Transcript IIP launch event presentation

The Initial
Industry Plan
England &
Wales
1
Agenda
09:00
Tea and Coffee
09:15
Introduction (Paul Plummer)
09:25
The Initial Industry Plan (Michael Roberts)
Headline messages
Presentation and discussion
10:00
Delivering better value for money (Graham Smith)
Industry supply chain perspective (Jeremy Candfield)
Presentation and discussion
11:00
11:15
11:30
Growth and sector strategies
Passenger (Richard Davies)
Freight (Lindsay Durham)
Choices and options (Calvin Lloyd)
Presentation and discussion
12:15
Next steps and Q&A (Paul Plummer)
13:00
Lunch
2
The Initial Industry Plan:
Headline messages
Michael Roberts, ATOC
3
The Initial Industry Plan - context
The Government’s vision is for a transport
system that is an engine for economic
growth; is cleaner and greener and
improves the quality of life in our
communities. A system in which rail has a
key role to play. With a safe, customerfocused rail system that supports a growing
economy, by improving capacity,
connectivity, performance, and productivity.
Contributing to our wider climate change
objectives, by reducing transport’s carbon
emissions, and encouraging modal shift
from road and aviation. And delivering value
for the farepayer, the freight customer, and
the taxpayer - as well as playing its part in
reducing the deficit.
The Rt Hon Philip Hammond MP
June 2011
The IIP has been developed in the context
of:
• Government policy
• End user needs
• Long term planning context (RUS
programme)
• Sustainability
• The railway today (costs, revenues,
outputs)
4
The IIP – a plan to inform choices
• The IIP is the industry’s view of the future of our railway (2014 to 2019). It also:
– looks to meet the challenge of improving the value for money of the railway
identifying significant efficiencies
• The railway is a growth industry - 41% passenger, 60% freight over past
decade with more predicted over CP5 (15 & 30% respectively)
• Infrastructure investment is an economic driver and continued railway
investment can deliver sustainable growth
– the IIP presents funders with options for growth
• The combined effects of increased demand and lower costs creates headroom
for governments to make real choices
– balance between subsidy, investment & fares
5
Value for money
• Industry will reduce the costs of the railway by £1.3bn per annum by 2019:
– 16% of efficiencies to be targeted by Network Rail over CP5. Includes things
like:
• devolution, alliancing, greater contestability of projects
• operating strategy
• innovation and new technology
– Significant savings from train operators but dependent upon new franchising
regime and realignment of incentives and could include things like:
• improved supply chain management
• greater innovation at bid stage
• enhanced staff productivity
6
What the plan would deliver
• Efficiency:
– make the railway cheaper by £1.3bn per annum by end of CP5
• Investment:
– £4.5bn of committed schemes
– £4.9bn of investment opportunities with 4.5 to 1 benefit to cost ratio
– combined provide 170,000 extra seats at peak times
• Safety:
– maintain and improve passenger, public and workforce safety
– reduce safety risk at level crossings by 50%
• Performance:
– maintain high levels of reliability and safety, focussing on areas in particular need of improvement
• Freight:
– provide capacity for a 30% increase in freight (tonne kms), equivalent to 15,000 daily lorry journeys
• Journey time:
– special fund approach to delivering better journey times, plus specified schemes identified through
the RUS process
• Carbon:
– further network electrification
– 25% reduction in carbon emissions (per passenger km) and 500,000 tonnes of CO2 from lorry
journeys
7
Investing in better outcomes
• The IIP seeks to inform funders of choices to deliver better outcomes in
terms of economic growth, user satisfaction, safety
• Investment in rail is an economic stimulant and some £4.9bn of investment
choices, all representing good value for money (4.5 to 1), are recommended
• Some of these outcomes to be delivered by a fund approach with industrywide governance
Possible funds:
• Level crossing safety fund (£300m)
CP5 Expenditure
£bn (2011/12 prices)
• Strategic Freight Network (£350m)
• Station accessibility fund (£150m)
Committed programme
4.5
• Station improvement fund (£150m)
• NRDF (£250m)
Specified schemes
Funds
Total
2.1 – 2.4
2.5
9 – 9.4
• Passenger information fund (£200m)
• Journey time improvement fund (£200m)
• East Coast improvement fund (£500m)
• Innovation fund (£150m)
• CP6 development fund (£100m)
• Performance fund (£160m)
8
Potential investments
Outcome
Example investments
Contribution to outcome
Reduced costs and a more efficient railway
Electrification schemes such as Great Western, North
West England, Midland Main Line, Cardiff Valleys
and North Trans Pennine Network Rail operations
strategy. Other operational efficiency schemes
Long term reduction in whole
industry operating costs
Continued economic growth in London and the South
East
Thameslink, Crossrail, Reading remodelling. Other
capacity and station schemes in the south east
Provision of additional capacity to
accommodate forecast demand
growth
Stimulating the northern economy through improved
access and connectivity to labour and markets
Northern Hub
Provision of additional capacity and
through journey opportunities
Improved journey times and connectivity between
other economic centres
Targeted journey time reduction schemes, including
line speed improvements in the East Midlands,
Yorkshire, Bristol and Oxford areas
Reduced journey times on key
interurban flows
A more efficient, greener and safer transport system
Strategic Freight Network, New and cascaded
electric trains including the Intercity Express
Programme, Electrification schemes (see above)
Stimulate modal shift from road and
air to rail. Replacement of life
expired rolling stock. Fuel efficiency
and alternative sources
A safer railway for workers, users and general public
Closure or upgrade of level crossings
Reduction in safety risk at level
crossings
Improving the quality of the service to customers
Passenger information improvements.Station
capacity and access enhancements.
Improved passenger information
Improved accessibility
Addressing identified end user needs
Performance fund Journey time fund
Performance improvement, Journey
time improvement
9
Summary
• The industry can make the railway much more affordable – cut £1.3bn
from cost of running the network by 2019
• Investment in rail is an economic stimulant and some £4.9bn of
investment choices, all representing good value for money (4.5 to1), are
recommended
• Strong growth will continue and this, combined with lower costs, means
real choices for governments of the balance between investment, fares &
subsidy
• The industry looks forward to discussing these proposals with funders and
the ORR to inform the periodic review and franchising processes
10
Discussion
11
Delivering better value for money
Graham Smith, Rail Delivery Group
12
The value for money challenge
• The IIP reflects industry’s commitment to:
– Deliver efficiencies in line with the Rail Value for Money’s “should cost” low efficiency scenario by the end of
CP5
– Undertake further work to identify opportunities to move towards the RVfM ‘high’ efficiency scenario
• This will result in a much reduced subsidy requirement by the end of CP5. This assumes that fares will be
increased at an annual rate of RPI + 1% (after three initial years of RPI + 3%). However, the industry recognises
the clear policy choice for funders whether improvements in efficiency are reflected in lower subsidy, or lower
fares.
England and Wales costs, revenue and subsidy requirement (base plan)
12,000
£m (2011/12 prices)
10,000
8,000
6,000
4,000
2,000
0
2013/14
2014/15
Network Rail Revenue Requirement
2015/16
2016/17
TOC Operating Costs
2017/18
Revenue
2018/19
Subsidy Requirement
13
Cost reduction
• The industry is developing plans will which deliver a real reduction in the overall cost per
passenger kilometre, whilst delivering additional outputs
• Strong growth will continue and this, combined with lower costs, means real choices for
governments of the balance between investment, fares & subsidy
• Industry plans enable a reduction in industry costs from 20.2p per passenger km at the end of
CP4 to 17.3p per passenger km at the end of CP5
Total industry cost per passenger kilometre
(Franchised TOC operating costs + Network Rail net revenue requirement)
0.25
0.2
£
0.15
0.1
0.05
0
2013/14
2014/15
2015/16
Cost per passenger km Current Railway (Low VfM)
2016/17
2017/18
2018/19
Cost per passenger km Current Railway (High VfM)
• With the top end efficiencies suggested in the Rail Value for Money study, this could reduce
further to 15.8p per passenger km by the end of CP5. Rail Delivery Group will examine crossindustry opportunities that could contribute to this
14
Improving value for money –
Network Rail’s plans
• In aggregate, delivers 16% reduction in costs by the end of CP5 (compared to
expenditure in CP4), consistent with the indicative savings assumed by the ORR at the
last periodic review
• Changing Network Rail:
– Devolution
– Deeper partnerships with train operators and supply chain
– Greater contestability of projects
– Better defined & stable work banks
– Asset policies, standards & operating rules
• Reflects a number of investments to reduce operating costs including:
– Network operating strategy
– Asset information strategy & intelligent infrastructure
– Electrification
15
Devolution
• Decision making and management accountability is being devolved towards more
local geographic route based organisations
• Network Rail routes will be empowered to interact with their customers in the most
effective way to deliver outputs at the lowest possible whole life, whole system cost
• Routes are accountable for:
– operations and maintenance activities
– development of asset plans
– delivery of small and medium size projects
– delivery of outputs
• Some activities will remain centralised, particularly where these enable broader
network benefits, or where economies of scale and standardisation can be achieved
16
Alliancing - TOCs and Network Rail
• An alliance
– is a relationship between Network Rail and one or more train operators
– involves the sharing of complementary disciplines, technology,
products, services, organizational structures, marketing, and financial
resources
• Network Rail and a number of operators are negotiating co-operative
agreements that align behaviours through shared incentives to work more
closely together
• Improving value for money will be achieved by unlocking the costs inherent
in the contractual interfaces and encouraging behaviours that are
consistent with ‘one team’ rather than two contractual counterparties.
17
Projects – alliancing & contestability
• Deliver projects faster, safer and better value
• Create performance that can’t be achieved individually
• Create an environment where results are rewarded
• Enable partners to help us shape solutions and deliver them
• Empowerment to drive out bureaucracy, inefficiency and waste
• Create a platform for innovation and leading edge thinking
• Create common goals with no “man marking”
• Create stronger client capability
• Provide for alternative forms of competitive project delivery
18
Route Asset Management Plans
(RAMPs)
• Ongoing optimisation of asset management policies to minimise whole life cost
• Policy improvements developed using improved asset-specific data and
understanding of intervention impacts and costs. Supported and enabled by bottomup asset management plans at Route level, applying policies more precisely and
reducing intervention cost
– Policy improvements have enabled > £700k benefits to date
– First draft CP4 RAMPs completed early 2011
– CP5 work leading to greater understanding and improved asset management,
including use of lifecycle cost models
– Improved RAMP template, systems and processes going live in November to
facilitate improved RAMP development in routes and in the Strategic Business
Plan
19
Improving value for money – train
operator’s plans
2018-19
2017-18
2016-17
0.000
2015-16
£0
2014-15
0.020
2013-14
£1,000
2012-13
0.040
2011-12
£2,000
2009-10
0.060
2008-09
£3,000
2007-08
0.080
2006-07
£4,000
2005-06
0.100
2004-05
£5,000
2003-04
0.120
2002-03
£6,000
2001-02
– Wider implementation of driver only
operation (DOO)
– Ticket retailing
– Operational improvements
– Investing in workforce flexibility
– Revenue generation
– Improvement in train utilisation
TOC costs per passenger km
0.140
2000-01
• The RVfM study highlighted the potential for
savings in the following areas:
TOC costs (£m)
• The efficiencies delivered by train operators
will, in part, be dependent upon reforming
enablers, specifically to the franchising process
TOC costs
£7,000
2010-11
• The current franchising process secures cost
effective delivery within existing framework
Year
The graph illustrates in the unit cost
trajectory the anticipated TOC cost savings
that could be delivered subject to reform.
Note that the total cost increases as a
result of the provision of additional outputs
to accommodate demand growth.
20
Enablers to train operator efficiencies
• Deep and wide implementation of franchise reform, including:
– longer and more flexible franchises
– improved risk sharing (e.g. ending the cap and collar regime), helping to improve
incentives to train operators to grow revenue
– National Rail Franchise Terms changes supporting other reforms to help pursue staff
productivity gains
• a more conducive environment for Network Rail / train operator alliancing: for example an
improved incentive regime (such as efficiency benefit sharing as proposed by ORR)
• fares regulation: including future fares regulation and smart ticketing opportunities
• The opportunity to replace an out of date Ticketing and Settlement Agreement to realise
savings in retail costs
21
The Rail Delivery Group’s priorities
Graham Smith, Rail Delivery Group
22
Terms of reference of the Rail Delivery
Group
• RDG will focus on industry-wide issues in the context of the need for improved service to
rail users and value for money to the taxpayer
• RDG will not duplicate or over-ride the primary accountability for delivery in the UK rail
industry (which remains with the passenger and freight train operators and Network Rail)
or the need for much stronger collaboration between these companies at a local level
• RDG will co-ordinate the objectives for key cross-industry groups including National Task
Force (NTF), Planning Oversight Group (POG) and Technical Strategy Leadership Group
(TSLG)
• RDG will conduct a review of the recommendations made by Sir Roy McNulty in relation
to the potential establishment of a Systems Agency and a National Safety Task Force,
including transition arrangements and potential changes to RSSB
• RDG will conduct a review of all other cross-industry groups to improve their efficiency
and effectiveness
• A key initial priority for RDG will be to review with an intent to sponsor cross-industry
work by Planning Oversight Group in preparation for the Initial Industry Plan (IIP) which
is due to be published in September 2011 including the scope for improvements in Value
for Money and overall industry costs
23
Priorities of the Rail Delivery Group
• The Rail Delivery Group reviewed the 700 recommendations and statements
made by the Rail Value for Money Study
• Decided priorities based on
– The potential for increased efficiency and lower costs
– Fitting with RDG’s remit (cross-industry rather than single company issues)
– External priorities
– Reasonable chance of success
• Working groups have been set up drawing on RDG members and resources,
supplemented by additional advice
24
Priorities of the Rail Delivery Group
• Establishing leadership and credibility through behaviour, communication and
demonstrating progress with other priorities
• Asset, programme and supply chain management
• Commercial agreements
• Train utilisation
• Technology and innovation
• Rail Systems Agency
• Passenger information
25
Priorities of the Rail Delivery Group
• The Rail Delivery Group is gathering information on the enablers – the things that others
have to do to facilitate improved efficiency
• The Rail Delivery Group is also conscious that that there will be other issues to tackle
such as:
– Passenger rolling stock
– The low-cost Regional Railway
– Information systems
• Recognise that each of the areas being tackled by the Rail Delivery Group is complex
and solutions have evaded many that have tried before
• There are no instant answers
• Finding and implement solutions will take time – the Rail Value for Money Study
acknowledged that benefits would not be achieved until 2014-2019
26
Supply chain perspective
Jeremy Candfield
Railway Industry Association
27
An efficient interface with suppliers
is key:
• RVfM efficiency savings (funding basis) in 2018/19 by area of study (£m 2009/10 prices)
Study area
Subject
A
Objectives, strategy and outputs
90
110
B&C
Leadership, structures and incentives
40
130
D
Revenue
90
90
E1 & F
Asset and supply chain management
230
580
E2
Programme management
40
100
G
Safety, standards and innovation
190
190
H
People
260
260
Less
Double counts
(200)
(410)
740
1050
Net funding savings
Low case
High case
28
Network Rail - Collaboration
• The approach launched by NR in March is very welcome
• Confrontational behaviours are wasteful of time, money, people, the control of
risk....
• We are committed to helping drive the change; it is not easy
• To be successful, it must be consistent; perhaps the greatest challenge
29
Network Rail - Planning
• Volatility is expensive
• Improving forecast work bank data
welcome
• Longer term still major issues
• Efficient electrification demands a
rolling programme
• And smoothing out the 5-yearly
investment cycle must be (and is
being) addressed
30
Network Rail – Asset Management
In addition to initiatives already identified we have agreed
• To develop a joint programme of work
• To challenge, asset by asset:
- blockers to whole life cost solutions
- the cost of workload discontinuities
- the cost of using non-standard products and processes
- and much else
• Led by a joint steering group
31
The potential scope is considerable
• Maintenance
• Renewals
• Enhancements
• Detailed discussion of numbers next month (ICIG), but for renewals alone:
32
Network Rail renewals in the IIP
£bn 2011/12 prices
CP4
CP5
Change
Track
3.88
3.36
- 13%
Signalling
2.32
3.58
54%
Civils
1.86
2.19
17%
Buildings
1.43
1.21
- 15%
Electrical power and fixed plant
0.87
0.99
13%
Telecoms
1.18
0.39
- 67%
Wheeled plant and machinery
0.30
0.48
64%
IT
0.44
0.27
- 40%
Corporate offices
0.31
0.09
- 70%
Other renewals
0.20
0.28
38%
Total
12.78
12.84
Expressed at end–CP4 efficiency; no CP5 efficiency included
33
7
Rolling stock
• IIP figures later
• The strategic task is to address the
issues raised in the IIP and the
Rolling Stock RUS, published
simultaneously, and in recent
debates:
• The volatility and
unpredictability of demand
• The number of customised
designs
• Lengthy and expensive
procurement processes
• Addressing infrastructure and
rolling stock design issues
together.
Not a small agenda, and one that has to be addressed cross-industry...
34
Discussion
35
Growth, sector strategies
and choices
Richard Davies, ATOC
Lindsay Durham, RFOA
Calvin Lloyd, Network Rail
36
Meeting the needs of customers
• Plans have been developed based on industry’s understanding of what its customers require
and how it can best meet these needs
• The provision of rail services has to address a range of diverse market needs which require
different strategic approaches
• Passenger needs are addressed in the following areas:
– Continuous improvement in safety
– Reduced peak crowding in London and Regional Urban centres
– Improved consistency of train service punctuality and reliability
– Improved journey times and connectivity on certain corridors
– Investments in improved accessibility and information provision
• In the freight sector, the IIP includes plans to develop the strategic freight network to
accommodate new traffic, and stimulate further modal shift from road to rail with associated
economic and environmental benefits
37
Passenger markets: long term view
• External factors will drive significant longer term growth across all rail markets;
‘background’ passenger demand could double over a 25 to 30 year period
Market
London Commuter
Long Distance
Regional Urban
Commuter
London Other
Regional Urban
Other
Rural
Total
Approx. % of
national passenger
km
21%
35%
7%
‘Background’
passenger km
growth 2008-2034
+40%
+67%
+102%
Average rate per
year
26%
9%
+90%
+116%
2.5%
3.0%
3%
100%
+90%
75%
2.5%
2.2%
1.3%
2.0%
2.8%
• Additionally, in the short to medium term existing commitments will stimulate further growth
in the market
38
Control Period 5 Demand Growth
• Over CP5, relatively strong growth is expected in the Regional sector, supported by
continued, favourable underlying trends in the market
Sector
Long Distance
London & South East
Regional (England & Wales)
Total (England & Wales)
Passenger km
growth over CP5
Real revenue
growth over CP5
15%
13%
17%
14%
25%
21%
26%
23%
39
London and South East
• Peak demand significantly driven by central London employment – 27% growth expected by
2031
• Continued growth in off peak demand expected as a result of continued increase in population
of Greater London
• Passenger demand growth forecast to the end of CP8 of between 1.9% and 2.9% per annum
• Significant additional capacity being provided in CP4, with further committed schemes due for
completion in CP5, particularly Crossrail and Thameslink
• Additional capacity is required to address those route corridors which are not addressed by
committed schemes
40
London and South East options for CP5
 New local service running between Stratford and Brimsdown on the West Anglia Lea Valley
route
 Additional peak services to Liverpool Street on the Great Eastern route
 Lengthening of peak Southern services to 8 car on the West London Line
 Additional peak services between Redhill / Reigate and Victoria with lengthening to 12 car on
this route
 Lengthening of peak services between Caterham, Tattenham Corner and Victoria
 Lengthening of peak services on the London Bridge to Uckfield line
 Lengthening of peak services on the Waterloo to Reading line
 Lengthening of peak services on routes in south east London
 Lengthening peak services on the Thameside route into Fenchurch Street to 12 car
41
Long Distance
• Historic demand growth of over 3% per annum on average since 1994
• Continued demand growth expected, driven by economic growth and structural changes in
economy and travel markets
• Additional capacity being provided on West Coast Main Line in CP4
• Intercity Express Programme due to be delivered in CP4 and CP5
• Opportunities from further development of demand and yield management techniques
42
Long Distance options for CP5
• timetabling and service development delivered through the Intercity Express Programme,
including investment to mitigate against congestion at stations resulting from the programme;
• additional capacity on long distance services operating on the Midland Main Line;
• a scheme delivering additional local services between Tamworth and Birmingham to relieve
current crowding on longer distance services on the route;
• further network electrification which can also be an enabler of extra capacity; and
• power supply upgrades to support the anticipated level of traffic on the network.
43
Regional
• Sector serves several markets, including commuting into regional centres, inter-urban business
and leisure travel, and rural
• Some additional capacity is being provided in CP4
• Electrification of Liverpool/Manchester/Blackpool triangle to be completed in CP5
• Options are:
– Northern Hub
– North Trans Pennine Electrification
– Liverpool Central station capacity
– Journey Time Improvements, e.g.
• Birmingham to Stansted
• Nottingham to Leeds
44
Rolling stock
•
Committed Schemes exist to procure new rolling stock for Thameslink, Crossrail and IEP
•
To maintain average fleet age, 350-400 vehicles would need to be replaced each year
•
Main themes:
– EMU cascades following completion of the Thameslink and Crossrail orders
– interurban EMUs for MML and TPE electrification.
– Pacer replacement
– possible life extension of stock reaching the end of its design life
– some growth build for intercity routes, over and above the current IEP commitment
– the start of plans to group older vehicles into areas that will be converted to ERTMS last
– growth builds of EMUs, principally in London but also Manchester/ Birmingham
– CP5 total 570-640 vehicles for growth
•
Projected volumes are indicative, the actual scale and allocation of replacement and additional
vehicles will emerge through the franchising process
45
Electrification
• Following schemes are committed:
– Great Western to Bristol, Cardiff, Oxford and Newbury
– Northern Triangle (Manchester, Liverpool, Blackpool)
• IIP contains options for electrification in the following areas:
– Midland Main Line
– TransPennine (North)
– Cardiff Valleys
• Potential for longer term rolling programme of electrification
• Potential business case for conversion of some of the DC network to AC
46
Stations & information
• Focus in CP5 on improving security, safety and ambience at stations
• Further improvements to parking facilities
• Proposal to continue National Stations Improvement Programme and Access for All
funding into CP5
• Some stations will require specific interventions to increase capacity for increased
passenger throughput
• Network Rail and train operators are working with ORR and the DfT on reform of
station leasing arrangements for new franchises.
– This will progressively see franchisees become wholly responsible for the
management of station assets
• Proposals for significant investment to improve the information provided to
customers at all stages of their journey. This includes investment in both technology
and people
– Links to NR and fares systems
47
Freight - growth and strategy
Lindsay Durham, RFOA
48
Rail Freight Operators’ Association
49
Rail Freight - strategically important to the UK
•
25% of the electricity consumed in the UK
is generated by coal that moved by rail.
•
rail freight helps drive economic growth
by moving aggregates and cement into
major conurbations for building and
developments.
In London, over 40% of such raw
materials are delivered by rail
•
30% of all deep sea containers arrive or
depart from the major ports by rail
,carrying goods including food, clothes,
electronic and white goods, raw
materials, and chemicals for retailers and
manufacturers
50
A competitive sector - both with road and
with each other
•
•
Competition helps drives efficient behaviour
The RVfM study concluded that rail freight operators had
achieved:
•
•
a 32 per cent improvement in staff productivity since
1998/99
48% growth with half the locomotives and two thirds of the
wagons employed in the mid-1990s
• In the future, even more flexibility & efficiency is
needed to keep up with competing modes and
drive modal shift.
• Longer&/or heavier trains
• Operating more days of the week
• Simple, national access and
planning regimes
51
Rail Freight Growth 2004 to 2011
The key sector is now intermodal - since 2003/4
• Rail grew by 61 per cent
• Road fell by 14 per cent,
• Rail’s mode-share is growing 3.6 per cent per annum faster than road
52
Future growth forecasts
•Since 1994/95 rail freight has grown by 48% - to 19.23 billion tonne km.
•The customer mix has changed markedly :
• Coal for electricity generation has declined – and will continue to decline
• Intermodal has become the largest sector in the market
•The industry’s growth forecasts have been recalculated to take account of the recession
• 43-45 billion tonne km by 2030 - mainly intermodal
•Key enablers to achieve this include;
• Ever more reliant and flexible products to compete with road
• Rail connected warehouses – needing alignment with emerging planning policy
• Equates to annual
growth of 4.3% in
tonne km
53
Strategic Freight Network
“a core network of trunk freight routes, capable of accommodating more and longer freight
trains, with a selective ability to handle wagons with higher axle loads and greater loading
gauge, integrated with and complementing the UK’s existing mixed traffic network.”
• CP4 interventions were mainly gauge clearance projects. These have unlocked immediate growth –
•
gauge clearance from Southampton increased rail modal share from 30 to 35%
Key projects have been on time and under budget partly due to innovation - eg Southampton tunnel
•In CP5 we propose to continue the SFN Fund concept to drive:
• economic growth/modal shift
• environmental benefit/avoid road congestion
• A £350m fund could drive :
•Capacity enhancements:
• Felixstowe to Nuneaton
• Southampton to West Coast Main Line
• West Coast Main Line (North of Preston)
•Gauge clearance:
• Great Western Main Line W12
54
Freight’s value for money strategy
RFOA is keen to work even more closely with NR, TOCs and the supply industry to reduce
industry costs, to make best use of existing capacity and support Efficiency Benefit
Sharing.
• The principles behind the Strategic Freight Network are designed to support value for
money initiatives;
• Maximising train lengths to minimise the paths needed and increase rolling stock
utilisation
• Flexible use of capacity
• continue current practice of minimising operations during periods of peak
passenger operation around major conurbations.
• Extended hours of operation to enable more services per week - increasing use of
both capacity and resources
• Re-aligning freight capability where there is no demand. RFOA has drawn up a list of
routes which could offer opportunities for savings and is discussing these with Network
Rail.
• Consider whether lightly used passenger services can be flexed to accommodate
freight
55
Choices and options
Calvin Lloyd, Network Rail
56
Investing in better outcomes
• The IIP seeks to inform funders of choices to deliver better outcomes in
terms of economic growth, user satisfaction, safety
• Investment in rail is an economic stimulant and some £4.9bn of investment
choices, all representing good value for money (4.5 to 1), are recommended
• Some of these outcomes to be delivered by a fund approach with industrywide governance
Possible funds:
• Level crossing safety fund (£300m)
CP5 Expenditure
£bn (2011/12 prices)
• Strategic Freight Network (£350m)
• Station accessibility fund (£150m)
Committed programme
4.5
• Station improvement fund (£150m)
• NRDF (£250m)
Specified schemes
Funds
Total
2.1 – 2.4
2.5
9 – 9.4
• Passenger information fund (£200m)
• Journey time improvement fund (£200m)
• East Coast improvement fund (£500m)
• Innovation fund (£150m)
• CP6 development fund (£100m)
• Performance fund (£160m)
57
Investing to support & stimulate
sustainable economic growth
Investment Choice
Better Journey
Opportunities
Better
Journey
Times
Increased
Capacity
Benefit Cost
Ratio*
The Northern Hub



4.1
Journey time improvement - exemplar
schemes


1.9

11.1

**
City region commuter market capacity

2.5
Midland Main Line long distance capacity

1.4 - 1.8
London commuter market capacity

Congestion relief at strategic London
stations
Cross country train service connectivity


Western access to London Heathrow
Airport



**
Birmingham New Street to Tamworth
corridor capacity



8.1
1.5
*Socio-economic BCR calculated in accordance with WebTAG guidance
**To be evaluated after publication of the IIP
58
Bristol
Nottingham
Leicester
Sheffield
90%
Newcastle
Liverpool
Leeds
Manchester
Birmingham
Cardiff
London (Total)
Average AM Peak Load Factor
(08:00 to 09:00)
Capacity: Peak train loadings
100%
End CP4
End CP5 Base Plan
End CP5 Base Plan + Investment Options
80%
70%
60%
50%
40%
30%
59
Train service performance
• Overall vision to maintain performance at the high levels targeted for the end of CP4
• Specific actions required to address poor performance days and groups of services,
and bring their performance closer to the current average
• Other plans are being developed to improve the resilience of the network to extreme
weather conditions
• The average level of performance across the network is therefore expected to improve
to around 93% PPM
• It is proposed that a performance fund is made available to address emerging
performance risks which are unforeseeable at the time of plan development.
60
Other outputs
• Safety
– The industry will meet its legal obligations to reduce safety risk to passengers, public and
workforce so far as is reasonably practicable
– Enablers include an improved safety culture and the proposed level crossing safety fund
• Carbon
3,500,000
3,000,000
2,000,000
1,500,000
1,000,000
Base Plan
500,000
Base Plan + Options
2049/50
2047/48
2045/46
2043/44
2041/42
2039/40
2037/38
2035/36
2033/34
2031/32
2029/30
2027/28
2025/26
2023/24
2021/22
2019/20
2017/18
2015/16
2013/14
2011/12
0
2009/10
Tonnes CO 2
2,500,000
61
Impact upon affordability
• Income growth and efficiency are the key determinants of subsidy in CP5
• The investment choices to deliver better outcomes in areas such as safety,
efficiency, sustainable economic growth and meeting the needs of rail users
require a further £260m of subsidy in the final year of CP5
• These choices further increase Network Rail’s net debt by £4.8bn by the end of
CP5, to £34.4bn in total
62
In summary
• The IIP offers a rail network that:
– will deliver rail’s contribution to Government’s vision of a transport system that is an
engine for economic growth
– tackles the key networks identified by the Eddington study to support a productive
economy:
• urban areas and their catchments
• key inter-urban corridors
• connections to international gateways for passengers and freight
– meets the key drivers of customer satisfaction in terms of performance, train capacity,
station capacity and facilities, passenger information
– supports a low carbon economy
• There are choices for funders in relation to the outputs, level of investment, fares and subsidy
that will determine what is ultimately delivered in CP5
• We must demonstrate our plans are sustainable, value for money and affordable
63
Discussion
64
Next Steps
Paul Plummer, Network Rail
65
Road map for 2012
2011
S
O
IIP
published
Industry
Gvt
2012
N
D
J
F
White
Paper
M
A
M
Advice to
Ministers
J
2013
J
A
S
O
N
D
J
Strategic
Business
Plan
HLOSs /
SoFAs
Explain IIP and support development of
advice to Ministers
Explain IIP and support development of the HLOSs / SoFAs
ORR
Develop industry inputs to Strategic Business Plan
Network
Rail
Network Rail develops the Strategic Business Plan
Agree process &
work plan with
POG, NTF etc
Develop industry input to SBP
"Window" to adjust plan to
deliver specified outputs
Finalise
industry
inputs to SBP
Franchise re-letting programme
66
Strategic Business Plan
Strategic Business Plan
Initial Industry Plans
Industry SBP
• Industry output trajectories
• Industry strategies and plans
Network Rail SBP
• Headline outputs & expenditure
• Strategies and policies e.g. asset policies,
operating strategy
• Revenue requirement and financing
10 route plans
• Outputs
• Route Asset Management Plans
• Operate & support plans
67
Industry view on the HLOS
• Passenger satisfaction – industry action planning but no HLOS target
• Freight user satisfaction – use existing output metrics
• Safety – meet legal requirements to maintain safety and improve so far as reasonably
practicable. No HLOS target proposed
• Performance – key output measure, propose to maintain PPM and CaSL metrics, but with
potential to publish further disaggregated data
• Capacity – work with funders to explore options as to how best to specify
• Network Availability - industry discussing potential metrics
• Journey times – to be developed through the route planning process
• Carbon – no HLOS metric recommended
• Franchise specifications must be consistent with HLOS outputs
68
Key industry work streams
• Planning Oversight Group and CP5 Group to oversee industry input
• Value for money: taking forward cross-industry proposals by RDG
• Performance: Further development of CP5 forecasts by NTF.
• Availability: working group looking at alternative metrics and route-based workshops to develop
route availability strategies
• Route plans: Further development of strategies and enhancements for each route through bilateral discussions between Network Rail and train operators
• Asset management plans: Route Asset Management Plans are key plus work with supply chain
• Further development of other proposals including:
– safety culture and specific level crossings programme
– sustainability and carbon management framework
– innovation and R&D programme
• And the franchising programme and reform agenda will require significant industry resource
69
Finally…..
“We've got a new Government, new management at Network Rail, and a raft
of franchises coming up for renewal. It's a once in a generation opportunity
to act and we will seize it. So with Theresa Villiers, the rail Minister, I will
shortly publish a comprehensive blueprint for reforming our railways. Asking
the hard questions about taxpayer subsidy....and considering the options for
greater local commissioning of services. Looking again at the role of
Government, Network Rail, and the train operators. Aligning the interests of
all the parties. Making Train Operators more accountable to their
customers....and Network Rail more accountable to the train operators. And
giving railway employees a real interest in the success of the companies
they work for. So when I say "all the parties", yes, that does include Bob
Crow. As far as the railway is concerned, we are all in this together!”
“Putting Britain back in the fast lane of global economies”
Speech by The Rt. Hon. Philip Hammond MP – Secretary of State for Transport
3 October 2011
70
Discussion
71