Lord Berkeley - Rail Freight Group

The McNulty report, published in early May, sets out the direction of travel for reducing the cost, and increasing the efficiency of, the UK rail network.

The long-awaited report, originally commissioned by the Department for Transport (DfT) and the Office of Rail Regulation has concluded that the rail industry should seek to reduce its costs by 30% over the next decade, with around half of that coming from Network Rail and the remainder elsewhere in the industry, principally the passenger franchises.  Sir Roy’s conclusions include recommendations for changes to leadership, incentives, structure, decision making, regulation, standards and resources, and represent a major challenge for the industry to address.

So, what happens next?  Well firstly, as is often the case with such reviews, a new group has been established.  The Rail Delivery Group, or RDG, will meet monthly from now, and comprises the CEOs of all the major train operators, including for freight DB Schenker and Freightliner.  It will be chaired initially by Tim O’Toole, CEO of First Group, with David Higgins of Network Rail as Vice Chair.  Its job is to take forward the reforms in McNulty.  An early task is the establishment of the so called ‘Systems Authority’ to take the lead on reforming industry standards.  How this will interact with existing bodies, such as RSSB and Network Rail will need to be determined.  The Group will also play a role in industry planning, with the first major plan due out in September.

DfT have welcomed the report.  However, it has yet to be seen whether they will take on board all the recommendations, or whether they will pick and choose.  For freight, decisions by DfT on whether to restructure the industry are particularly key, with McNulty still recommending at least one trial of ‘vertical integration’ where track and passenger trains are controlled by the same party.  It appears that DfT may be waiting to see how Network Rail’s restructure progresses, with more devolved decision making in the regions, and the possible testing of infrastructure concessions also on the table.  However, with the Greater Anglia franchise still waiting to be relet, and the SNP in Scotland supporting vertical integration, there are still options open, and we will be watching with care to ensure that freight is not disadvantaged.

DfT do appear to be taking steps now to reform the way that franchises are specified and let.  Whilst this may not appear to be relevant to freight it has created a number of perversities in recent years, not least in timetabling and capacity, as DfT have sought to specify every last detail of the contracts.  However the revised specification for the West Coast Main Line, issued in parallel with McNulty, appears to be a significant step in the right direction, with much less detail, and a timetable pattern which gives greater opportunity for a balance of services on the route.  If this model is repeated elsewhere, it should be liberating not just for the franchises but also for other users of the network.

Many details will need to be worked through in coming months, and we will need to watch with care, but thus far, the signs are positive for an outcome which helps rail freight to continue its success story.

Lord Berkeley is Chairman of the Rail Freight Group.  For further information, visit: www.rfg.org.uk

Published: 05/07/2011