rail 2020Written evidence from Jonathan Tyler, Passenger Transport Networks (ROR 04)


Preamble and Summary

Jonathan Tyler joined British Rail as a Traffic Apprentice in 1962. His career path has been from operations through demand modelling to BR-sponsored university lecturer and then to independent-minded consultancy in a range of transport work. Since 2000 he has specialised in making the case for the importance of integrated strategic timetabling, drawing in particular on Swiss methodology and software for case-studies in Britain.

The thrust of this submission is that the existing process of timetabling Britain’s railway is inefficient in itself and incapable of delivering either good use of scarce capacity or an attractive national network of services. It does yield benefits within each franchise, but these are as much to do with advantage to shareholders as to that of travellers and they cannot sum to a coherent whole. The wider public interest and environmental values receive insufficient attention. Structural reform is essential if the railway is to become something more than a loose collection of fiefdoms. The proposed solution is to move from franchises to concessions, thereby acknowledging that strong public specification within a national framework is desirable—while allowing for flexibility in delivery. The timetabling process would be managed by a National Timetabling Authority.

1. Public transport can be provided either as a commercial activity or as a public service. Under the commercial model each business

seeks to maximise its market share;

uses marketing tools to stimulate demand;

aims to maximise net revenue;

is vigilant in cutting costs, where necessary without regard, for example, to the wider consequences of withdrawing services;

may be innovative; and

owes its ultimate loyalty to its shareholders.

2. Under the public-service model the organisation

puts more emphasis on maximising market share than on stimulating demand;

seeks to optimise general welfare by considering social and environmental value;

is mindful of costs but recognises non-monetary considerations;

may be innovative; and

is ultimately responsible to democratic institutions.

3. The problem in Britain is that we have an uneasy mix of the two models. Neither the McNulty Value for Money study nor the Command Paper offers much clarification, and the latter may make matters worse.

4. In the bus industry the majority of services are run commercially. The operating companies have improved their offer, in some cases to a very high standard with commensurate increases in market share relative to private cars. However, quality remains uneven, fares are deemed to be too high, coordination is poor (partly because of the arbitrary application of laws against anti-competitive behaviour), and the industry has generated little public trust. Substantial profits are paid to shareholders while ruthless application of financial criteria leads to withdrawal of evening, weekend and geographically-marginal services. Provision of supplementary services supported by public funds is stricken by austerity budgets and typically troubled by scratchy relationships with the commercial services. This is not a promising exemplar for rail to follow.

5. The franchise system for Britain’s railway combines features of the two models. Two of the franchises (Merseyrail and London Overground) are essentially public-service concessions, since the infrastructure and the timetable are largely determined by public bodies, and the franchisees are contracted to deliver the service. Revenue-risk lies with the specifying authority. All the other franchises are based on a process whereby bidders propose the price for which they will operate a service outlined by government. The winning company is then free (subject to the terms of the franchise) to operate in whatever way will enable it to maintain the committed premium payments or to minimise support.

6. Under this scheme the Train Operating Companies [TOCs] are constrained by the initial specification and to some extent by public opinion in respect of changes to their offer, especially to the timetable, but few questions are asked about their marketing activities and there appear to be no market-share targets. It is considered acceptable to fulfill the premium commitment and to pay dividends by stimulating new travel and (especially in the peak period) by maximising revenue rather than passenger-kilometres. Because there is no clear and explicit definition of what may be expected in the public interest companies can point to numerous initiatives to meet particular demands—many of which are worthwhile in themselves—while emphasising that—monetary value is the ultimate criterion.

7. The Government proposes to continue this mixed model, with some modifications. It seems likely that the Scottish and Northern franchises will move closer to being concessions, with a significant degree of control exercised by public authorities. That is to be welcomed. For the London commuter and inter-city franchises it is intended that they will have greater freedom in order to reduce the much- and rightly-criticised micromanagement by the Department for Transport. Precisely how this will work has not been properly defined, and hence there is a risk that public-interest constraints will be weakened while private objectives are encouraged. (Ironically these may now include transfers of British public funds to support railways in other countries—an anomaly that must surely be removed.)

8. It is therefore important at this moment to register some significant disadvantages of the current franchise model and to consider some remedies.

Disintegration of the national network

9. Each franchise is treated as a distinct business. The franchises are let sequentially with only limited concern for interactions with neighbouring franchises. There is no constraint on branding, brands are multifarious and unstable, and customer-loyalty is consequently weak. The result is that any communal sense of a national network has become very attenuated (the phrase National Rail is deployed but is almost devoid of meaning). Whether this matters deserves more careful investigation than it has yet received. It may be that highly-focussed regional businesses realise substantial benefits. The offset is that rail is no longer recognised as the universal public service that it undoubtedly remains in some countries in mainland Europe, with the possibility that irritation with a complex and opaque structure hinders the railway’s ability to increase its market share.

Confused priorities in marketing

10. The behaviour of the inter-city TOCs is becoming ever more like that of supermarkets. Both types of business have a fairly fixed number of “products” to sell, with limited scope for satisfying niche markets (supermarkets may claim to offer what customers want, but of course they will not stock what does not fit readily into their large-scale logistics operations), and they both respond by vigorous marketing designed to win customers from rivals and to persuade them to maximise their spend. That is business, although it does raise some social, ethical and sustainability questions that cannot altogether be ignored. More immediately, however, in the railway case the purposes must be queried.

11. Ostensibly the objective is to fill seats that would otherwise remain empty, given that most railways operate (for very good reasons) fixed-formation trains at fixed intervals and that there is nothing more perishable than an unoccupied seat at the end of a train’s journey. Thus far the marketing activity and the associated fares structures are unobjectionable. Yet there are some increasingly concerning downsides:

Virtually all of a TOC’s effort goes into selling journeys within its own territory, with the result that place-pairs that happen to involve more than one TOC tend to be offered fewer or less substantial discounts. This raises important equity and regional issues.

The fares system necessitated by supermarket-styles of selling has become increasingly unwieldy, to the point where confusion and a palpable sense of being exploited are discrediting both it and the companies who run it. Any reform must be drastic.

Frenetic promotions are now commonplace, and one gets the feeling that some companies are primarily focussed on stimulating trips that would not otherwise have been made (ie by diverting expenditure from non-transport items). That is perfectly legitimate from their standpoint, but it runs counter to the long-term sustainability target to reduce the total volume of travel, and more immediately it diverts effort from the purported government aim to increase the share of the travel market held by rail.

The combination of on-line marketing with internet booking systems affords the traveller many benefits and the company valuable tools for planning its services (not least to spread traffic as evenly as possible), but one unintended consequence is the widespread belief that all tickets have to be purchased in advance, must be accompanied by seat reservations and are subject to restrictive rules. The concept of the “walk-up” railway has thus been gravely weakened. The government’s commitment to maintain it is welcome, but active measures are needed to re-emphasise its vital role in making the railway a convenient and credible alternative to the private car. Reform of fares and timetabling must take this into account.

Disconnecting the network

12. Actions by TOCs, no doubt each reasonable from its own point of view, accumulate to undermine a network in which the companies collaborate:

Because franchises are let sequentially any one operator is restricted in recasting its timetable by the pre-existing and legally-protected paths of other operators. Some instances only cause minor difficulties, and it is important to maintain some stability rather than be constantly changing timings. Nevertheless the system can devastate the process of radical overhaul that is necessary from time to time—as it did in respect of the East Coast Main Line revision that was both interminable and eventually mediocre.

TOCs pay little attention to securing good connections with other operators’ services. It is not a priority for management time because the net-revenue benefits are limited and difficult to discern, while the process for achieving them would often be fraught. The Office of Rail Regulation [ORR] has systematically neglected its duty to facilitate the making of journeys which involve the services of more than one operator. The loss of potential revenue that this entails to the national railway and the social and environmental benefits forgone are unlikely to be trivial, but the narrow focus of each TOC and fear of change are preventing even a study of the issue, despite copious evidence of the benefits of connected networks in a number of European countries.

Most TOCs have also ceased to offer useful information about connecting services in their printed literature and on-train announcements. Network-wide maps are not often displayed, and publicity for the facilities offered at a system level is scarce. In one indefensible case a TOC poster shows only its own lines while purporting to assist travellers with their onward journeys.

Connections are commonly broken as each TOC seeks to protect its performance statistics. There can be good reasons for not holding trains for a late-running service, but what to the customer look like casual or self-interested actions, sometimes resulting in disproportionate inconvenience and long taxi-rides, have undermined confidence in the collective railway. The effect on demand is unknown, although research suggests that the perceived interchange penalty has increased dramatically (with the perverse effect that through trains are demanded beyond what there is any realistic prospect of delivering).

Setting the franchisees free

13. This is a key feature of the proposed Government policy. It has long been sought by ATOC, the franchisees’ association, and it chimes with a general intention to reduce central control. Little detail has so far been offered as to how it will work, and therein lie some worries:

If TOCs seek significant changes to their timetables in order to pursue what they believe to be their customers’ interests (but which will also be driven by shareholder interests) then two things may happen. One is that they will be frustrated by the constraints imposed by other operators’ paths. The other, partly in consequence as compromises are worked through, is that the changes will degrade the offer by varying standard-hour paths, creating gaps and nibbling at the edges of evening services and geographic spread. This will then bring the Department back in, because public criticism will have to be faced. The issue will become critical if, as some comments suggest could happen, TOCs try to withdraw services from secondary stations or flows in order to concentrate on the big flows that maximise profit.

These potential problems will be exacerbated because no precise definition of the public interest has been offered by any government running the present franchise process. There is neither a modal-split target to underpin the public involvement in the railway nor any framework of standards of service by which to measure whether particular communities are receiving a good, fair or indifferent quality of public transport.

Franchisees will only be incentivised to pursue innovations which happen to fall within their territory and happen to be advantageous to them. The industry will still lack an overall view such that wider initiatives for new service patterns and inter-connections or, say, for some clearer differentiation of service-types can be explored.

What then are the remedies for the unresolved contradictions in the franchising model?

14. Neither the Government nor the current industry players have any inclination to resort to major structural changes. This is despite the fact that many informed observers have become convinced that further tinkering evades the reality of the failure of the fragmented and contractualised railway and despite what appears to be a consistent majority in public opinion in favour of reunifying, or even renationalising, the railway and thus explicitly confirming its public-service status. What follows is therefore based on an attempt at reform in pursuit of a key objective without resorting to comprehensive change.

15. The steps in the reasoning are these.

Any vision of a railway that takes an increasing share of the market, that contributes significantly to real long-term sustainability (by minimising transport’s use of resources and damaging emissions) and that affords every citizen a reasonable standard of accessibility for a fulfilling life must be centred around a coherent national network (which could well extend to public transport as a whole).

A national network implies that the component parts will function as an entity in respect of the service offer, common standards, ease of use and the perception inculcated in public attitudes through consistent presentation and branding.

It is perfectly possible for the network to be delivered by different players so long as they work collaboratively—while retaining freedom in respect of any matters that do not detract from the national system (this is more or less how London Buses functions). The very costly process of delay-attribution could usefully be cut back in a unified network.

The timetable is the central feature of the product offered by public transport and a fundamental element in the operation of a disciplined railway. This needs to be recognised more explicitly. In particular, Britain can never have a high-connectivity timetable with well-delineated services and easy-to-understand repeating patterns unless the existing process is comprehensively reformed.

In parallel it is becoming increasingly clear that the capacity of the railway can neither be used efficiently nor expanded effectively if pathing is no more than the cobbling together in a rigid legal process of the demands of an uncoordinated set of players each seeking its own independent advantage. The conflict between franchise and open-access requirements is a particularly pernicious example of inefficient use of resources. These aspects were acknowledged in the McNulty review in the form of a need for system-level functions within Network Rail and for some form of “guiding mind” in timetabling.

Such weaknesses can only be addressed by moving from the franchise concept to a concession system. The timetable would be planned centrally using well-established principles and methodologies in order to realise all the benefits of an integrated system, including opportunities for “clean-sheet” recasts to optimise outcomes. Service-delivery would continue to be contracted out. This would in turn enable the entry of a wide variety of operators, since it would no longer be necessary to offer large franchises, and particular services could be taken on by, for example, local or cooperative organisations.

16. Responsibility would rest with a National Timetabling Authority [NTA]. Its remit would be to balance all the requirements for paths in the way best calculated to optimise the use of existing capacity and to guide its enhancement. This body would:

take over the specification of the public interest from the Department of Transport, whose role would be to lay down overall policy;

consolidate (and hence secure economies in) the overlapping timetabling activity now undertaken by the Department, Network Rail, the TOCs and other players;

receive representations from all interested parties, including businesses with market experience and organisations of users;

work systematically and consensually to consider every aspect of services, including market potentials, connectivity, accelerations and resource utilisation; and

devolve many detailed tasks to regional bodies.

17. Network Rail would continue to manage the infrastructure and would work closely with (and probably be best co-located with) the NTA. Access-rights would be determined as an intrinsic element of the timetabling process and no longer require a distinct legal process, but ORR would retain a referee and appeal function in order to ensure non-discrimination, especially with respect to capacity for freight trains. The Department for Transport would manage the concessions process based on the specifications of paths drawn up by the NTA, including arrangements for adjusting terms when timetables were altered for system reasons.

18. This does not claim to be a fully developed proposition. Plainly it would require extensive reorganisation and probably statutory powers, although with a degree of goodwill and cooperation it could begin to function immediately on a provisional basis. The point however is that the Command Paper represents the fourth attempt to make the fragmented railway work, and once again analysis suggests that it contains the seeds of the next failure.

19. That will be particularly the case if no action is taken to address a system of timetable planning that is cumbersome, inefficient and incapable of delivering an effective national network. The alternative vision of an integrated pattern of regular and connected services delivered in the public rather than in the shareholders’ interest must surely merit consideration at this time since it would very probably reduce costs and increase revenue.

20. There is no reason to believe that this structure would be incompatible with European Union law as it now stands, since most mainland railways continue to offer a unified service. It might however be necessary to challenge further liberalisation, given that the evidence that that will secure the style of public transport appropriate for a sustainable future is very thin.

11 April 2012

Prepared 5th January 2013