{"id":34628,"date":"2013-11-12T15:49:28","date_gmt":"2013-11-12T15:49:28","guid":{"rendered":"http:\/\/mostafa.openonline.co.uk\/?guid=7ce88b967b861fba2199e36329d709de"},"modified":"2013-11-12T15:49:28","modified_gmt":"2013-11-12T15:49:28","slug":"speech-rail-growth-through-competition-the-success-of-the-uk-model","status":"publish","type":"post","link":"https:\/\/mostafa.openonline.co.uk\/?p=34628","title":{"rendered":"Speech: Rail growth through competition: the success of the UK model"},"content":{"rendered":"
\n

Thanks for that introduction.<\/p>\n

It\u2019s a pleasure to join you today (12 November 2013).<\/p>\n

This is an industry with an increasingly international \u2013 indeed global \u2013 outlook.<\/p>\n

So it\u2019s great to welcome delegates and speakers from across Europe to London for this inaugural European Rail Congress.<\/p>\n

It is fitting that the subject of my speech this afternoon is \u201crail growth through competition.\u201d<\/p>\n

Because the UK railway was privatised almost exactly 20 years ago.<\/p>\n

In fact the Railways Act came into effect on November 5 1993, breaking up the state-run British Rail, and transforming the face of our railway for ever.<\/p>\n

Nobody back then could have predicted the extraordinary changes that have taken place over the subsequent 2 decades.<\/p>\n

So today I want to reflect on the UK\u2019s experience of privatisation.<\/p>\n

On the many benefits that it\u2019s brought to us as a country.<\/p>\n

But I also want to talk about the challenges we\u2019ve faced.<\/p>\n

And the lessons we\u2019ve learnt along the way.<\/p>\n

Let me start by taking you back to the late 1980s.<\/p>\n

I was a junior transport minister in Margaret Thatcher\u2019s last government.<\/p>\n

And I remember what our railway was like under a single, publicly-owned operator.<\/p>\n

Rail was an industry in decline. <\/p>\n

In fact it had been declining since the motorways were built in the 1950s and \u201860s.<\/p>\n

The infrastructure was in need of urgent attention.<\/p>\n

Reliability was poor.<\/p>\n

And like other monolithic state institutions, British Rail had a culture that hampered rather than encouraged innovation.<\/p>\n

It\u2019s true that public subsidy under British Rail was comparatively low, but that reflected underinvestment in tracks and trains, rather than an efficient and sustainable business model.<\/p>\n

We knew things could be better.<\/p>\n

Because we\u2019d already successfully sold off other utilities, like British Aerospace, British Gas, and Rolls-Royce.<\/p>\n

Introducing competition.<\/p>\n

Improving performance.<\/p>\n

Widening share-holding.<\/p>\n

And reducing the burden on the taxpayer.<\/p>\n

It was against this background that we privatised the railway.<\/p>\n

But expectations weren\u2019t high.<\/p>\n

Rail travel had dwindled to such an extent that most people thought the private train operators would manage a decline in both passenger and freight traffic.<\/p>\n

How wrong they were. <\/p>\n

Privatisation sparked a railway renaissance.<\/p>\n

Since 1993, passenger journeys have doubled in the UK to a level not seen since the 1920s.<\/p>\n

On a network roughly the same size as 15 years ago, today our railway is running 4,000 more services a day.<\/p>\n

And rail freight has grown by 60%.<\/p>\n

Revenue is up more than \u00a33 billion since privatisation, almost all of it due to higher passenger numbers rather than fare rises<\/p>\n

Safety levels are at an all time high.<\/p>\n

Punctuality is at near record levels.<\/p>\n

And passenger satisfaction is up by 10% over the past decade.<\/p>\n

None of this would have happened without privatisation.<\/p>\n

Without competition.<\/p>\n

Without franchises investing in better services.<\/p>\n

Without an industry structure promoting accountability and incentivising growth.<\/p>\n

Yet the job is far from over.<\/p>\n

We still face some considerable challenges – challenges that must be met if we\u2019re to build on the achievements of the past 20 years.<\/p>\n

The first is: how to meet rising demand.<\/p>\n

Because we didn\u2019t just inherit a record public deficit in 2010 – we also inherited an infrastructure deficit.<\/p>\n

Our main intercity network was built to serve a Victorian economy, not a 21st century one.<\/p>\n

Historic underinvestment left the railway ill-prepared to meet soaring demand – which was triggered not just by privatisation, but also by 15 years of subsequent economic growth.<\/p>\n

By 2010, the railway was in need of urgent investment, both in the short term, and in the longer term, to achieve a step change in capacity.<\/p>\n

We therefore embarked on an unprecedented rail modernisation programme.<\/p>\n

Between 2014 and 2019, infrastructure operator Network Rail will spend over \u00a338 billion running and expanding our railway.<\/p>\n

Improvements include an extra 140,000 seats on peak services by the end of the decade.<\/p>\n

A major electrification programme.<\/p>\n

A multi-billion pound deal to replace intercity rolling stock. <\/p>\n

And a new high capacity railway for London and the south east called Crossrail.<\/p>\n

But even this ambitious package of improvements will not provide us with the space we need to grow.<\/p>\n

Major routes like the West Coast line will be overwhelmed by 2025 if we fail to act.<\/p>\n

So we are currently taking a Bill through Parliament to deliver HS2 – a new high speed rail network for the UK.<\/p>\n

With construction due to start in 2017, HS2 will connect London with Birmingham, Manchester and Leeds. <\/p>\n

It will boost capacity by almost 20,000 seats an hour.<\/p>\n

And it will slash journey times between 8 of our 10 biggest cities.<\/p>\n

HS2 will free up space on the existing network for more commuter services and freight.<\/p>\n

It will give customers more choice about how to travel.<\/p>\n

And it will make our railway more competitive.<\/p>\n

And that brings me onto the second major challenge.<\/p>\n

Getting down costs.<\/p>\n

By 2010, our railway was the most expensive in Europe.<\/p>\n

At a time when we faced the largest public deficit in UK history, and when we made a commitment to tackle waste and profligacy across government, reducing the cost of the railway became an urgent priority.<\/p>\n

We\u2019ve made good progress.<\/p>\n

The rail subsidy for England and Wales fell from \u00a34 billion in 2009 to10 to \u00a33.2 billion in 2011 to 12.<\/p>\n

We\u2019ve tasked the industry to make savings of \u00a33.5 billion a year.<\/p>\n

And we\u2019ve put a lid on expensive fare rises.<\/p>\n

This is just the start.<\/p>\n

There is still a long way to go before we hit our cost saving targets, and before we can achieve our goal of ending above-inflation fare increases.<\/p>\n

Turning round the performance of such a huge industry is a big job.<\/p>\n

But it\u2019s one we are determined to finish.<\/p>\n

The final big challenge is modernising the railway for the customer.<\/p>\n

Fares and ticketing, for example, is still complex and impenetrable.<\/p>\n

So we\u2019ve recently completed a major review of the fares and ticketing system<\/a>.<\/p>\n

By making it simpler and more user-friendly, more people will travel by rail, and they\u2019ll also have a much better experience.<\/p>\n

So we\u2019re trialling a flexible ticketing system<\/a> which will meet the needs of individual travellers.<\/p>\n

Ultimately, we would like to see passengers use smartcards for use across the network, and on different types of transport.<\/p>\n

Operators are investing in better stations, better trains and better facilities.<\/p>\n

But to improve the railway for passengers, we\u2019re also encouraging them to collaborate more closely with Network Rail.<\/p>\n

One operator, South West Trains, has joined with Network Rail to create a single management team responsible for both trains and track.<\/p>\n

This kind of joined-up working isn\u2019t bad for competition.<\/p>\n

Neither is it an end to the market.<\/p>\n

It\u2019s an example of how to make things work.<\/p>\n

And how to respond to the needs of passengers.<\/p>\n

There are enormous gains to be made from aligning objectives, so that different parts of the industry do what they do best for the benefit of passengers – whether it\u2019s selling tickets, running signals or fixing track.<\/p>\n

So 20 years on, what have we learnt from privatisation?<\/p>\n

Well, we\u2019ve learnt that it can transform the fortunes of the railway.<\/p>\n

Turning decline into growth.<\/p>\n

Boosting revenue, and passenger satisfaction.<\/p>\n

But we\u2019ve also learnt that growth must be managed in a sustainable and responsible way.<\/p>\n

We failed as a country to plan for growth.<\/p>\n

To look beyond our immediate needs and build for the future.<\/p>\n

And to keep a close control of costs.<\/p>\n

Now we\u2019re sorting out these problems, our railway is in a better position than it has been for decades.<\/p>\n

Franchising might still be criticised by those who want to turn backwards.<\/p>\n

Who haven\u2019t learnt any lessons from the past.<\/p>\n

But now we\u2019ve got a structure that\u2019s working.<\/p>\n

Encouraging innovation through competition.<\/p>\n

Allowing the private sector to do what it does best.<\/p>\n

But also collaborating for the benefit of the customer.<\/p>\n

And building the capacity we need to grow.<\/p>\n

Rail privatisation has made Britain a better country.<\/p>\n

But if we heed the lessons I\u2019ve talked about today, then we can look forward to an even brighter future.<\/p>\n

Thank you.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Discusses the benefits of competition in the rail industry plus future plans for development and enhancement.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"_links":{"self":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/34628"}],"collection":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34628"}],"version-history":[{"count":0,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/34628\/revisions"}],"wp:attachment":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}