Interview:
Network Rail on its England and Wales Strategic Business Plan for CP7
RSSB talks to Paul McMahon, Director, Planning and Regulation, Network Rail
Paul McMahon Director, Planning and Regulation, Network Rail
Following the publication of Network Rail’s England and Wales Strategic Business Plan for CP7, we caught up with one of its directors to find out what it means for our members.
Friday 19 May was a significant day for Network Rail. After much hard work over the last two years, the infrastructure manager published its Strategic Business Plan (SBP) for England and Wales, detailing how it will use the funding provided by government for Control Period 7 (CP7) to deliver the best railway possible. We caught up with Paul McMahon, Network Rail’s Director of Planning and Regulation, to unpack the SBP and find out what it means for the wider industry. (The SBP for Scotland is to be published in due course.)
For senior rail leaders who are pressed for time, what are the top takeaways from the SBP?
We have more funds than CP6. This is a vote of confidence in the rail industry.
We’re planning to deliver on the objectives set out by the Secretary of State and we’re setting out a balanced plan for CP7 – balancing the key CP7 needs on delivering safety and good performance as well as longer term investments to support longer term growth.
Delivering the SBP and making it a success relies on strong and positive collaboration across the industry.
We’ll need to maintain a relentless focus on improving our efficiency.
Why does Network Rail see the government’s £44bn commitment to fund the operation, maintenance, and renewal of rail infrastructure over CP7 as a vote of confidence in the industry’s future?
Given the pressures on public finances, and the economy more generally, there was a concern that the government would have to allocate money more thinly across the public sector. This may have seen Network Rail, and the rail industry more broadly, bear some pain, working with less money than we had in CP6. But Network Rail has been awarded more funding—£44.1bn in CP7 compared to £40.8bn in CP6 (for England and Wales)—although, once you adjust for the increases in expected traction electricity costs, the increase in CP7 is £1.8bn.
Despite Network Rail’s positive response to the funding, it acknowledges that there will be cost pressures in CP7, including those for managing infrastructure. What are the implications for train performance?
We don’t have enough money to do everything we want to do in CP7, and we have had to make some tough choices. Due to the funding available, we will not maintain the network in a steady state. Because of this we anticipate a small increase in the average age of the asset base and a small increase (2%) in service affecting failures. A slightly older asset base will have incidents slightly more frequently. And all other things being equal, train performance would get a bit worse, but it’ll be by a small amount and is only expected to appear in the latter years of CP7. But our performance planning for CP7 is looking to offset this impact with other improvements.
Recognising we must maximise the benefits of the money we have, our regions and our asset management teams are looking at more focused asset interventions. This includes doing the right amount of work on the right assets in order to extend their life and maintain their serviceability. This should minimise any impact on service affecting failures and train performance.
Do remember that infrastructure performance is only one of the factors that affect train performance, currently accounting for around 20% of train delay. Other factors include performance of rolling stock, operation of the railway, weather, and suicides. To manage the increase in asset age, we intend to spend around 7% (£700m) more on maintenance in CP7 than we did in CP6.
Should rail companies simply suck up any impact aging infrastructure has on train performance, trusting that Network Rail is doing its best?
The simple answer to that is, ‘no’. We want to provide the best possible service for passengers and freight. We know that train performance isn’t good enough now, in the last year of CP6. Currently, there’s a lot of industry focus on improving train performance this financial year, heading into CP7. Where we can, we want to improve train performance in CP7.
In our SBP we’ve set out ranges for train performance. It’s difficult to predict it one year ahead, let alone five, and there are many factors that influence how it materialises. It’s all uncertain at the moment.
We do need to work closer with train operators over the next few months, though. This is so we understand each other’s plans and how we’ll each play a role to improve train performance in CP7. There are things companies can do individually, of course, but, ultimately, working together is the best way to improve train performance.
What other challenges do you think rail companies should be aware of?
Delivering cost efficiencies. For the first time ever, Network Rail is going to, at the very least, hit the efficiency targets set by the Office of Rail and Road—that’s £3.5bn of savings by the end of CP6. And we’re aiming to outperform this and hit £4bn of savings. Across the company, we’re aiming for £3.8bn of further efficiency savings in CP7. Achieving this will not be easy! There’s lots we must do to make it happen, with some of it requiring the support, challenge, and participation of train operators and the wider supply chain.
The SBP supports the delivery of the government’s five long-term strategic objectives for rail. Can you share any examples of how Network Rail hopes to work with rail companies in CP7 to meet these goals?
Yes, here are a few examples.
Meeting customer needs We have been set an objective in the Secretary of State’s High Level Output Specification to improve freight growth. We cannot deliver freight growth alone. We do not operate freight trains. We’re not responsible for the commercial negotiations with freight end users. So, we need to work closely with the freight sector to set out a target for freight growth and deliver it. Our SBP sets out 7.5% for freight growth in CP7, and we’ve engaged with the freight sector on that. That engagement with the freight sector will need to continue in order to establish how that growth can be achieved. We’d like to work hand-in-hand with freight companies on this.
Delivering financial sustainability As I said, we’ve plans to deliver £3.8bn of savings. Much of that will come through collaboration with the industry. We’ve set out various initiatives in our SBP to cut costs, including such things as joint property strategies. There’s depot, office, and station space across the industry that isn’t used as efficiently as it could be. So we want to continue to work closely with industry partners to identify opportunities for co-location and more productive use.
Then there’s engineering access planning, where we need the support of train operating companies. In recent years, we’ve been taking possession of the network for some longer blockades, say nine days, rather than trying to do work in the traditional way over a series of weekends or weeknights. This approach, which needs to be done in conjunction with the train and freight operators, can provide significant savings.
Environmental sustainability The incidence of more extreme weather impacting the railway is increasing. In response to this we’re doubling the planned spend in this area for CP7, and we’re pleased we’ve been able to do so. By and large, this involves additional work on the assets through maintenance and renewals to make the network more resilient, in particular for the track drainage, and earthworks assets. This is, in part, driven by the fatal railway accident at Carmont and the Lord Robert Mair and Dame Julia Slingo reviews following that, and the RAIB recommendations.
Separately, we have a bold environmental strategy to reduce our carbon emissions and improve biodiversity across our land, and we are planning to transition our own vehicle fleet to electric. We are also exploring opportunities to use renewable energy sources, including using unused land and roof space to generate renewable energy.
When it comes to weather resilience, we’ve put a lot of work into developing better weather forecasting, strengthening the capability of our route controls to forecast local weather patterns. This affects the operational railway so will involve working with train operator colleagues.
The SBP lays the foundations for Network Rail’s transition into Great British Railways during CP7. In this period of change, what should senior rail leaders be focusing on?
It’s Network Rail’s working assumption that we will transition into Great Britain Railways (GBR) during CP7. If or when this happens, and all the other GBR-related changes, it will constitute a massive industry change – for the better. In the meantime, I’d encourage senior rail leaders to keep a strong focus on running the railway safely and delivering train performance during this time. It’s what we need to provide to customers anyway, but if we get that wrong, it increases concerns, if not criticisms, from politicians, regulators, and the media. That’s not how we want GBR to start. Additionally, whatever form it might take, I urge rail leaders to develop their understanding of how the whole system can work together – whole-industry thinking.
CP7 comes with challenges, but Network Rail sees it as a period of opportunity too. What makes Network Rail hopeful?
The funding has allowed us to balance between the essential spend on delivering safety and performance and investing in longer term enablers, such as technology, research and development, and the implementation of the European Train Control System. This is intended to help the railway beyond CP7 become more efficient and deliver better service to passengers and freight.
Separately, the railway hasn’t recovered from Covid. As we all know, passenger numbers and revenues are still materially below pre-Covid levels. But it’s our hope that in working with industry to deliver a safe, reliable, and efficient railway in CP7, people’s confidence in rail will grow and we’ll see people continue to return to rail.
What is rail’s biggest underappreciated strength?
The fundamental advantages of rail – convenience, reliability, and it being a more environmentally friendly mode of transport – still stand. There are many reasons for people to choose rail over road, and that’s what people were doing in the quarter century before Covid. Getting those passenger volumes again in CP7 won’t be plain sailing. It’ll be tough for us and the wider industry, but there is real potential and we need to work together as one industry to make it happen.