Memorandum by Railtrack PLC (TYP 52)
Railtrack has welcomed the 10 Year Plan's aims
of providing an integrated approach to planning national transport,
and recognises its own role in delivering the government's plans.
Rail use is intrinsically linked to government policies, especially
in respect of roads and motor vehicles. Integrated planning will
ensure appropriate trade-offs between modes. The need for a long
term plan to manage historically high, and growing, levels of
rail travel is essential if rail is to deliver national expectations
in five, 10 and 20 years time. The key points in our evidence
are as follows:
It is not clear the Plan addresses
historic under-investment in railby 2010 the level of rail
funding will be a smaller proportion of GDP than it is now. Most
of our European partners spend considerably more on their rail
infrastructure than the UK. If rail is to play a greater part
in the national economy then the 10 Year Plan does not provide
adequately for it.
In addition to the general point
made above, the Plan does not appear to fund certain areas of
necessary rail expenditure. First, it is now clear that Railtrack
must focus more on maintenance and renewal of the network, and
that these areas will require additional funding. Secondly, there
are a number of key areas of recent legislation and government
policy that do not appear to be fully funded by the Planthese
include, the recommendations of the Cullen/Uff inquiries, the
Disability Discrimination Act, and European legislation with respect
to interoperability and noise. Unless additional funding is put
in place these requirements will reduce the funds available for
expanding the rail system. The government should examine the balance
of funding between capacity, safety and network performance.
Our analytical modelling, our appreciation
for the availability of resources, and the time necessary to complete
major projects, all suggest that the Plan is optimistic in terms
of the timescale for achieving targets. The length of time necessary
to make changes to national rail infrastructure suggests a strong
case for a 20-year plan.
To achieve the total levels of rail
funding set out in the Plan practical mechanisms must be developed
through which significant private sector investment can be secured.
As transport demand grows all modes
will have to cope with the risk of worsening performance. Railtrack
recognises the increasing emphasis that is given to railway performance.
Unless a balance is struck between performance and capacity then
the achievement of 10 Year Plan targets will be at risk. The lack
of a clear policy framework for performance targets in the rail
industry will not help achieve overall government objectives.
For the Plan to be achieved an SRA
Strategic Plan must be published which the industry can deliver.
This paper was drafted before Railtrack had been able to evaluate
the recently published SRA Strategic Plan.
Our analysis of whether the principal targets
can be achieved is set out below:
Passenger volume: Our analysis suggests that
growth in patronage of existing services, together with implementation
of new rail schemes, will not achieve the passenger volume target
by 2010-11. Passenger volume outcomes may be achievable within
15 years if investment is made in new rail capacity, industry
resources are used efficiently, delivery mechanisms (via SPVs
or otherwise) are perfected, economic prosperity is maintained,
and inter-urban road congestion grows in line with current trends.
If the 10 Year Plan target to reduce road congestion is achieved
then the rail volume targets will be missed by a wider margin.
Freight volume: Our analysis suggests that if
road congestion grows in line with current trends then the growth
in rail freight forecast in the Plan can broadly be achieved if
the schemes and incentives advocated in the SRA Freight Strategy
are adopted. However it must be pointed out that unless service
delivery to the end customer is improved then achievement of freight
targets is very much at risk. Furthermore, government must recognise
the higher operational and maintenance costs that are associated
with higher volumes of rail freight.
London overcrowding: Our analysis shows that
the Plan targets for reducing London overcrowding could broadly
be achieved in the timescales, with some notable exceptions on
certain specific service groups, provided that best use is made
of existing network capacity, including maximising the length
In addition to the targets above we believe
that the Plan must also incorporate targets in the following areas:
Performance: As with each of the modes of transport
considered by the Plan, as demand increases on the existing network
then performance will suffer. Government, SRA and ORR have placed
considerable emphasis on the need to make a step-change in railway
performanceyet the 10 Year Plan contains no specific guidance
on the levels of performance the railway industry should be expected
and funded to achieve. Whilst Railtrack has a key role to play
in improving day-to-day performance, we are concerned that there
is an implicit assumption that improving long-run rail performance
is seen by government policy-makers solely as an operating issue.
A step-change in railway performance cannot be achieved without
a realisation that (a) a balance must be struck between the level
of use of the network and performance, (b) network stewardship
must be properly funded, and (c) renewals/enhancements must as
a matter of course build in additional "resilience".
(Additional resilience can be provided, for example, through higher
quality equipment, or through the provision of alternative and
diversionary routes.) The lack of a clear policy framework for
the setting of performance targets in the rail industry will not
help in achieving overall government objectives.
Overcrowding: Our analysis shows that around
two-thirds of the growth in passenger kilometres will be achieved
through more intensive use of existing servicesthis will
in turn lead to these services becoming more crowded. With the
exception of peak travel on commuter routes to/from London there
is no Plan target with respect to overcrowding. Targets might
be set for acceptable levels of overcrowding on other routes.
Regional targets: The principle passenger targets
can largely be met by improving long-distance and commuter services
into London: hence it is these services that will attract investment.
If the government wishes to see improvement in other railway services
it must target and fund accordingly.
10 YEAR PLAN
The principal factors affecting rail demand
are the national economy, road congestion, relative levels of
rail and road costs, strategies for land-use, and the quality
of rail services (ie frequency, speed, punctuality, comfort etc).
It is largely within the control of the government, rather than
the rail industry, to control and influence most of these factors
in the long termthey are all absolutely essential to achieving
Plan outcomes. In other words, government policy is the single
most important determinant of demand for rail services.
Implementation of new rail industry capacity
will be constrained by resource shortages, particularly in sector-specific
skills, such as signalling design. Critical resources can be grown
over time but only if the supply market believes there is a long-term
capital expenditure programme. An SRA Strategic Plan that enables
suppliers to plan their business with more certainty is a pre-requisite
to developing and retaining skilled resources in the supply side
of the industry. We are working closely with the SRA to ensure
that they understand our perspective on the need to plan realistically
in this regard.
How will the current situation in the railway
industry affect the need for, and provision of, private and public
Industry parties whose role is critical to the
achievement of the 10 Year Plan must be brought within a rail
industry-planning framework; notably the network operator, franchise
owners, and key investors. Such a planning framework does not
exist. The SRA Strategic Plan must be a comprehensive plan that
includes the requirements of government, ORR, HSE and others.
It must incorporate all of these aspirations, and set out plans
for their delivery that are realistic and achievable. It must
set out clear priorities in order that scarce industry resources
and management effort can be focussed in pursuit of the Plan's
objectives. The Strategic Plan must set out clear criteria around
which government prioritises rail investment.
It is clear from recent reactions that government
will have to address the guarantees that are associated with Railtrack's
successor in order to encourage future private sector investment.
Government will bear a greater proportion of the risk associated
with maintenance and enhancement of the network. To the extent
that this implies a lesser role for private funding of railway
investment government must reduce the emphasis on private rail
investment in the Plan, and correspondingly increase the contribution
made from public funds.
Government policy for rail infrastructure investment
is dependent upon private funding being providedeg via
Special Purpose Vehicles (SPVs). There are significant issues
with the proposed use of SPVs for major enhancement schemes which
are as yet unresolved. These are quite apart from the untested
nature of the SPV proposition in respect of complex projects built
on an operating railway. These issues must all be resolved if
significant private investment is to be achievedthis may
further delay railway enhancement. Furthermore it is likely that
some important elements of risk associated with upgrades will
be required to be borne by the network operator. The degree to
which SPVs are manageable will depend on the nature of the scheme"green
field" (eg brand new lines) and station investment is likely
to be easier than investment over the existing network (eg commuter
routes into London).
Is the balance and phasing of investment across
funding areas correct?
It is important to recognise that whilst the
Plan suggests a short term increase in the funding of rail, by
the end of the Plan period the level of rail funding will be a
smaller proportion of GDP than it is at present. It is noteworthy
that most of our European partners spend considerably more on
their rail infrastructure than the UK. As a percentage of GDP
then over the period 1982-95 the UK spend less than half the European
average on its railway infrastructure. Correspondingly rail's
market share is lower than that of many principal EU countries.
It is therefore not clear that the Plan addresses the historic
under-investment in rail.
Railtrack is not in a position to comment on
the appropriateness of the level of funding applied to modes other
than rail. However we believe that the level of funding provided
within the Plan for rail can no longer be appropriate for the
The projected costs of maintaining
the rail network have increased significantly over the past two
or three years. First, it has become clear that the volume of
work required to maintain the network must risein part
because of rising traffic levels, and in part because of recognition
that previous levels of work were inadequate for an ageing network.
Second, as franchises have been renegotiated by the SRA, the like-for-like
costs of those franchises has rise significantly.
Government has emphasised the need
to introduce new safety systems to make rail travel more safe
than it is today (eg the European Rail Traffic Management System).
In the main such new safety systems do not contribute to achievement
of 10 Year Plan capacity targets, New safety initiatives are likely
to require additional funding provision from that set out in the
10 Year Plan.
In addition to safety measures a
number of significant areas of recent legislation do not appear
to be fully funded by the Planthese include, the Disability
Discrimination Act, and European legislation with respect to interoperability
The phasing of spend on new rail schemes must
be questioned. Major rail schemes can rarely be delivered in less
than 10 years. The following factors all impact on project timescales:
(i) feasibility work to the point at which commitment is made,
(ii) negotiation of contracts which might cover creation of an
SPV, access to the network for construction, and the new capacity
created, (iii) the need to obtain consents for new works, (iv)
the construction of the new works on an operating railway, and
(v) the time for the benefits of the new works to be manifested
in the market growth. Given that no commitments have been made
by government to significant new rail infrastructure investment
since the Plan was published, it is clear that delivery of many
projects will require funding towards the end of the Plan. If
efficient and strategic investment is to be made in the rail industry
over the next five years then commitment to funding beyond 2010
must be assured.
Should the Plan represent a better balance between
large and small schemes, and between infrastructure, management
Railtrack analysis suggests that in many cases
small, targeted schemes can offer better value for money than
some major upgrades. Furthermore, given costs of sustaining the
rail network, it is prudent to make best use of the existing network,
eg, through better timetabling, or through ensuring that trains
run at maximum length where the network is most congested. Sometimes
such changes may provide significant benefits to the majority
of users. Quite modest investment in infrastructure can sometimes
create opportunities to make better use of the existing network.
A plan that contains a balanced portfolio of small and large schemes,
together with efforts to make better use of the network, will
most efficiently deliver the 10 Year Plan objectives.
A fundamental target in the Plan, and one that
underpins forecasts of rail growth, is the level of road congestion.
There is no readily understandable measure of road congestion,
and hence it is difficult for us to assess the extent to which
the Plan is "on-course" in this critical dimension.
We await publication of the DTLR sponsored review on the extent
to which Plan targets are being achieved.
Our analysis suggests that if the government
is as successful in reducing road congestion as proposed in the
Plan, then national rail passenger and freight volume targets
will prove more difficult to achieve than the Plan anticipates.
Our own modelling has assumed that road congestion will continue
along current trends. If government wishes to promote record growth
in rail, whilst simultaneously reducing road congestion, then
the levels of resources applied to rail are, in our view, insufficient.
Government may wish to re-assess the relationship between the
objectives it is setting for both road congestion and rail usage.
Market-specific targets may achieve a more optimal contribution
from rail in reducing road congestion.
The Plan, and recent government statements,
imply different, and costly, safety standards for rail. Whilst
this benefits rail users, it carries with it the risk that government
will perceive road to be disproportionately economical when compared
to rail. In the long-term this may lead to funds being directed
away from rail to less safe forms of transport. A more integrated
approach is required to transport safety.