What’s the best structure for Network Rail?

Two days spent in Brussels talking to other European infrastructure managers has given me valuable insights into the parallel challenges facing our colleagues in other nations.

Our discussions brought to the surface a range of surprising questions, though surprising only in their familiarity: how can we run a busy rail network with punctual, quick trains? Why does it cost so much to build a new piece of rail infrastructure? Can politicians be persuaded to value maintenance and renewal as much as flagship projects? Are standardisation and localisation enemies of each other, and which is the more efficient? Indeed, which achieves better results for passengers and freight customers? What are the respective roles of the Government, of public bodies (such as regulators) and of railway professionals? Is the railway industry really so different from other sectors?

These are, of course, some of the perennial railway questions familiar to a home audience; on this occasion, each was raised by colleagues from other member states. Even the Swiss, for whom trains run on time so consistently that it has earned them a handsome global trade in railway watches, are currently disappointed with the punctuality of their rail system. The valuable lesson is that we are not alone here in the UK.

That doesn't make the questions any easier to address and resolve, of course, but it does put the work I am currently engaged on – preparing a report for the Government on the future structure
and financing of Network Rail – into context. We have Europe's fastest growing and safest railway, which is also one of the most financially successful. The recent history of rail travel in Britain has been one of growth and expansion, but there is no room for complacency. The great opportunity for rail is perhaps also its greatest challenge.

In November I published a document setting out the scope of my work, primarily aimed at describing what Network Rail currently does, how it is organised internally to do those things, how it is governed and held to account and how it is funded. It also sets out what I think are the key questions which need to be addressed.

I am using three different perspectives to consider the issue of structure – the customer, devolution, and growth.

Network Rail has many customers and stakeholders: how do their needs translate into what Network Rail provides? How can Network Rail balance their conflicting priorities?

Regarding devolution, how do the current political devolution and Network Rail's own organisational devolution into eight routes work together? And growth: with a doubling in passenger demand and around a 60% increase in freight traffic since the mid-1990s, and further growth of a similar magnitude expected over the next decade, can the railway be organised better to meet that challenge?

When looking at financing, it is essential to consider what has changed. Network Rail's work is funded by farepayers, freight operators and the taxpayer; however, it has historically been financed by borrowing from the capital markets against a future payment stream. It no longer has that borrowing freedom – so how, in this cash-constrained world, do we now finance the work required to meet that growth challenge?

My recommendations will cover the functions which Network Rail carries out and how it is organised to do that. But the success of whatever structure I recommend will depend on a number of other things too: interactions with customers, the regulator and the Government, for example. If it transpires that some of these relationships need to work in a different way to make the Network
Rail structure successful then I propose to make such recommendations too. My recommendations will look to a start date of 2019, the end of the current control period of funding, and will seek to create the right industry structure to incorporate the projected opening of High Speed 2 in 2026.

At the end of this work, I would like to be able to propose changes to Network Rail which will help Britain to develop economically and socially; which will meet growing customer needs better; and which will showcase a safe, cost-efficient and innovative railway delivered by highly skilled staff.

I am not carrying out this work alone. Network Rail chairman Sir Peter Hendy and I are working closely together; I am supported by a brilliant team from Whitehall and Transport for London; and I am drawing on insights from a range of sources. We'd benefit from your insight too. We need a railway that can provide what the UK needs now and for the future. Only together will we find the right steps forward, so please get involved.

Further information about the Shaw Report and how to contribute can be found at https://shawreportblog.wordpress.com/

Reference: Transport Times, December 2015 Issue

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