CP6 Delivery Challenge

June 11, 2018

A mammoth amount of money has been set aside by the Government for improving the British railway network during the next 5-year Control Period (CP6) which starts in April 2019. The Statement of Funds Available (SoFA) for the period totals £48 billion substantially above the £41 billion (at current prices) agreed for CP5.

It recognises that attempts to reduce the amount spent on day-to-day maintenance and operations has resulted in asset deterioration which has impacted on train service reliability. As a result, a number of additional cash injections have taken place to provide extra funds the latest being £900 million to replace old and dilapidated assets to allow the full Thameslink timetable to run from December 2019.

The then Office of Rail Regulation believed that CP5 day-to-day expenditure could be reduced after using benchmarks from railway systems elsewhere that appeared to be cheaper to run. The policy also reflected findings in the 2011 McNulty report which asserted that the cost of the network was 20% higher than for other comparable European systems and that a £1 billion per annum cost saving should be made by 2019.

The McNulty findings also identified the opportunity for efficiency savings by bringing Network Rail and the train operators closer together by implementing management alliances. Success has been variable with the 2012 South Western alliance collapsing in 2016 as a result of the conflict in reporting lines for the lead Manager who needed to satisfy both the Network Rail hierarchy and ultimately the shareholders of a public limited company.

A more structured approach has been followed in Scotland where the lead Manager has been appointed as a non-Executive Director of Network Rail as well has having responsibility for the operation of the Scotrail franchise held by Abellio.

Is this a template that can be used elsewhere for example to restore a South Western alliance? That must be unlikely as non-Executive NR directors could not be appointed for each of the franchises. Instead the development of Route-based supervisory boards is a more likely direction although executive authority, if there is any, will be difficult to define in the interface with NR Route and TOC managements.

There is also potential for a duplication of effort with the Office of Rail and Road on important operational matters such as the approval of the safety management systems and processes to ensure compliance, although the ORR is devolving economic regulation to the NR routes.

For the Western supervisory board, the declared objective is to ensure priorities are aligned for the benefit of passengers. One early outcome has been that Heathrow Express operations are to absorbed by the Great Western Railway although independent marketing and ticketing is to be retained by the airport management.

The new arrangement for the InterCity East Coast franchise is likely to bring greater future alignment between the newly created LNER franchise and NR’s LNE and East Midlands Route with ambition for management as a single entity and a remit to attract support from the private sector for infrastructure projects.

The selection of projects for development will be largely in the control of NR Route Managers and emphasis is being placed on a pipeline of work that in some circumstances will be wholly or partly funded by the private sector. The two large programmes illustrated have been nominated initially but the DfT doesn’t intend to specify any further priorities at the moment.

The East-West Railway will ultimately link Oxford with Norwich and Ipswich via Cambridge and provide valuable connections with main line routes.

The Heathrow Southern extension is intended to provide links to Staines for access to the London Waterloo route and Chertsey which will allow Woking be reached and stations on the South Western main line.

Supervisory boards provide a useful function in setting the tone for the type of projects undertaken to ensure they maximise benefit for passenger and freight customers and stakeholders such as local communities along the Route. They could also be a channel for liaison with the growing number of elected Mayors and other devolved transport authorities that have to date failed to win support for localised objectives.

FCP’s record of providing strategic advice on the delivery of high-level change management will be an invaluable industry enabler as future structures are defined as well as identifying development opportunities and funding to bring transformational outcomes.

 

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