A NEW report has suggested that the railway industry could be saving as much as £1 billion a year by working more effectively. The transport secretary has welcomed the interim findings of Sir Roy McNulty, who is carrying out a detailed investigation of the industry's costs.
The key will be closer co-operation, according to the transport secretary Philip Hammond, who said that train operators currently had no interest how much Network Rail was spending, because its funding has been solely a matter for government.
Mr Hammond, who said the savings could be achieved without any route closures, is now setting up a 'high-level' group, which he will chair, in order to bring about the necessary reforms.
The DfT said Sir Roy had found that the key to making the savings is ‘much closer working and alignment of incentives between train operators and Network Rail and strong leadership across the industry’.
The Department has also confirmed its plans to restructure rail franchising. Future contracts will be longer, more flexible and ‘more responsive to the needs of passengers while providing better value for taxpayers’.
Mr Hammond explained: “Incentives on the railway have become blurred and interests mis-aligned, to the detriment of efficiency, value for money and passenger satisfaction. At present Network Rail answers to its regulator, not to its customers, the train operators. Meanwhile, train operators have no interest in Network Rail’s costs, since any increases or decreases are passed straight through to the Government.
“This situation cannot be allowed to continue. All the players in the industry need to be pulling in the same direction in the interests of passengers and taxpayers. Sir Roy McNulty has pointed the way and I am establishing a high-level group, which I will chair, to drive reform. The Government is going to make significant investments in our railways in the coming years, but that support must be matched by a relentless drive for efficiency on the part of the industry.”
First reactions have been positive. The watchdog Passenger Focus welcomed Sir Roy's conclusions in principle, but said that the needs of passengers had to come first.
The chief executive of Passenger Focus Anthony Smith said: “Passengers will welcome pressure being put on the rail industry to reduce its costs and achieve maximum value for money from its business. Passengers mustn’t be expected to cover the cost of poor and inefficient planning, working practices and project management.
“Any change to industry structure and franchising must take into account passenger needs.”