In­sider

Wil­liams Re­view must be more than a rewrit­ten McNulty study

Rail (UK) - - Contents - Email: rail@bauer­me­dia.co.uk

Wil­liams Re­view must de­liver.

The terms of ref­er­ence pub­lished by the Depart­ment for Trans­port for the Wil­liams Re­view pro­vide lit­tle clue about any Gov­ern­ment pref­er­ence for fu­ture rail­way or­gan­i­sa­tion, other than once again try­ing to re­strain costs - for the ben­e­fit of pas­sen­gers in the level of fares, and for the ben­e­fit of tax­pay­ers in terms of the grant needed to sus­tain net­work ca­pa­bil­ity.

In the 2011 McNulty value for money study, it was found that op­er­at­ing costs in Britain were 20% higher than for com­pa­ra­ble Euro­pean coun­ter­parts, with ticket prices 30% above the Euro­pean aver­age per pas­sen­ger kilo­me­tre. State fund­ing was also sig­nif­i­cantly higher than else­where, which re­sulted in a 40% ef­fi­ciency gap be­ing iden­ti­fied.

It was, how­ever, ac­knowl­edged that Bri­tish ge­og­ra­phy was a fac­tor in higher costs - Lon­don is the main traf­fic hub, but is not in the geo­graphic cen­tre of the coun­try, which has an ef­fect on as­set and staff util­i­sa­tion.

It was also pointed out that at that time rail in­dus­try wages had risen by 16% more than the na­tional aver­age in­crease dur­ing the 15 years since pri­vati­sa­tion, and that greater pro­duc­tiv­ity was needed - in par­tic­u­lar by mak­ing Driver Only Op­er­a­tion the de­fault method of work­ing.

There was a call in the study for im­proved in­dus­trial re­la­tions, to bro­ker change. But that as­pi­ra­tion looks as far away as ever, with the re­fusal of staff ( backed by their trade unions) to ex­tend the op­er­a­tion of trains with­out an on-board pres­ence in ad­di­tion to the driver.

The Rail Reg­u­la­tor acted on these find­ings and made sub­stan­tial cuts to Net­work Rail’s Op­er­at­ing, Main­te­nance and Re­newal bud­get, with a £ 2 bil­lion cut in fund­ing dur­ing Con­trol Pe­riod 5 (2014-19). De­spite NR opin­ion that this was un­de­liv­er­able, the re­duc­tion in the bud­get went ahead. But it has proved im­pos­si­ble to im­ple­ment, as through­out the five-year pe­riod tranches of fund­ing have been re­stored as a de­te­ri­o­ra­tion in as­set con­di­tion and lack of op­er­a­tional re­silience be­came ev­i­dent.

Other cost re­duc­tions were pro­posed, such as im­proved rolling stock pro­cure­ment - it was sug­gested this should be stan­dard­ised, along with the trains them­selves. The change was made, but the Na­tional Au­dit Of­fice found that costs in­flated rather than re­duced, as a re­sult of a lack of ex­per­tise within the DfT that led to a 27 ½-year com­mit­ment cost­ing £ 7.65 bil­lion to pro­cure In­ter­city Ex­press Trains.

An­other rec­om­men­da­tion was that the newly cre­ated Rail De­liv­ery Group (RDG) should lead change, and that a small in­de­pen­dent team should have an im­ple­men­ta­tion plan and mon­i­tor re­sults. There is lit­tle ev­i­dence that the RDG is struc­tured to de­liver this type of ac­tiv­ity, as it has no ex­ec­u­tive pow­ers to bring com­pli­ance by Net­work Rail or the train op­er­at­ing com­pa­nies (TOCs).

So, will the Wil­liams Re­view have any ma­te­rial dif­fer­ences to the McNulty find­ings? My guess is that if there is a re-run of the ef­fi­ciency ma­tri­ces, the find­ings will be worse, sug­gest­ing that the real rea­son that it costs more to run our rail­ways in Britain is to do with ex­ter­nal fac­tors that are dif­fer­ent to com­pa­ra­ble rail­ways else­where.

The most sig­nif­i­cant of these is the growth in de­mand for ser­vices over two decades, which ex­tends to the freight in­ter­modal sec­tor. It is in­evitable that there will be more in­fra­struc­ture wear and tear on a sys­tem that NR has re­peat­edly pointed out has suf­fered from years of ne­glect, in the re­place­ment of struc­tures such as bridges and the con­di­tion of em­bank­ments.

These is­sues re­main largely out of sight of rail­way cus­tomers… un­til they are con­fronted with the with­drawal of ser­vices to al­low in­fra­struc­ture re­newals and ca­pac­ity up­grades, which at least are pub­lished in ad­vance. But it is short­term dis­rup­tion that needs high lev­els of cus­tomer ser­vice man­age­ment, and all too of­ten this has been ab­sent.

It is a sur­prise that the make-up of ex­perts de­scribed as a chal­lenge panel does not in­clude any­one run­ning a pas­sen­ger or freight op­er­at­ing com­pany or a rolling stock leas­ing com­pany, with the ex­cep­tion of the DfT- ap­pointed chair­man of the East Coast Part­ner­ship fran­chise. These are or­gan­i­sa­tions that un­der­stand the un­der­ly­ing cost driv­ers of op­er­a­tions. There is also no room for the of­fi­cial pas­sen­ger watch­dog Trans­port Fo­cus, while there are two rep­re­sen­ta­tives out of six from NR Route Su­per­vi­sory Boards.

With a po­ten­tial gap in cred­i­bil­ity, it is cru­cial that Keith Wil­liams pro­vides the skills and ex­pe­ri­ence not to un­der­write poli­cies that count against the adop­tion of the cus­tomer in­ter­est.

As a for­mer Chief Ex­ec­u­tive of Bri­tish Air­ways, his pe­riod in of­fice started in the mid­dle of a two-year dis­pute with cabin crew that had cost the com­pany £150 mil­lion in strikes and stop­pages.

This is not a dis­sim­i­lar sit­u­a­tion from ef­forts to ex­pand Driver Only Op­er­a­tion, which has faced a brick wall of op­po­si­tion from the RMT union, con­sis­tently backed by staff in bal­lots for strike ac­tion.

The BA is­sues were re­solved by de­vel­op­ing a re­la­tion­ship with Unite Gen­eral Sec­re­tary Len McCluskey, and by mak­ing a point of reg­u­lar face-to-face con­tact with dis­af­fected staff which fi­nally en­abled planned cost re­duc­tions to take place. Op­er­a­tions were also slimmed down by sell­ing off smaller busi­nesses such as Deutsche BA and its own low-cost op­er­a­tor BA Con­nect, while ex­pand­ing routes which had the po­ten­tial for prof­itabil­ity.

There has been a search for cost re­duc­tion by the TOCs, in the main driven by the level of premium pay­ments of­fered to the Gov­ern­ment for the right to run ser­vices. Un­re­al­is­tic fore­casts for rev­enue growth have led to mea­sures that have re­moved front­line staff.

Di­rec­tors and Se­nior Man­agers are no longer seen at sta­tions, ex­cept for staged ‘meet the man­ager’ events. The same ap­plies to con­tact with many stake­hold­ers such as lo­cal author­ity of­fi­cials. Not even the re­cent ser­vice dis­rup­tion (as a re­sult of timetable changes) per­suaded those in charge to make ad hoc sta­tion vis­its, to learn from the staff im­me­di­ate ac­tions that could be taken to im­prove the sit­u­a­tion for pas­sen­gers.

As deputy chair­man of John Lewis, Wil­liams is in a lead­ing role that pro­motes the value of front­line staff as part­ners in the busi­ness. He will be used to talk­ing to these in­di­vid­u­als, and should re­peat that in a rail­way con­text… but he won’t like what he hears.

“Di­rec­tors and Se­nior Man­agers are no longer seen at sta­tions, ex­cept for staged ‘meet the man­ager’ events.”

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