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Special report | Bringing track and trains together

Network rail track works

It took more than six years, but the 2011 McNulty report’s recommendations on joining up track and train operations on the national rail network are finally getting off the ground.

After transport secretary Chris Grayling made train and track alliancing a core strategy for UK rail last November, several opportunities were announced. An invitation to tender (ITT) has already been published for the South Eastern franchise, which covers the network  between London and Kent, excluding High Speed 1 . The winning bidder will have to show how, as the next franchise operator, it will work to improve train and track services in one team with Network Rail under a single director. It will start from April 2019.

The aim of what is termed “deep alliancing” between Network Rail and private train operating companies (TOCs) is to encourage a “one team” approach, putting customers first and removing the chance to shift blame for cancellations and delays. TOCs will also get more input into infrastructure plans, allowing them to push for schemes that will benefit their passengers.

Customer focus

Grayling hopes that making Network Rail more customer-focused and encouraging TOCs to think longer term will result in better services for passengers.

“I intend to start bringing back together the operation of track and train on our railways. It will be a process of evolution and not revolution, but I believe it will mean a better railway on a day to day basis, and it will mean that it is much easier to meet the challenges today’s network faces,” he said in December 2016.

Rail regulator the Office for Rail and Road (ORR) agrees with the vision for a more decentralised Network Rail. It told New Civil Engineer in April 2016 that route-based rivalry between managers would encourage competition and result in better customer service.

What the train operator found was that Network Rail didn’t change its overall mentality

At the time, ORR chief executive Joanna Whittington said: “It’s positive for a number of reasons, the most important is that it enables Network Rail to get that much closer to its customers.”

Network Rail has eight “routes”, such as the Wessex or Anglia route, which are regional networks.

But questions about how it will work in practice remain.

Deep alliance

In 2012 a “deep alliance” between Network Rail and South West Trains was created. It was known as the Wessex alliance. At its launch, its managing director Tim Shoveller said: “The creation of this joint alliance provides a real opportunity to deliver an even better service for our passengers, and we have already had a very positive response to this new way of working.”

The alliancing pilot was due to run until February 2017, but in June 2015 it ended unexpectedly with an announcement that changes to the management structure and commercial operations would take place.

Very little has been written publicly about why the alliance failed. Law firm Stephen Harwood partner Tammy Samuel, who works with TOCs, believes that collaborative behaviour between both parties could have been lacking.

What you need is a partnership that covers everybody. And then you’re not really aligning track and train, you’re just creating a kind of industry body for that line

“I think what the train operator found was that Network Rail didn’t change its overall mentality,” she says.

For “deep alliancing” to work, TOCs and Network Rail must work as one team. Even when both parties are behaving collaboratively, the whole concept of alliancing could suit some routes better than others.

“I think this is easier to do where the track and the train are very well aligned,” says Samuel, adding that the South Eastern franchise could work well, as the network is mainly used by one train operator and therefore suits a partnership between a private TOC and Network Rail.

Sharing routes with other TOCs

But with several different TOCs operating on a route or network, giving one more control than others could cause problems.

One such example is the proposed East Coast Partnership, which will be responsible for services and infrastructure along the East Coast mainline between London, Yorkshire, the North East and Scotland when it is up and running in 2020. Unlike current route operator Stagecoach-Virgin, the private TOC in the East Coast Partnership will have some authority over what infrastructure plans are made for the route.

This could prove difficult to implement if only one TOC is appointed to the partnership, as multiple operators use the route.

“I’m not quite sure how that’s [the East Coast Partnership] going to work because everybody uses the East Coast Mainline,” says Samuel.

 All of that, I think, gives them an unfair market advantage over other operators that are also on that route

“So then it becomes a bit more difficult because actually what you need is a partnership that covers everybody. And then you’re not really aligning track and train, you’re just creating a kind of industry body for that line.”

Like Samuel, KPMG associate director, infrastructure advisory group Emma-Jane Houghton believes that while deep alliance franchises could work well on single operator routes, applying them to crowded lines used by more than one operator could lead to  one operator gaining a competitive edge.

Decision-making influence

“If you’ve got your prime operator in an alliance with Network Rail, it effectively has the ability to influence decision-making with Network Rail around what infrastructure interventions happen, when they happen, how they happen etcetera,” says Houghton.

“And all of that, I think, gives them an unfair market advantage over other operators that are also on that route.”

Freight operators are also worried about competing needs for the tracks. Under European Union law, which will most likely be written into UK law after Brexit in March 2019, train and track operators cannot be fully integrated as there must be an independent body responsible for capacity allocation and charging.

Robust accountability

But there will be a need for robust accountability to ensure the private train operating alliance partner is not given priority over other train operators when it comes to track access.

“Usually that’s a big concern of the freight contingent, because what they don’t want is some passenger train operator cooking up plans with Network Rail in their region, which gives passengers the priority over their freight,” Samuel explains.

“That has to be preserved, that ability for other people to get access if there’s space.”

Meanwhile there are claims that TOCs are unwilling to take on extra risks associated with responsibility for the tracks. At the moment, if a line has to be closed for maintenance a TOC, whose business model is heavily reliant on revenue, receives financial compensation from Network Rail.

It is not yet clear how alliance partners would share the compensation pain, causing anxiety for TOCs, which tend to run on margins of between 3% and 5%.

Performance incentives

“For all intents and purposes they [TOCs] get paid if the railway is not available when it’s supposed to be,” says Samuel.

“If they are no longer getting paid for that, because somehow the track and train are closer together and they’re involved in the decision making, what does that mean for them?”

It highlights the problem of integrating a capital expenditure (capex) focused body like Network Rail with an operational expenditure (opex) focused TOC, explains Houghton, who believes areas of mutual value for both parties must be established for an alliance to run smoothly.

“It’s possible, but it just requires some real thought in where you put the commercial risk between those two very different types of business,” she says.

With a lengthy list of problems to overcome, it is not too cynical to question whether pulling train and track operations into a single team will work in practice. And as Samuel points out, we have been here before.

“This is not a new idea,” she says. “It will go out of favour again.” 

Upcoming track and train partnerships

East Coast Partnership

The East Coast Partnership will be set up over the next two years, and the team will be responsible for services and infrastructure along the east coast mainline between London, Yorkshire, the North East and Scotland. Not much information is available on the partnership yet as plans are still in development, but we do know it will see one team responsible for train and track operations under one leader and unified brand.

Great Western

The Great Western franchise, which runs services from London to the South West and into Wales, could be broken up under proposals currently out for consultation.

Network rail gwr

Network rail gwr

Great Western franchise could be broken up under new proposals

A new West of England franchise could be created to offer long-distance services to London, as well as local services in the South West.

South Eastern

An invitation to tender (ITT) has been published for the South Eastern franchise, which covers trains and infrastructure in south London and Kent.

It will be the first in the country where a single director is responsible for a joint team running track and train operations.

The winner will be expected to improve customer service and deliver “significantly enhanced” cooperation with Network Rail.

Bidding is open until 14 February, and the franchise will start operation from April 2019.

Wales and Borders

The £5bn operator and development partner (ODP) contract will involve the operation of the Wales and Borders rail franchise and the design and build of a metro-style service on the Core Valleys Lines,  a series of suburban rail lines which serve Cardiff.

It also involves subsequent infrastructure management of the Core Valleys Lines, the operation of rail and related aspects of the South Wales Metro service, and the design and development of further rail schemes in Wales.

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