Rail fares review to report early

[John @ home]

Independent review to get better value for money in rail asked to give early initial report

14 June 2010 11:19

Transport Secretary Philip Hammond announced today that he wants an independent review of value for money in the rail industry to report back early with its initial findings.

The review by transport industry expert Sir Roy McNulty will now speed up its work so that preliminary findings are ready in time to inform Government decisions on public spending in the autumn.

The scoping study for Sir Roy’s report, jointly sponsored by the Department for Transport and the Office of Rail Regulation, was published today, setting out the key issues that need to be dealt with.

The scoping study says that the overall cost of running Britain’s railway has risen but income from users has not kept pace, meaning an increased call on the taxpayer.

The way forward will involve not just cutting costs, the study says, but identifying how the industry can work more innovatively, finding new ways of doing things. The study has no “no go areas” and will aim to create a range of short and long-term solutions across the entire industry. Its scope has been informed by feedback from about 100 stakeholders.

The study will focus on eight broad themes: industry objectives, strategy and outputs; industry leadership, planning and decision-making; interfaces, incentives and structure; revenue; asset management; supply chain management; innovation, standards and safety; and people.

The review was launched last December and asked to report in March 2011, its remit to make recommendations to improve value for money on the railway to ensure future growth is sustainable.

Transport Secretary Philip Hammond said:

"Passengers and taxpayers will rightly ask why it is that our railways in the UK are so much more expensive than those in the rest of Europe.

“Given the very significant financial constraints that we face, it is essential that we drive out inefficiencies and reduce costs. Better value for money is the only way we are going to protect train services and avoid very high rises in train fares.

“This report by Sir Roy McNulty will play a key role in informing how we go about creating an efficient and modern railway fit for the 21st century that provides taxpayers with value for money.”

In setting the context of its study, the review published today said:

- International benchmarking carried out by ORR suggested that Network Rail is 30 to 50% less efficient in terms of maintenance and renewals expenditure than comparable European railways.

- The recent HS2 study found that civil engineering costs in the UK were typically up to double those in Europe.

- Franchising of trains in countries such as Germany and Sweden has reportedly led to cost reductions of between 20 to 40%, while train operating costs in Great Britain are still above their level in 1996-7.

The Office of Rail Regulation’s Bill Emery said:

"In recent years there has been significant growth of passenger and freight traffic on the railway, while performance has improved considerably. However, the current cost of running the railway is too high, and the burden on the taxpayer too great.

"The joint ORR and DfT Value for Money study will bring together the entire rail industry to explore ways in which we can reduce these costs so that our railway can continue to grow and prosper. The study will make recommendations about how the industry can meet the challenges of the future towards achieving our vision of a railway which delivers safety, efficiency and satisfaction levels to world class standards."

Leader of the independent review of value for money in the rail industry Sir Roy McNulty said:

“The railway as a whole faces significant challenges in terms of costs and affordability. Finding effective responses to these challenges will not be easy in such a large and complex industry.

“The study team has been encouraged by the ready co-operation we are receiving from many people within the industry, and from ORR and DfT. Our aim, with their help and support, is to chart a route to a sustainable future for rail in this country”.

Notes for editors

1. The full scoping study is available on the Department for Transport website at www.dft.gov.uk and the Office of Rail Regulation website at www.rail-reg.gov.uk

2. The former Secretary of State for Transport announced a study into the value for money of the railway on 9 December 2009, jointly sponsored by the Department and the Office of Rail Regulation. Today’s scoping study is the first published output. The final report is expected by the end of March 2011.

3. The study is operating within the following Terms of Reference announced by the Secretary of State for Transport in the Pre-Budget Report in December 2009:

1. To examine the overall cost structure of all elements of the railway sector and to identify options for improving value for money to passengers and the taxpayer while continuing to expand capacity as necessary and drive up passenger satisfaction.

2. In particular, to examine:

- what legal, operational and cultural barriers stand in the way of efficiency improvements;

- the incentives across different parts of the rail industry to generate greater efficiency;

- the role of new technology, processes and working practices in fostering greater efficiency;

- ways of generating more revenue, e.g. car parking, gating at stations, better utilisation of property; and

- to make recommendations.

4. The study will examine the whole industry costs and revenues and their composition. In doing so, it will look at comparable industries in the UK and abroad.

5. Sir Roy McNulty was appointed by the former Secretary of State for Transport in February 2010 as Chairman to lead a special Rail Value for Money Study.

6. Sir Roy was previously Chairman of the UK Civil Aviation Authority (CAA), the specialist aviation regulator, a post he held for eight years. Prior to this he was Chairman of National Air Traffic Services Limited (NATS) from May 1999 to July 2001. He is a former Chief Executive and latterly Chairman of Short Brothers plc, the Belfast-based aerospace company now part of Bombardier Inc. Previous posts include being President of the Society of British Aerospace Companies and Chairman of the former Department of Trade and Industry Aviation Committee.

7. Sir Roy was appointed as Chairman of Advantage West Midlands in May 2009 and is also Deputy Chairman of the Board of the Olympic Delivery Authority, Chairman of the Ilex Urban Regeneration Company in Northern Ireland, and a non-executive Director of Norbrook Laboratories Limited.

http://nds.coi.gov.uk/clientmicrosi...02&NewsAreaId=2&ReleaseID=413847&SubjectId=36

 

[A60K]

Interesting! I wonder how many of Uncle Roger's boiling frogs they will find?

Reading the terms of reference they don't at this point seem to actually be looking at fares that the passengers pay, but more the structural operational and capital costs of the railway.

I do worry that if they get into looking at fares and ticketing in the future it could mean fares increasing significantly or ticket conditions changing to have a similar effect.

 

[yorkie]

Doesn't sound like a fares review to me?!

In setting the context of its study, the review published today said:

- International benchmarking carried out by ORR suggested that Network Rail is 30 to 50% less efficient in terms of maintenance and renewals expenditure than comparable European railways.

- The recent HS2 study found that civil engineering costs in the UK were typically up to double those in Europe.

- Franchising of trains in countries such as Germany and Sweden has reportedly led to cost reductions of between 20 to 40%, while train operating costs in Great Britain are still above their level in 1996-7.

Sounds like a "how much more do our DMU-infested railways run by the least efficient network provider in the world cost compared to efficient railways with loads of electrification, loco haulage and public ownership".

What has that got to do with fares? Other than, perhaps, deciding how much of the hugely over-inflated costs should come from fare payers.

At the end of the day the railways are expensive here because we go about things in an appauling way. Instead of replacing 158s on TPE with spare class 87s/90s and Mk3s at minimal cost, and invest in electrification, we buy lardbutt DMUs and perpetuate the inefficiencies of DMUs over tough gradients and short sardine trains, we somehow manage to raise costs when other countries would be investing to lower their costs. We even spec the DMUs so ridiculously that on one major route they cannot exceed 70mph, compared to the old trains doing 90mph, because they are so heavy. This madness only happens in this country!

A fares review should look at.... fares!

Maybe we should do our own fares review?!

 

[John @ home]

Doesn't sound like a fares review to me?!

... A fares review should look at.... fares!

The scoping study's passion for avoiding the use of the word fare suffers a momentary breakdown in the first bullet point of page 23!

3.5 Theme D: Revenue

Engagement with stakeholders identified that a key area for improving the industry’s value for money is to increase the total revenue earned by the industry, particularly with respect to areas where better enforcement and exploitation of existing opportunities can take place. This could include areas such as revenue protection and the exploitation of property rights, as well as ensuring that the level of charging for both passengers and freight traffic is economically efficient and reflects the markets in which rail operates.

This theme will examine the range of income sources for the current rail industry, as well as potential areas for increasing it either through more effective use of existing resources or through identifying opportunities that exist and which may require a whole-industry solution to maximise value to users and taxpayers.

The key activities during the diagnostic stage of Phase 2 are expected to include:

• Analysing and benchmarking fare levels both within the rail industry and across modes within Great Britain;
• Assessing the potential of the railway property portfolio and barriers to its exploitation;
• Drawing on industry research on the impact of increasing car parks and gating and identifying barriers which are preventing increased revenue (this will link to the cross industry interfaces and incentives issue); and
• Analysing rail charging structures within a wider societal and economic context to identify opportunities for more effective use of network capacity.

This theme is central to the value for money study, and there will be significant linkages with respect to the benchmarking and analytical work being undertaken for the other themes.

http://www.dft.gov.uk/pgr/rail/strategyfinance/railvaluemoneystudyscopingreport.pdf

 

[shinkansen1966]

A review of the cost of running Britain's privatised railways ?

But, but John Major said British Rail was "deeply inefficient" and that privatising railways would bring in private sector efficiencies and cost reductions.

I don't understand.