Focus the railway on the customer to balance the books
Give operators the freedom to respond to customer need.
After the pandemic, operators were placed onto emergency contracts that effectively brought the railways under Whitehall control. At a time when recovery of passenger numbers has plateaued and taxpayer support remains high, commercial decisions need to be placed back into the hands of operators, even within existing contracts, so that the private sector can do what it does best – innovating to attract customers and reduce costs. In doing so, it will reduce subsidy, freeing up public money for other government priorities.
Unleash the expertise of railway businesses in future contracts. The current contractual model is not working as it should, so when Covid-era contracts end, the new model should move away from a culture of Whitehall control and micro-management. Under a new public body, the expertise within operators should be harnessed through a range of contracts to deliver growth and firm cost control – a model used by Transport for London on the Overground and Merseytravel with Merseyrail.
Let operators compete to connect communities
Allow operators to compete to attract customers on more long distance routes. Open access operators, who run services in gaps on the network and without a contract from the government, can offer services at no direct cost to the taxpayer while helping to connect previously underserved communities, spreading opportunity and investment to the places they serve. For open access to prosper, it is vital that the access regime is fair, transparent, stable and that the regulator is equipped to facilitate the expansion of this type of competition.
Encourage intercity competition to drive modal shift from cars and planes. The full potential of open access operators should be realised through easier application processes to gain access to the rail network. Whether it is quicker, more comfortable journeys or faster Wi-Fi or providing services that adapt to changing travel patterns, competition would shape the market meaning rail companies would have to adapt to the needs of passengers if they want to keep their business.
Overhaul fares to offer customers the best value for their journey
Make it easier for passengers to find the right fare. The complexity of the fares system puts potential customers off using the railway. Attracting and retaining customers means providing them with an easy-to-understand process for getting the right ticket that offers value compared to other transport modes. Reforming the regulations that underpin the fares system to deliver single-leg pricing is a crucial component of this.
Bring ticketing into the digital age. A modern approach to ticketing is needed with new ways to pay including expanding the availability of digital tickets to cover more journey types and investing in more tap-in-tap-out systems in urban areas across the railway. Prices should be designed to fill empty seats on long distance journeys through more ‘demand-led’ pricing rather than peak and off peak prices.
Prioritise getting freight off roads and onto rail
Harness rail freight for less congested roads and cleaner air. Rail freight is already the most carbon-friendly way to move goods and helps to decongest roads with each train removing up to 129 HGVs. The sector contributes £2.45bn to UK plc with 90% of the economic benefits accruing outside of London and the South East. Clear commitments and timescales on infrastructure, including the Ely Area Capacity Enhancement and a solution to the ongoing capacity challenges apparent on the West Coast Mainline, are needed to create room for freight to grow and help unlock private sector investment.
Make rail freight attractive to more customers. Government should put policies in place to address the widening gap between road and rail costs, with the latter getting comparatively higher. This includes doubling the Mode Shift Revenue Support scheme budget, which currently removes 900,000 HGVs, and reintroducing the Freight Facilities Grant in England to support the development of new rail connected facilities. A more creative approach to the access and charging regime is also needed, by guaranteeing longer-term access to the railway and lower access charges to make rail more competitive against road.
Create a new public body to oversee the railways
Legislate to create a new body that is accountable to the public. There is broad consensus across industry on the need to create a body which delivers joined-up thinking between train operators and the manager of the tracks and infrastructure, with legislative safeguards for freight and open access passenger services, giving customers the confidence that someone is ‘in charge’ when things go wrong.
Let railway leaders get on with the job of running the railway. The body should be separate from Government and sit above industry, providing the public oversight needed to ensure the railway is delivering for passengers, communities, and the environment. It should harness the private sector, as both contracted and open access operators, to deliver passenger and revenue growth, and firm cost control for the benefit of taxpayers.
Focus commercial decisions with the customer in mind. When emergency measures were put in place during Covid, responsibility for industry cost and revenue were split between the Department for Transport (DfT) and Treasury respectively. Growing fiscal constraints leads the DfT to cut services to save money, without fully considering the impact on revenue, as this makes the railway less attractive for passengers. By reuniting cost and revenue, a holistic view can be taken of the railway that leads to decisions with the customer at the forefront, which are crucial for growth.