Voices of the Industry presented by Steer - #5 Part 2: Projects, Decisions, and Future Challenges with ORR


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[Music] hello and welcome to voices of the
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industry a podcast series bringing you leading industry voices who challenge thinking across Transportation
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infrastructure and [Music]
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cities welcome back everyone to the second part of our two-parter with John Linson of the office of Ray Road we hope
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you enjoyed the first part and in part one we navigated through the intricate landscape of rail regulation we explored
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the evolving role of regulators dissecting challenges and Dynamics shaping the industry of rail and Road in
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the UK today now in part two we're delving into more specific projects and
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decisions that impact rail infrastructure get ready for a deep dive into the intricacies of round
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development and regulation in the second half hour disc discuss I hope you enjoy it now let's get back to the chat with
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John yes I I suppose you know we we deal with or I certainly have dealt with trying to help reform uh change
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processes in the in the UK rail sector uh and you know there's proposals just come forward from Great British Railways
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transition Team LA uh last week I think it was put some ideas forward and I can just imagine if you're I don't know
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working in a local Authority part of local government trying to develop a Mobility Hub which brings together different sustain aable modes alongside
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the rail network and you think I've got a scheme with network rail to introduce this create these things but now I've
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got to talk to an energy provider to be able to get the energy to that site you think oh no there's another set of
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processes that I need to go through so I just wonder how agile UK PLC will be in
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some form in in picking up with some of these things that yes that's a pretty
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big question to speak on on beh of I'm nervous if I speak on the PA of the whole UK PLC in that case
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the the um but if you take it from the perspective of an individual company it
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is sometimes I think quite easy to to criticize a big company like Network
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rail or national highways I mean I I I'm not short of people walking up to me saying I tried to get network rail or
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national highways or some part net Ro to do this and they were holy uncooperative and we get quite a few frankly
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complaints about that but if you look at it from Network rail's perspective sometimes
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actually people organizations want Network rail to pay more into something
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so if you look at schemes where I've been told well net just hasn't cooperated with this at all sometimes
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they haven't and I'm not saying netk perfect they're certainly not but often we find that they have but they just
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haven't done what some people wanted them to do so they haven't added some extras onto into a scheme which frankly
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they didn't really have to do but people wanted them to and ultimately as as a regulator we we can't always be in the
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business of giving everybody what they want Network rail has a fixed budget it has licenses is bound by license it has
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targets to me and it to make and it can't just be a general distributor of
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resources no matter how popular that might that might be so there is a there is just a bit of a bounce in that here I
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think for Network rail National highways and ourselves understood understood conscious of time let's let's turn some
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some questions which are definitely in your wheelhouse they would say so rail reform John the UK government proposed
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through the Williams railview some significant reform of the rail sector most significant probably in the last 30
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years because of its well reported failings weaknesses of the current
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structure and I'm just wondering how much is the O A contributed to the challenge that the industry now faces
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and what roles do you think it will play to support Improvement in Industry outputs and Effectiveness going forward
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if this if there is this major reform agenda underway how do you see that the
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O will play its part in that yes so as you say m this has been on for some time
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the debate over ra reform and particularly the instruction of legislation to set up a new entity Great
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British Railways and and the idea behind that was to be effec as the government said to bring track and train together
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you know we would we'd have one organization umbrella organization that was responsible for track and train uh
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where at the moment we much more of a split between what might for the infrastructure and and the train operators and as part of that we we did
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have a a long discussion with with government about what what what that would mean for the the office of RA Road
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what would that mean for us what would we need to do differently and so what what was agreed at the time was that if
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this organization was set up Great British Railways the government wanted to have our role expanded so that we
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were basically a regulator for the whole of Great British Railways so whatever Great British Railways did one regulator
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would sit above it and so you'd have the government You' have the regulator you have Great British Railways um and
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that's that would that would have required us to make some quite big changes we would have needed to change
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some of our capabilities we do need to take on capability we don't don't currently have so we had an agreement to
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to do that but in practice uh the legislation isn't going to be introduced in this Parliament just for sort of
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wider listeners it may well be that it's coming um but in the short term it's not but I
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suppose the only thing I'd add on that is that it does raise a sort of in regulatory terms what what's often
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forgotten is which organizations are outside Great British Railways because
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as a regulator we we what what people want out of a regulator is that impartiality they go to a regulator
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because they're looking effectively for someone who would would take a sort of rational public interest View and so I
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do find that sometimes is presented as if every rail company or infrastructure manager or whatever in
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Britain is inside would be inside Great British Railways they wouldn't all private freight companies would be
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outside Great British Railways and hence from from my perspective it's it's it is
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what I can do to support the government in its reform setting up Great British Railways oversight and Assurance around
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Great British Railways but I also need to think about well what what protection do the freight companies need because
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from their perspective they're just facing and even bigger monopolist so if you're if you're a
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relatively small company you might reasonbly ask well what's the regulator going to do for me and that's led to
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some actually quite interesting challenges in terms of we we have performance incentive systems in in
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Britain so if the infrastructure manager causes more delay minutes the train operators get payouts and things like that and the government wanted to switch
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off those mechanisms for companies inside Great British Railways which is is is fine and that will be done but
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actually the freight companies outside of Great British Railway wanted to keep them because they didn't trust great Bri Railways so for me there's there is a
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again there that sort of balancing act we can't just look at for one part of the of the sector we have to try and
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find in this case a hybrid system where we have one system for companies inside gbr and a system for companies outside
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gbr and to me that's you know that's a pragmatic way of of of dealing with the
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an evolving situation and you talked about the new capabilities if you become
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that regulat for Great British rers in due course that new capability which will be I I guess looking after train
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the gbr's role with regard to train operators do you see I'm I'm trigged with going forward going looking back
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what else might change in the way the O operates the way it addresses its Mission if the whole industry is going
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to be the intention is to do culture change adopt automation deliver more seamlessly and better almost and be you
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know be more strategic perhaps in in the way it works how does the O change the way it operates as well as its scope of
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operation if you want yes we we we looked to this we had um there was quite a debate of what you might what was
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called a sector Target operating model what would the whole rail industry look like after reform and then for each
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organization its own Target operating model so one of the things we we did was to look at how we would organize
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ourselves as you say exactly how would we work what what what would we need in changes in our
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culture at this stage that's that works never because this reform isn't going ahead that that work's never sort of
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been discussed in detail externally it's effectively sitting there and it's I think probably inappropriate to to talk
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about it until we know the reforms are are are going ahead which we'll just have to wait for but uh but um yes we we
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we have we've debated that we we would need to shift in in certain ways we we'd have to have slightly different
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relationships with government probably there' be uh maybe s changing some of the lines around accountabilities in
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certain areas and that would drive different behaviors maybe in governance Etc so you know the quite a lot of work
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did go into this at the time and if and when it was required with all this would um this would all be sort of rebooted
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and we would we would be coming back to it understood step and I both had had a
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role to to support network rail in some Readiness I guess for the the next
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control period which were just about to end yourselves the O gave your final
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determination at the end of October uh uh and there is still you know some people believe the the determination is
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perhaps better than it might have been but there is still quite healthy challenge to network ra to deliver
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efficiency and improve outputs Etc and one of the aspects that they were looking at was Market Le and whole
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industry initiatives to try and help them better get improved confidence around of cost efficiency and where
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savings might become and I'm wondering how when we don't know the answer we are going to have to think laterally
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radically perhaps innovatively creatively how does the IR support that
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creative agenda to try and realize the benefits certainly in terms of something like whole industry performance we the
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split between ourselves effectively with's performance and government focusing more on the train operators
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there is no doubt that we could we could all and I'm including the IR in this all Sol and government do better in terms of
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joining up on that with or without rail reform we we didn't we just this is a s
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sort of danger that you you just sort of wait for for something to happen you well you know there there's not a lot I can do until Railway reform comes on and
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and it's just not true and and it almost allows a little bit of a little bit of a cop out but if you've got an
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infrastructure manager on the fiveyear planning cycle and train operators on an annual business planning cycle and you
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want to ask the question how are we planning for year two performance you've got a problem but that's a solvable
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problem in a sense it's a solvable problem without legislation and so the the it just come just come back to
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directly to your question the the thing that we particularly want to focus on at the moment is okay let's now go back to
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what we can do without legislative change it cannot be that effective that everything has to stay the same as it is
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now it just doesn't and so and and hence in that that whole industry performance
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area that that's certainly something which we believe we can do quite a bit more on with government that we're doing
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now and and we are having active discussions about that so that's the number one priority of most users the
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performance of the system are you know in Cally is is your train on time yes or no that's what people want to see us us
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to do and that's what I believe we we should we should be focusing on Stephen any any Reflections from the
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whole industry market led work that you were doing and and perhaps you know the one thing that you might say that networ
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ra might ask John or if they haven't already asked or anything thing that you think might be the differentiator to
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unlocking things it's a radical idea I mean you know obviously Nal rail has very much been asset condition Le and
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this going to something which is more Market Le I think everyone needs to
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recognize is is is a significant change and and it was what was driving that
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change was potentially different use of the network by the consumers by train
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operators so I mean I think it's still a little bit early and you know I go back to one of John's points about five year
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Rail and oneyear train operating business plans I do wonder whether part of the the answer is is better alignment
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between those which would allow perhaps some of these Concepts and new ideas to
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be investigated in a bit more of a joined up way I think I think that's a
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really good point that that there probably is more work to do there because I won't mention any names but I did try a a brief test on people about
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what do you think is meant by the market Le proposal and I would say there was quite a wide range of answers in in terms of what
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people actually thought it would mean in in practice partly depend I suppose
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maybe on what they hoped it would it would it would it would mean but um it is an area worth focused on more because
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we we are as a railway in Britain we are short of money we have lost close to
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something like 750 million pounds in revenues from from industrial relations
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problems since last summer that is a phenomenal sum our revenues are way down anything they were in covid and hence
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the idea that we shouldn't look at how to boost revenues and not was clearly be be wrong but what it actually means in
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practice and also the politics around it because some sometimes what what depending on how what your view of these
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proposals are if you're saying actually we need more higher Revenue generating trains on the network and fewer lower
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generating trains Revenue generating trains on the network that's that's a profound political choice I know that's
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not what always people mean about it and some of it could just be about giving people more visibility I remember um I
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know real often say well this is partly just about making sure Engineers realize that they're about to spend 40 million
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pounds on renewing this bit of the network which you know generates literally a couple million pounds in Revenue a year or something like that is
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is that really essential not not that don't do it because it might be necessary for safety Rec but but you
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know is he really essential I think that's quite a good discipline actually but it so it depends Steven was I think saying that it depends how far you take
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some of these things because if it's about which trains go on the network well actually that's entirely under
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almost entirely under government's control today those decisions could be decided now no no legislation is
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required to do it uh franchisers decide the franchise operators operate the vast majority of trains in the country and
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you could sort of change that with no major structural change in it at all but and I think that takes us to a point
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that eventually you go beyond analysis and these are these are really difficult
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political choices and in a sort of relatively densely populated country
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where with lots of conations where people rely on on networks on the rail network and also with increasing you
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might say interest at a more devolved level about the relationship between different parts of the country Etc these
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are actually big political questions that they're they're Way Beyond just analis and I I think the idea that if
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you if we set up the new Great British Railways company you could just Implement those sort of changes almost
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without political oversight I just find a little bit unlikely certainly I have
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extensive dealings with MPS I mean as as a an independent regulator I we are ultimately accountable to Parliament I
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can be called in front of parliamentary committees and I'm I do get called in front of committees I meet lots of MPS
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and at the local level these things really really matter I think one of the
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es is how those are big questions as you certainly say and they're probably multigenerational or multi- Parliament
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perhaps so how do we help decision makers navigate what are electorally
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sensitive topics and choices yeah yes absolutely and there has been some good
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work done uh I think in the industry setting out some of those choices because yeah if you don't put the
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options on the table you're quite right how how would any politician know what they were choosing between so I do think
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some good work's been done there and and I know that more more could be done but
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generally speaking politically in in Britain that there's often quite any extensive debate about relatively small
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variations in train services around the country so so it depends on suppose when
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people say Market later how how big are you planning to go here this and and going back to the point we discussed
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what exactly does it mean is is it means is it indicative just trying to give you a pointer or actually saying it's a
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really big driver of strategic change that that would that's a different way of look it it's a very good segue to my
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next question I can't let you get pass without asking a question about hs2 so the government has decided not to
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proceed Beyond phase one of the new highspeed line hs2 and is canceling Phase 2 a and 2B so the Ser Network
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won't extend beyond Birmingham John what's the ramifications for you you can
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express an opinion on the hs2 decision if you wish but what's the ramifications for in enhancement development and
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delivery perhaps on the conventional rail network given that decision because it it has
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ramifications yes yes it does I mean the decision on hs2 is a is a critical choice and and we don't have any
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involvement in those political choices i w I won't I won't comment on that but but so it is a ramifications which I think we do need to have a view on and
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and there are it's interesting that a lot of people perhaps naturally are focused on what else could you do with
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the money in say building new stations or electrifying parts of the network or
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things like that I think again there perhaps the more public facing glamous schemes and I can tightly
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see why people are interested in that but going back to well okay that and some of those again are political
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choices but going back to what what do you expect of a regulator here we just need again to look at the existing
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Network and where we find ourselves without going into to understand detail geography of of of this where we find
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ourselves is now with a we have a rout running from London North heading the sort of central western side of Britain
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heading up Scotland or we've call West Coast Main Line in effect and you've got sort of s bit of that which is is going
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to have a highspeed line running alongside it and then the rest of it w't and that raises some some quite big
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issues in terms of capacity as as as trains come off the highp speeded line and have to join what sometimes called
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the conventional Network or whatever you want to call it that there there are now quite clear issues around around
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capacity and depend on the level of capacity that can be generated choices and and that's an area where Network
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rail now are doing along with along with high speeded to and and others are doing I think some quite really important and
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essential work to to look at that I it's you know again probably a bit less glamerous than some of the some of the
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schemes people are talking about but that that's an imperative also for us what happens at ouon station there's
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quite a controversy about what exactly happens around the main the main station in London and and an intermediate
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station at oldo com and quite what what sort of role these stations are serving in the new word and how how they fit in
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with the conventional tiet old at common how this fits in with conventional services and the these are real real
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sort of nuts and bolts stuff now for for the the rail network so that they're probably more of our our area's interest
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than than perhaps some of the big enhancement schemes you you refer to yeah I mean do do you think it has
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ramifications or repercussions for how you will monitor the beginning years of cp7 for example that you might that you
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know Network rail may say hang on a bit we we're not we can't we shouldn't proceed with that renewal until such time as we know it isn't a hunt
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enhancement this at this stage and it may be that I changed my mind over time
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at this stage I don't think so not not in the not in the early stages if only for the reason that it may take some
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time to to get decisions on on what we need to do there because as just as you
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implied there the decision is almost certainly going to well it will cost money and there are plenty other claims on government funding we've got an
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election next year almost certainly both political parties have their own all
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political parties were their own spending priorities so I I suspect there's some way to go there and there's expectations that some money might be
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spent on other schemes around the country so I I don't actually think might we probably even got to the starting line of of that debate uh I
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just think that it's going to take some time a lot of options have being looked at before and I don't recall any of them being particularly easy as options so I
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think we've got some way to go and I don't I don't at the moment see it having a major impact on the early years
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of of the next control B the only thing that's worth pointing out is that there's always always an assumption well
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you surely Network rail could find the money from somewhere type question whenever you've got a big company especially company spending more more
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than 10 billion pounds a year there assump we surely they can find a bit more money from somewhere one of the features of the financial settlement for
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the next five years is that the risk funding well not only is it been badly affected by inflation as indeed has happened you know across the world in
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many sectors but that the risk by because of very fairly tight funding the risk funding is actually quite low
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relative to the size of of the business and spend and indeed the RIS so there's
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not some there's not a sort of big big fund sitting there waiting to fund major works there I think we're in the sort of
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quite a lot of analysis to be done then some no doubt as ever quite quite tough prioritization to be done okay thank you
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before we go to some quick fire questions Stephen any any reflection or question that you might have for for
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John at this point yeah I I mean I I guess just looking forward with with all the
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changes that have come in what what do you see as as the biggest challenge going forwards John in your role the
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challenge what from my experience and this is just based on my own personal experience the challenge is is always
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for the organization to stay relevant and I think you could look other sectors of the economy where organizations have
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been perceived not to say stay relevant in changing circumstances and I think we
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have demonstrated repeatedly and into the way we've changed our role over time the way we Flex you know we not that
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many years ago we were regulating a private Company Limited guarantee then we moved to regulating a nationalized
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industry so you have to adapt you you have to stay relevant you you have to
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look at the problems around you and be part of a solution to those problems rather than just saying well we're the
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later you know we do it this way and uh and good luck to everybody else and and certainly while I'm in this job I'm
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absolutely determined that we will continue to change continue to evolve with the aim of staying relevant so we
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we can serve the the public interest and hence the users and the systems and and
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taxpayers right now conscious of time John I've got some quickfire questions I
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don't know whether the answers are think be quickfire or not but uh let me try let me try these I've not done this
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before is effective regulation an art or a science it's quite a bit of art to it
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I think but obviously there has to be some science to it but I I think particularly when you've got a a lot of
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a public sector environment I suspect there's probably a slightly higher degree of art what's the biggest
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evolution in rail regulation you've seen since rail privatization I I think just in terms of
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the functioning of the the regulator it goes back to discussion we had earlier about bring bringing together the health
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and safety elements of Regulation with the economic regul I I know it's not something which permeates the public
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Consciousness I don't think particular reason why why it should but in terms of just the difference those brings I I I
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think that was pretty profound the other one was when Network rail effectively moved into the public sector I remember
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I remember people distinctly remember the time some people saying well you know it gets a lot of money from the
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public sector anyway so just so now it's now it's sort do nationalized industry I can't see any change I mean what did it
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mean it meant that Network rail will be Consolidated into the Public Accounts as
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soon as you are Consolidated into the Public Accounts of a government your life changed dramatically overnight you
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are subject to processes procedures that you never saw before now now run
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effectively an extra set of accounts uh that and I that was one which I I do
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think was massively underestimated in terms of the profound impact that that
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have and he still having to this day i' sort of Shar that it was a a decision but it took I think it took two years
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before the The Narrative or the rhetoric about the the change was realized I
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think I think you're right that's was that was looking back about rail regulations since privatization what
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would be the one thing you'd like to see emerge in rail form if legislation comes forward and the next government is up
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for rail reform is there something you'd have on on your Christmas list what would you like well I've stayed all all
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the time on rail reform we we've tro a fairly careful line because effectively this this is government policy and so
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clearly clearly if the government Chang its policy on on rail reform or you got a new government coming in with a different policy on rail reform I just
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have to preserve the fact that we we are an independent impartial regulator you
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we we we we don't contest with with government policy Direction whatever
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happens though I don't think at the moment anything gets around the fact that we
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we are at the moment in in a constrained funding environment on Rail and and if that's not going to change then the need
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to prioritize will remain and hence that the importance of what you might call well-informed
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prioritization uh people understand the choices that are being made and why I just don't see that going away in in the
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slightest is going to remain as as a as a major issue right last one you might have you might play the same argument
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again given the national infrastructures commit commission recommendation that
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the government should replace tfl's annual funding with fiveyear settlements
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would you like to take up a role overseeing tfl's efficiency and expenditure that's actually a really
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topical question because For the First Time Ever we about a couple months ago
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we we did provide a report to to tfl the Department of Transport on for transport
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and the treasury in Britain around the the cost of the capital program next
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year for tfl we were asked to do this the three organizations effectively asked us to do this it's the first time
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we've ever done what you might call more of an economic role with with tfl we we're responsible just for particular
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International listeners we we're responsible for health and safety on pretty much every part of the rail network in Britain tfl runs a lot of the
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tube trains the underground trains and we do health and safety on on that as well but we've never had a role beyond
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that and and some of that came out of a more General discussion about the future
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funding framework for for tfl uh because like all funding Frameworks in in any
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any walk of these things are hotly debated and but the question was the question we has been some discussion
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about is that would tfl the government in general all both or all be better off
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under a some kind of regulatory environment than the current environment would would that actually be better for
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the organizations for the end the end users of the system or not and so that we have had some some conversations
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about that it is it is really really interesting because there's a different political structure for tfl there's
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there's a separate mayor a separate assembly so there's different structure but we there has been some work done on
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that and and I think it just interesting this literally a couple months ago we we we sent a report about our cost analysis
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for tfl and the government so I I don't know what's going to happen and ultimately it'll be decision for for
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government and for tfl but as as I've yeah we again we s we are we're here to
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serve in that sense and if if we're asked to to do that do such a role then obviously we we would we would we would
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do it but I suspect there's there's quite a long go long way to go and discussions like that you'd end up picking up new capabilities for buses
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and cable cars at least well indeed one of the issues would be about when when
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we say transport fund and do do we mean all modes for transport fund exactly what would it cover and and and so on so
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yes the um yes and if that if that required whatever the decision would taken we would have to look at
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capabilities and also just the very different environment there and also we course we have different models what exactly do we mean by sort regulation
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regulatory settlement we we have a different model for National highways compared to network Rail and there are
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actually many different ways of cutting these models and something more more tailored to those precise circumstances
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of tfl and what the government's looking for too might be better than any of the current models okay right we are out of
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time I think Stephen any last thought or reflection before we sign off I think
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thank you to John and you know a reflection of how important the the the
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life and the role of The Regulators within industry but also to each
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individual consumer uses the transport system really does go to the heart of that thank you yeah certainly I I'm
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taking away John the the important role that the O is playing and wants to
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continue to play as that independent voice for different users uh but I'm also taking away some some other things
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I've heard which in our recent series that we were doing here in the UK on recab rating Britain's Railways was
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changes possible reform may or may not come and Great British Railways may not be the Panacea solution so it's
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important that energy is sustained and change is sought now frankly rather than
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waiting so John thank you very much for sparing the time it's been a great conversation I didn't didn't think we
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would go as long as this but we did I could have asked more contentious questions of you like with do you want
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to get back into Health economics or not I suspect I've left it a bit late now
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Mike and I do enjoy working in in railroad I say I've really enjoyed it thanks so much yourself Mike and Stephen
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it's been really really interesting conversation so thank you uh and this is you can find this podcast and other
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pieces of our voices of steer and voices of Industry at steer group.com I look
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forward to uh engaging with you again thanks very much everybody
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n
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