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

Memorandum by Virgin Trains (PRF 45)



  The rapid improvements that the Government and Transport Sub-Committee rightly seeks in safety, performance, comfort and frequency are the foundation stones for the industry's revival. This is not an area for instant solutions and success is going to hinge around restoring stability in the industry.

  The concern must be that the rail industry has been losing its professionalism due partly to a serious drain of experienced people and partly to the overriding distractions of re-organisation, franchise bidding and contract letting. The industry needs stability to attract skilled professionals to ensure its basic tasks are performed with excellence.

  The restoration of high operating performance will require a single-minded focus on achieving the following three ingredients and I offer some examples below:

    (a)  Professional equipment.

    (b)  Professional management processes.

    (c)  Professional staff.

1.1  Professional Equipment

  The West Coast infrastructure was handed to Railtrack with just one speed restriction between London and Glasgow in 1994, but this could not have been sustained. Much of the infrastructure is now beyond reliable maintenance and the only solution is a sustained investment programme in robust equipment. The West Cost Route Modernisation was only achieved through a long-term franchise agreement and the performance benefits are only just becoming obvious after four years. We now have brand new infrastructure on the approaches to both Birmingham and London Euston at a cost of £180 million and these now deliver 99 per cent equipment reliability—a Japanese level of professionalism.

  The ageing Cross Country train fleet has also defied high quality maintenance and the only solution was to replace the entire fleet with a train that is designed to be reliable. British Rail was never able to make the financial case for this level of investment in Cross Country, but the 15-year franchise commitment allowed Virgin Trains to justify investment in a total fleet replacement. The new Voyager trains promise to be a highly reliable fleet with robust modern equipment, which is extensively duplicated to ensure that the train keeps running. The manufacturer's commitment has been held through a long-term contract to maintain the fleet for the next ten years with high penalties for failing to achieve at least 28,000 miles between incidents.

  Two 15 year contracts have allowed Virgin Trains to justify the renewal of its entire Cross Country and West Coast train fleets—together with virtually the entire West Coast infrastructure south of Crewe. This total route modernisation is the essential foundation to future reliability, but it will have taken a five-year lead-time to negotiate and deliver the investment.

  The West Coast benefits include:

    —  £3 billion renewal of Phase 1 track, signalling and electrification (65 per cent completed).

    —  £1 billion investment in new fleet of 53 Pendolino tilting trains and ongoing servicing.

    —  Two Pendolino trains testing well with first production train 26 November 2001.

    —  125 mph railway by 2003 with 90 per cent Punctuality and 99 per cent Trains Run.

  The Cross Country benefits include:

    —  £1 billion investment in new fleet of 78 Voyager trains.

    —  33 Voyagers already in traffic with a new train delivered every week.

    —  New intensive timetable by September 2002 with 90 per cent Punctuality and 99 per cent Trains Run.

  Our experience is that it is very difficult to plan and operate a railway that is fragmented across so many Railtrack Zones and train operators. We welcome Railtrack's recent decision to shrink the number of Zones and we shall be pressing for a West Coast Zone which can operate as a "virtual railway" by bringing all users together at a senior level to improve co-operation and decision-making.

1.2  Professional Processes

  The long franchises have also allowed us the time to develop highly complex timetables which have taken three years to negotiate with 18 train companies and six Railtrack Zones. The output will be the significant increase in train frequencies that everyone wants, but it is unlikely that we would have committed to such a time-consuming process in a short franchise. The service frequency improvements include:

West Coast

    —  40 per cent increase in trains run by 2004.

    —  80 per cent increase in passenger journeys by 2006.

  This has been achieved by increasing train frequency out of London from six to ten trains per hour and purchasing additional train sets.

Cross Country

    —  60 per cent increase in rains run by 2004.

    —  80 per cent increase in passenger journeys by 2006.

  The Cross Country benefits will be achieved by adopting a regular interval (clock face) timetable in place of a rather ragged service that wasted "slots". The new clock face service has also released more paths for other users, and the final timetable will almost double train frequencies. The infrastructure upgrade costs have been held at £200 million, but any further expansion will require far greater track and signalling enhancements.

1.3  Professional People

  Reliable equipment and timetables does not guarantee a world class railway. The other key ingredient is experienced people. I place the highest importance on a stable organisation backed by an adequate mix of experienced railway professionals to train and develop the new generation.

  We have succeeded in maintaining a stable organisation structure unchanged since 1999 with experienced managers leading every activity. Despite all the problems of the last year, this team has dragged our West Coast performance back to pre-Hatfield levels and has brought Cross Country very close.

  The calibre of the new generation of railway people has never been better. We owe them the professional training, supervision and development opportunities that can only flow from a stable organisation with a long franchise. Virgin Trains' secure future is reflected in our recruitment position where the waiting list currently exceeds 1,000 people.

  Every single member of Virgin Trains 4,200 staff will be going through professional retraining over the next two years. Learning from our earlier mistakes, experienced staff are now mixed with new staff to provide continuity and support. This is a major opportunity: we have created 400 additional jobs in the last two years and we have recruited over 1,000 new staff to fill these jobs and to cover turnover in the existing posts.


  We fully support the concept of the future Railtrack (NewTrack) being required to focus on delivering excellence in train performance and engineering maintenance/renewal in a Not-for-Profit environment. We believe that this will achieve the long-overdue focus on delivery and performance, which is vital to the success of the rail industry.

  However, this will mean looking beyond NewTrack for additional investment for enhancements. We shall have this additional need in both our franchises over the next ten years, and we shall be seeking new funding through the private sector using either Rosco/Bank leasing (for additional new trains) or Special Purpose Vehicles (for major investment such as our £60 million station improvement programme).


  We could not have made these major investment commitments without 15 year franchises. This has had the triple advantage of a) giving financiers the confidence to negotiate long-term investments worth £2 billion b) encouraging on-going investment in staff and equipment rather than waiting for refranchising and c) allowing the management team to stay focused on running the railway rather than rebidding the two franchises.

  We would strongly recommend that the Government resume its support for long franchises of up to 20 years to ensure both the stability of the industry and the investment in the long-term.

  Franchising bidding is an expensive process which also diverts significant management attention. Our East Coast experience would suggest that this process needs to start with a clear invitation to tender to all parties, should identify transparent evaluation criteria parties, and should end with a published guillotine date for a decision.


  I do not perceive industrial relations to be generally poor in the rail industry—but they can always be improved. Customers have not suffered any strike days on Virgin Trains since 1996 and staff have gained significantly better pay and conditions (including 100 per cent pensionable pay from 2002) as the following Virgin Trains example show:

Basic pay
Basic pay
Av earnings
Av earnings
Driver£11,938£29,033 £25,137£38,048  +51% 39 hours35 hours
Train Manager£10,019 £20,553£17,324£25,220  +46% 39 hours35 hours
Booking Office£11,037 £15,924£15,843 £19,662  +24%37 hours 35 hours

  At the detailed end, the industry has well-tested processes for airing specific grievances and negotiating solutions. What is missing is a sense of industry partnership between management and unions which would lift issues onto a more strategic level. This would point to escaping from the annual pay round and developing more strategic deals that lasted three years or more and brought bigger benefits for both sides over a longer period of time.

  It would also mean involving unions as partners in more of the decision-making processes. This has worked well in the National Safety Task Force and could be extended to other areas such as Supervisory Boards for SRA, Railtrack etc. Unions in their turn would need to limit their aspirations to affordable goals.


  The rail industry needs a period of stability in which it focuses on restoring train performance and customer service through focused investment and professional people. It is hard to see how this can be achieved without longer franchises driving long-term investment together with the training and development that we need to replace the lost experience.

Chris Green

Chief Executive

31 October 2001

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