Great British Rail’s (GBR) long-term business plans need to be informed by short-term funding payments as long-term funding commitments are “unrealistic”, Network Rail chiefs have said. There is.
GBR is the working name for the Integrated Rail Authority (IRB), which will be established when the Rail Reform Bill is enacted. This will bring together the UK's rail infrastructure and services under one 'guiding philosophy' and is expected to make the rail network more efficient and run smoothly.
The Rail Reform Bill is currently in draft form and is undergoing pre-legislative scrutiny by the House of Commons Select Committee on Transport, which heard oral evidence from Network Rail chief executive and GBR transition team leader Andrew Haines and Network Rail chairman Sir Peter Hendy on Wednesday 22 May.
The main topic of discussion was the business plan that institutional review boards are required to create when they are formally established. Interviewees were asked whether this was the right approach, as the bill does not provide for deadlines or consultations for the development of a business plan, leaving room for institutional review boards to change the plan after publication.
Excerpt from the draft railway reform bill including provisions for the IRB/GBR business plan
Hendy said the “generalization” of the direction in which business plans are created is “very helpful” because it allows the person writing the plan to interpret what the plan should include. ” states.
“You want to look at the long-term plan. [with] “The short-term budget and business plan is an interpretation of that,” he added. To do so, it will be necessary to “meet the government's demands on the railway's bottom line in terms of profit and loss.”
“I don't think it's that difficult,” he said. “It's so obvious to me that I don't think I need to say it.”
Hendy said the business plan must be detailed enough to tell the secretary of state and Congress what the railroad is doing.
“It would be ridiculous if it were so high that you couldn't see what individual investments were going to do,” he continued. “And in fact, it would be a good thing if individual investments were more transparent than they are now.”
He was asked if he needed a more detailed 10-15 year business plan.
“I think it’s inevitable that we will need more long-term planning, including a very clear short-term plan for what the railway is going to do over the next two, three, four, five years. “There are elements,” Hendy said. He said. “Such large investments need to be planned long in advance.”
Mr Haines commented that the Department for Transport (DfT) had asked his team to develop a long-term strategic plan looking 20 to 30 years into the future, but this did not set funding requirements.
“I'd like to say we've had checks from the Treasury for 10 to 15 years, but it's not credible to think we're going to have that level of certainty about operating spending,” he said. “Indeed, when railroads were experimenting with very long franchises, […] In the end, we created a break clause because no one would want to be tied to a flow of funds for 10 to 15 years without being able to respond to shocks and changes. ”
He added that while “understanding the interaction between long-term strategic planning and the five-year funding cycle is a challenge to be addressed,” there was no need to include this level of detail in a rail reform bill.
“But I'm convinced that that mechanism is absolutely necessary and will be very important,” he continued. “The importance of long-term funds means that railways can […] Therefore, it is very important to have visibility into it and understand that costs are funded and that you are responsible for delivering revenue benefits. ”
Mr Hendy added that Network Rail, which is committed to a five-year funding period known as the control period, has clearly “created a situation where money is spent more wisely”, giving confidence to the supply industry.
“You can make the case for long-term investment, but by the same token, governments will want to do some short-term budgeting just because they need to spend money on other things as well,” Hendy said. Stated. “You can't expect to put all your long-term operating capital into it. That wouldn't be realistic.”
DfT View
At the next session of the Transport Select Committee, Rail Minister Huw Merriman and DfT Director General for Rail Services Alex Hinds were asked for their thoughts on the requirements for a GBR business plan and what form it might take.
Mr Merriman said it would work similarly to the current Network Rail control period.
“The plan is first decided on the high-level output specifications, how the statement of funding availability is going to work, and then that plan is proposed,” Merriman said. “I think it’s actually working pretty well in that regard.”
He continued: “What I want to make sure is that when one period ends and the next five years starts, there's not some sort of misalignment. We've heard about those before. I've been there before.
“And, of course, we also take into account spending periods that fall outside of these periods. And we also have an annual report on the private sector.”
“But I expect it to be on an iterative basis.” [and] I think if you think about all the tracks and train operations together, you'll have the ability to plan five years ahead. There's a lot more that can be configured up front as we're bringing passenger services into that realm as well.
“So I’m happy with the way things are.”
Mr Hines added: “Network Rail currently undertakes its five-year business planning process in a highly consultative and transparent manner and I am confident that GBR will do exactly the same.
“Of course, the key win is the fact that this will be an integrated business plan covering track and trains, which is a huge step forward in building a more coherent railway across the UK.”
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