Reforming our Railways: Putting the Customer First

"How do we make rail travel more affordable? What can be done to get more out of our existing rail network? How do we improve and expand our rail network when money is tight? These simple yet fundamental questions are what this Command Paper is about.

We all know how important our railway network is to the prosperity and wellbeing of this country. But we too often find ourselves frustrated when the cost, punctuality or comfort of rail travel disappoint.

I believe that Government and the rail industry can and must do more for the passenger and the taxpayer. So we will.

For our railway to be more affordable, it must also be efficient, but Sir Roy McNulty, in his Rail Value for Money Study, identified inefficiencies worth £2.5-£3.5 billion that are being paid for by passengers and taxpayers. I will not allow this to continue unchecked. Network Rail is already due to deliver £1.2 billion of genuine efficiency savings by 2014 with at least a further £600 million by 2019 but the industry as a whole needs to become less dependent on Government subsidies. The industry should aim to fully close the efficiency gap identified by Sir Roy by 2019.

This paper sets out how we will address this challenge and states clearly what we will do with the savings: reduce and then abolish above-inflation rises in average regulated fares, combined with lessening the burden on the broader taxpayer purse. Taken together with my decision to limit the most recent increase in regulated fares I believe this will have a real and lasting impact on household budgets.

But this Command Paper is not only about affordability. Rail franchises will be reformed with greater transparency around costs and efficiency so that taxpayer subsidies are concentrated on the less profitable routes that remain crucial to communities.

We will move to a more transparent, modern and flexible approach to fares
and ticketing. Working together with industry we will expand smart ticketing technologies to give more passengers the kinds of benefits that passengers in the capital already enjoy with Oyster cards. We also want to introduce new kinds of season tickets, recognising the reality that not all commutes take place five days a week during rush hour.

Making growth happen means there is no alternative to investing in greater capacity and better connectivity. A new national high speed rail network announced in January will deliver the quantum leap in capacity needed on Britain's major north-south lines in the decades ahead. While today we are reducing crowding, cutting journey times and improving the passenger experience by funding thousands of new carriages across the country, electrifying swathes of the railway network and redeveloping many of our great railway stations. The Chancellor's Autumn Statement saw £1bn invested in north of England rail services, freight and measures to prevent cable theft. In total, we have invested £18 billion in this Spending Review period alone.

We want everyone working in rail, be it management or front-line roles, to be involved in all of these reforms. If rail can deliver savings by cutting costs and growing demand there is real potential to grow jobs in a crucial and vibrant industry.

Network Rail is rightly taking steps to reform corporate governance - including its management incentives package - so that it is more accountable to passengers and freight customers. We welcome its commitment to appointing a Public Interest Director, to ensure the interests of taxpayers are articulated during board discussions. Network Rail is also giving greater decision-making powers to its regional Route Directors, making it more responsive and more focused on operations.

The history of Britain's railways means that for far too long the industry and Government have obsessed about who pulls the levers rather than why. This Command Paper is about placing the passenger back at the heart of everything the rail network is about. By working together on this package of reform, I believe industry, regulator and Government can generate the savings and change we need so that we can all look ahead to a network that not only conveys passengers safely, quickly, punctually and in comfort but one that is affordable and efficient."

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