Industry improvements continue: the SRA's golden legacy?
October 2005
If you go to the web site of Strategic Rail Authority (SRA), you will be greeted with the message that the site ceased to be updated after 22 August 2005, and offered a link to the railways section of the Department for Transport’s site. To all intents and purposes, the SRA has ceased to function though it will not be finally wound up until December. It therefore seems an appropriate moment to consider the Authority’s legacy to the industry.
The industry certainly seems to be in a much better condition than many would have thought possible, even a year ago and whilst staff and managers on the ground can claim most of the credit, the framework within which these things have happened was set by the SRA, which also determined the industry’s priorities.
The downsides and criticisms have been well rehearsed: the micro-management of franchises, the dithering and uncertainties of the re-franchising process in the early days, and then the pendulum swing to the increasingly prescriptive and restrictive nature of the last franchises to be let, leaving little or no freedom for innovation or change. There were the wars of words, too – with other industry partners, with train operators and with the trade press. Some harsh things were said at times – and tend to get remembered when the chips are down and your future is on the line. Like the National Bus Company twenty years ago and BR ten years ago, the SRA ran out of friends in Whitehall last spring, and paid the ultimate price.
However, there were undoubtedly some positive achievements, and these will rebound to the authority’s credit when the history books come to be written. Two areas spring to mind immediately: the West Coast Main Line and the Southern Electrification Upgrade. In both cases, the authority was faced with a complete mess – major projects that were central to the industry’s future but which had fallen into the mire of industry fragmentation and the demise of Railtrack. There were technical achievements, too, such as the new template franchise agreement, which simplified the labyrinthine processes of penalties and rewards introduced in 1996: these had perverse consequences, and cost far more to administer than the benefits they delivered to the industry, or to the consumer they were designed to protect.
There were good ideas, too: the Community Rail initiative, which will survive, and the Rail Passenger Partnership (RPP) scheme, which has been dropped. RPP was successful in getting industry stakeholders to think about quite small schemes which benefited customers, and in levering in other funds, notably from local authorities – non-PTE authorities contributed some £36m to projects at the height of the RPP in 2002/03, up from just £9m in 1996/97[1]. As projects wound down in 2003/04, spending fell sharply again. Eventually, somebody will need to reinvent RPP - or something very like it.
The ultimate question, though, is whether the industry is in a better state at the end of the SRA’s existence than at the beginning. It is difficult to answer, given the other cataclysmic events that happened at around the same time. The authority’s formal legal existence commenced in February 2001, though it had existed in shadow form since 1999.
Thus, it assumed its statutory responsibilities three months after the Hatfield crash, and just weeks after Railtrack had announced that it was no longer in a position to fund network enhancements, and so called into question the franchising approach adopted by SRA chairman Sir Alistair Morton. Further change came after the 2001General Election: Stephen Byers arrived as Secretary of State, and Morton’s departure quickly followed. Then in October 2001 came Richard Bowker’s appointment as chairman. A year later, Railtrack went into administration, to emerge twelve months later as Network Rail.
Punctuality and reliability collapsed post-Hatfield, and passenger revenue collapsed as well – falling from £939m in the quarter immediately prior to Hatfield to £792m in the quarter immediately after it: this exposed what many had feared – that some of the initial franchise bids were way too optimistic, and were not sustainable. The Government and the SRA were faced with the unenviable choice of seeing some operators go bankrupt or stumping up some more money. They stumped up – having fallen to £1.1bn in 2000/01, government support for the industry rose to £1.5bn in 2002/03 and just under £2bn a year later.
Five years later, things look remarkably different – patronage and revenue recovered quickly from the post-Hatfield downturn and have gone on growing. The network carried 1,088m passenger journeys in 2004/05 – a figure last seen on the network in 1958. Passenger revenue now exceeds £1bn per quarter. On the performance front, there are signs that some sectors have reached pre-Hatfield levels and even exceeded them, even though train operators are running almost 10% more train miles than in 1999/2000. There is evidence that Network Rail is getting its costs under control, and that taxpayer support could begin to fall once more.
Many people have played their part in this recovery, from the humblest train cleaner to the highest chief executive, but there can be little doubt that the SRA contributed as well. It set the agenda, it provided leadership (even if this was resented at times) and sorted out some thorny problems. The legacy for the industry might not be golden – but it is certainly a positive one, for which we should probably be more grateful than we are.[1] Rail Industry Monitor 2005, Volume 2.