1. 1 The Initial Industry Plan England & Wales

2. 2 Agenda 09:00Tea and Coffee 09:15Introduction (Paul Plummer) 09:25The Initial Industry Plan (Michael Roberts) Headline messages Presentation and discussion 10:00Delivering better value for money (Graham Smith) Industry supply chain perspective (Jeremy Candfield) Presentation and discussion Growth and sector strategies 11:00Passenger (Richard Davies) 11:15Freight (Lindsay Durham) 11:30Choices and options (Calvin Lloyd) Presentation and discussion 12:15Next steps and Q&A (Paul Plummer) 13:00Lunch

3. 3 The Initial Industry Plan: Headline messages Michael Roberts, ATOC

4. 4 The Initial Industry Plan - context The IIP has been developed in the context of: Government policy End user needs Long term planning context (RUS programme) Sustainability The railway today (costs, revenues, outputs) The Government’s vision is for a transport system that is an engine for economic growth; is cleaner and greener and improves the quality of life in our communities. A system in which rail has a key role to play. With a safe, customer- focused rail system that supports a growing economy, by improving capacity, connectivity, performance, and productivity. Contributing to our wider climate change objectives, by reducing transport’s carbon emissions, and encouraging modal shift from road and aviation. And delivering value for the farepayer, the freight customer, and the taxpayer - as well as playing its part in reducing the deficit. The Rt Hon Philip Hammond MP June 2011

5. 5 The IIP – a plan to inform choices The IIP is the industry’s view of the future of our railway (2014 to 2019). It also: –looks to meet the challenge of improving the value for money of the railway identifying significant efficiencies The railway is a growth industry - 41% passenger, 60% freight over past decade with more predicted over CP5 (15 & 30% respectively) Infrastructure investment is an economic driver and continued railway investment can deliver sustainable growth –the IIP presents funders with options for growth The combined effects of increased demand and lower costs creates headroom for governments to make real choices –balance between subsidy, investment & fares

6. 6 Value for money Industry will reduce the costs of the railway by £1.3bn per annum by 2019: –16% of efficiencies to be targeted by Network Rail over CP5. Includes things like: devolution, alliancing, greater contestability of projects operating strategy innovation and new technology –Significant savings from train operators but dependent upon new franchising regime and realignment of incentives and could include things like: improved supply chain management greater innovation at bid stage enhanced staff productivity

7. 7 What the plan would deliver Efficiency: –make the railway cheaper by £1.3bn per annum by end of CP5 Investment: –£4.5bn of committed schemes –£4.9bn of investment opportunities with 4.5 to 1 benefit to cost ratio –combined provide 170,000 extra seats at peak times Safety: –maintain and improve passenger, public and workforce safety –reduce safety risk at level crossings by 50% Performance: –maintain high levels of reliability and safety, focussing on areas in particular need of improvement Freight: –provide capacity for a 30% increase in freight (tonne kms), equivalent to 15,000 daily lorry journeys Journey time: –special fund approach to delivering better journey times, plus specified schemes identified through the RUS process Carbon: –further network electrification –25% reduction in carbon emissions (per passenger km) and 500,000 tonnes of CO 2 from lorry journeys

8. 8 Investing in better outcomes The IIP seeks to inform funders of choices to deliver better outcomes in terms of economic growth, user satisfaction, safety Investment in rail is an economic stimulant and some £4.9bn of investment choices, all representing good value for money (4.5 to 1), are recommended Some of these outcomes to be delivered by a fund approach with industry- wide governance CP5 Expenditure £bn (2011/12 prices) Committed programme4.5 Specified schemes2.1 – 2.4 Funds2.5 Total9 – 9.4 Possible funds: Level crossing safety fund (£300m) Strategic Freight Network (£350m) Station accessibility fund (£150m) Station improvement fund (£150m) NRDF (£250m) Passenger information fund (£200m) Journey time improvement fund (£200m) East Coast improvement fund (£500m) Innovation fund (£150m) CP6 development fund (£100m) Performance fund (£160m)

9. 9 Potential investments OutcomeExample investmentsContribution to outcome Reduced costs and a more efficient railwayElectrification schemes such as Great Western, North West England, Midland Main Line, Cardiff Valleys and North Trans Pennine Network Rail operations strategy. Other operational efficiency schemes Long term reduction in whole industry operating costs Continued economic growth in London and the South East Thameslink, Crossrail, Reading remodelling. Other capacity and station schemes in the south east Provision of additional capacity to accommodate forecast demand growth Stimulating the northern economy through improved access and connectivity to labour and markets Northern HubProvision of additional capacity and through journey opportunities Improved journey times and connectivity between other economic centres Targeted journey time reduction schemes, including line speed improvements in the East Midlands, Yorkshire, Bristol and Oxford areas Reduced journey times on key interurban flows A more efficient, greener and safer transport systemStrategic Freight Network, New and cascaded electric trains including the Intercity Express Programme, Electrification schemes (see above) Stimulate modal shift from road and air to rail. Replacement of life expired rolling stock. Fuel efficiency and alternative sources A safer railway for workers, users and general publicClosure or upgrade of level crossingsReduction in safety risk at level crossings Improving the quality of the service to customersPassenger information improvements.Station capacity and access enhancements. Improved passenger information Improved accessibility Addressing identified end user needsPerformance fund Journey time fundPerformance improvement, Journey time improvement

10. 10 Summary The industry can make the railway much more affordable – cut £1.3bn from cost of running the network by 2019 Investment in rail is an economic stimulant and some £4.9bn of investment choices, all representing good value for money (4.5 to1), are recommended Strong growth will continue and this, combined with lower costs, means real choices for governments of the balance between investment, fares & subsidy The industry looks forward to discussing these proposals with funders and the ORR to inform the periodic review and franchising processes

11. 11 Discussion

12. 12 Delivering better value for money Graham Smith, Rail Delivery Group

13. 13 The value for money challenge The IIP reflects industry’s commitment to: –Deliver efficiencies in line with the Rail Value for Money’s “should cost” low efficiency scenario by the end of CP5 –Undertake further work to identify opportunities to move towards the RVfM ‘high’ efficiency scenario This will result in a much reduced subsidy requirement by the end of CP5. This assumes that fares will be increased at an annual rate of RPI + 1% (after three initial years of RPI + 3%). However, the industry recognises the clear policy choice for funders whether improvements in efficiency are reflected in lower subsidy, or lower fares.

14. 14 Cost reduction The industry is developing plans will which deliver a real reduction in the overall cost per passenger kilometre, whilst delivering additional outputs Strong growth will continue and this, combined with lower costs, means real choices for governments of the balance between investment, fares & subsidy Industry plans enable a reduction in industry costs from 20.2p per passenger km at the end of CP4 to 17.3p per passenger km at the end of CP5 With the top end efficiencies suggested in the Rail Value for Money study, this could reduce further to 15.8p per passenger km by the end of CP5. Rail Delivery Group will examine cross- industry opportunities that could contribute to this

15. 15 Improving value for money – Network Rail’s plans In aggregate, delivers 16% reduction in costs by the end of CP5 (compared to expenditure in CP4), consistent with the indicative savings assumed by the ORR at the last periodic review Changing Network Rail: –Devolution –Deeper partnerships with train operators and supply chain –Greater contestability of projects –Better defined & stable work banks –Asset policies, standards & operating rules Reflects a number of investments to reduce operating costs including: –Network operating strategy –Asset information strategy & intelligent infrastructure –Electrification

16. 16 Devolution Decision making and management accountability is being devolved towards more local geographic route based organisations Network Rail routes will be empowered to interact with their customers in the most effective way to deliver outputs at the lowest possible whole life, whole system cost Routes are accountable for: –operations and maintenance activities –development of asset plans –delivery of small and medium size projects –delivery of outputs Some activities will remain centralised, particularly where these enable broader network benefits, or where economies of scale and standardisation can be achieved

17. 17 Alliancing - TOCs and Network Rail An alliance –is a relationship between Network Rail and one or more train operators –involves the sharing of complementary disciplines, technology, products, services, organizational structures, marketing, and financial resources Network Rail and a number of operators are negotiating co-operative agreements that align behaviours through shared incentives to work more closely together Improving value for money will be achieved by unlocking the costs inherent in the contractual interfaces and encouraging behaviours that are consistent with ‘one team’ rather than two contractual counterparties.

18. 18 Projects – alliancing & contestability Deliver projects faster, safer and better value Create performance that can’t be achieved individually Create an environment where results are rewarded Enable partners to help us shape solutions and deliver them Empowerment to drive out bureaucracy, inefficiency and waste Create a platform for innovation and leading edge thinking Create common goals with no “man marking” Create stronger client capability Provide for alternative forms of competitive project delivery

19. 19 Route Asset Management Plans (RAMPs) Ongoing optimisation of asset management policies to minimise whole life cost Policy improvements developed using improved asset-specific data and understanding of intervention impacts and costs. Supported and enabled by bottom- up asset management plans at Route level, applying policies more precisely and reducing intervention cost –Policy improvements have enabled > £700k benefits to date –First draft CP4 RAMPs completed early 2011 –CP5 work leading to greater understanding and improved asset management, including use of lifecycle cost models –Improved RAMP template, systems and processes going live in November to facilitate improved RAMP development in routes and in the Strategic Business Plan

20. 20 Improving value for money – train operator’s plans The current franchising process secures cost effective delivery within existing framework The efficiencies delivered by train operators will, in part, be dependent upon reforming enablers, specifically to the franchising process The RVfM study highlighted the potential for savings in the following areas: –Wider implementation of driver only operation (DOO) –Ticket retailing –Operational improvements –Investing in workforce flexibility –Revenue generation –Improvement in train utilisation The graph illustrates in the unit cost trajectory the anticipated TOC cost savings that could be delivered subject to reform. Note that the total cost increases as a result of the provision of additional outputs to accommodate demand growth.

21. 21 Enablers to train operator efficiencies Deep and wide implementation of franchise reform, including: –longer and more flexible franchises –improved risk sharing (e.g. ending the cap and collar regime), helping to improve incentives to train operators to grow revenue –National Rail Franchise Terms changes supporting other reforms to help pursue staff productivity gains a more conducive environment for Network Rail / train operator alliancing: for example an improved incentive regime (such as efficiency benefit sharing as proposed by ORR) fares regulation: including future fares regulation and smart ticketing opportunities The opportunity to replace an out of date Ticketing and Settlement Agreement to realise savings in retail costs

22. 22 The Rail Delivery Group’s priorities Graham Smith, Rail Delivery Group

23. 23 Terms of reference of the Rail Delivery Group RDG will focus on industry-wide issues in the context of the need for improved service to rail users and value for money to the taxpayer RDG will not duplicate or over-ride the primary accountability for delivery in the UK rail industry (which remains with the passenger and freight train operators and Network Rail) or the need for much stronger collaboration between these companies at a local level RDG will co-ordinate the objectives for key cross-industry groups including National Task Force (NTF), Planning Oversight Group (POG) and Technical Strategy Leadership Group (TSLG) RDG will conduct a review of the recommendations made by Sir Roy McNulty in relation to the potential establishment of a Systems Agency and a National Safety Task Force, including transition arrangements and potential changes to RSSB RDG will conduct a review of all other cross-industry groups to improve their efficiency and effectiveness A key initial priority for RDG will be to review with an intent to sponsor cross-industry work by Planning Oversight Group in preparation for the Initial Industry Plan (IIP) which is due to be published in September 2011 including the scope for improvements in Value for Money and overall industry costs

24. 24 Priorities of the Rail Delivery Group The Rail Delivery Group reviewed the 700 recommendations and statements made by the Rail Value for Money Study Decided priorities based on –The potential for increased efficiency and lower costs –Fitting with RDG’s remit (cross-industry rather than single company issues) –External priorities –Reasonable chance of success Working groups have been set up drawing on RDG members and resources, supplemented by additional advice

25. 25 Priorities of the Rail Delivery Group Establishing leadership and credibility through behaviour, communication and demonstrating progress with other priorities Asset, programme and supply chain management Commercial agreements Train utilisation Technology and innovation Rail Systems Agency Passenger information

26. 26 Priorities of the Rail Delivery Group The Rail Delivery Group is gathering information on the enablers – the things that others have to do to facilitate improved efficiency The Rail Delivery Group is also conscious that that there will be other issues to tackle such as: –Passenger rolling stock –The low-cost Regional Railway –Information systems Recognise that each of the areas being tackled by the Rail Delivery Group is complex and solutions have evaded many that have tried before There are no instant answers Finding and implement solutions will take time – the Rail Value for Money Study acknowledged that benefits would not be achieved until 2014-2019

27. 27 Supply chain perspective Jeremy Candfield Railway Industry Association

28. 28 An efficient interface with suppliers is key: RVfM efficiency savings (funding basis) in 2018/19 by area of study (£m 2009/10 prices) Study areaSubjectLow caseHigh case AObjectives, strategy and outputs90110 B & CLeadership, structures and incentives40130 DRevenue90 E1 & FAsset and supply chain management230580 E2Programme management40100 GSafety, standards and innovation190 HPeople260 LessDouble counts(200)(410) Net funding savings7401050

29. 29 Network Rail - Collaboration The approach launched by NR in March is very welcome Confrontational behaviours are wasteful of time, money, people, the control of risk.... We are committed to helping drive the change; it is not easy To be successful, it must be consistent; perhaps the greatest challenge 29

30. 30 Network Rail - Planning Volatility is expensive Improving forecast work bank data welcome Longer term still major issues Efficient electrification demands a rolling programme And smoothing out the 5-yearly investment cycle must be (and is being) addressed 30

31. 31 Network Rail – Asset Management In addition to initiatives already identified we have agreed To develop a joint programme of work To challenge, asset by asset: - blockers to whole life cost solutions - the cost of workload discontinuities - the cost of using non-standard products and processes - and much else Led by a joint steering group 31

32. 32 The potential scope is considerable Maintenance Renewals Enhancements Detailed discussion of numbers next month (ICIG), but for renewals alone: 32

33. 337 Network Rail renewals in the IIP £bn 2011/12 pricesCP4CP5Change Track3.883.36- 13% Signalling2.323.5854% Civils1.862.1917% Buildings1.431.21- 15% Electrical power and fixed plant0.870.9913% Telecoms1.180.39- 67% Wheeled plant and machinery0.300.4864% IT0.440.27- 40% Corporate offices0.310.09- 70% Other renewals0.200.2838% Total12.7812.84 Expressed at end–CP4 efficiency; no CP5 efficiency included

34. 34 Rolling stock IIP figures later The strategic task is to address the issues raised in the IIP and the Rolling Stock RUS, published simultaneously, and in recent debates: 34 The volatility and unpredictability of demand Not a small agenda, and one that has to be addressed cross-industry... The number of customised designs Lengthy and expensive procurement processes Addressing infrastructure and rolling stock design issues together.

35. 35 Discussion

36. 36 Growth, sector strategies and choices Richard Davies, ATOC Lindsay Durham, RFOA Calvin Lloyd, Network Rail

37. 37 Meeting the needs of customers Plans have been developed based on industry’s understanding of what its customers require and how it can best meet these needs The provision of rail services has to address a range of diverse market needs which require different strategic approaches Passenger needs are addressed in the following areas: –Continuous improvement in safety –Reduced peak crowding in London and Regional Urban centres –Improved consistency of train service punctuality and reliability –Improved journey times and connectivity on certain corridors –Investments in improved accessibility and information provision In the freight sector, the IIP includes plans to develop the strategic freight network to accommodate new traffic, and stimulate further modal shift from road to rail with associated economic and environmental benefits

38. 38 Passenger markets: long term view External factors will drive significant longer term growth across all rail markets; ‘background’ passenger demand could double over a 25 to 30 year period Additionally, in the short to medium term existing commitments will stimulate further growth in the market MarketApprox. % of national passenger km ‘Background’ passenger km growth 2008-2034 Average rate per year London Commuter21%+40%1.3% Long Distance35%+67%2.0% Regional Urban Commuter 7%+102%2.8% London Other26%+90%2.5% Regional Urban Other 9%+116%3.0% Rural3%+90%2.5% Total100%75%2.2%

39. 39 Control Period 5 Demand Growth Over CP5, relatively strong growth is expected in the Regional sector, supported by continued, favourable underlying trends in the market SectorPassenger km growth over CP5 Real revenue growth over CP5 Long Distance15%25% London & South East13%21% Regional (England & Wales)17%26% Total (England & Wales)14%23%

40. 40 London and South East Peak demand significantly driven by central London employment – 27% growth expected by 2031 Continued growth in off peak demand expected as a result of continued increase in population of Greater London Passenger demand growth forecast to the end of CP8 of between 1.9% and 2.9% per annum Significant additional capacity being provided in CP4, with further committed schemes due for completion in CP5, particularly Crossrail and Thameslink Additional capacity is required to address those route corridors which are not addressed by committed schemes

41. 41 London and South East options for CP5  New local service running between Stratford and Brimsdown on the West Anglia Lea Valley route  Additional peak services to Liverpool Street on the Great Eastern route  Lengthening of peak Southern services to 8 car on the West London Line  Additional peak services between Redhill / Reigate and Victoria with lengthening to 12 car on this route  Lengthening of peak services between Caterham, Tattenham Corner and Victoria  Lengthening of peak services on the London Bridge to Uckfield line  Lengthening of peak services on the Waterloo to Reading line  Lengthening of peak services on routes in south east London  Lengthening peak services on the Thameside route into Fenchurch Street to 12 car

42. 42 Long Distance Historic demand growth of over 3% per annum on average since 1994 Continued demand growth expected, driven by economic growth and structural changes in economy and travel markets Additional capacity being provided on West Coast Main Line in CP4 Intercity Express Programme due to be delivered in CP4 and CP5 Opportunities from further development of demand and yield management techniques

43. 43 Long Distance options for CP5 timetabling and service development delivered through the Intercity Express Programme, including investment to mitigate against congestion at stations resulting from the programme; additional capacity on long distance services operating on the Midland Main Line; a scheme delivering additional local services between Tamworth and Birmingham to relieve current crowding on longer distance services on the route; further network electrification which can also be an enabler of extra capacity; and power supply upgrades to support the anticipated level of traffic on the network.

44. 44 Regional Sector serves several markets, including commuting into regional centres, inter-urban business and leisure travel, and rural Some additional capacity is being provided in CP4 Electrification of Liverpool/Manchester/Blackpool triangle to be completed in CP5 Options are: –Northern Hub –North Trans Pennine Electrification –Liverpool Central station capacity –Journey Time Improvements, e.g. Birmingham to Stansted Nottingham to Leeds

45. 45 Rolling stock Committed Schemes exist to procure new rolling stock for Thameslink, Crossrail and IEP To maintain average fleet age, 350-400 vehicles would need to be replaced each year Main themes: –EMU cascades following completion of the Thameslink and Crossrail orders –interurban EMUs for MML and TPE electrification. –Pacer replacement –possible life extension of stock reaching the end of its design life –some growth build for intercity routes, over and above the current IEP commitment –the start of plans to group older vehicles into areas that will be converted to ERTMS last –growth builds of EMUs, principally in London but also Manchester/ Birmingham –CP5 total 570-640 vehicles for growth Projected volumes are indicative, the actual scale and allocation of replacement and additional vehicles will emerge through the franchising process

46. 46 Electrification Following schemes are committed: –Great Western to Bristol, Cardiff, Oxford and Newbury –Northern Triangle (Manchester, Liverpool, Blackpool) IIP contains options for electrification in the following areas: –Midland Main Line –TransPennine (North) –Cardiff Valleys Potential for longer term rolling programme of electrification Potential business case for conversion of some of the DC network to AC

47. 47 Stations & information Focus in CP5 on improving security, safety and ambience at stations Further improvements to parking facilities Proposal to continue National Stations Improvement Programme and Access for All funding into CP5 Some stations will require specific interventions to increase capacity for increased passenger throughput Network Rail and train operators are working with ORR and the DfT on reform of station leasing arrangements for new franchises. –This will progressively see franchisees become wholly responsible for the management of station assets Proposals for significant investment to improve the information provided to customers at all stages of their journey. This includes investment in both technology and people –Links to NR and fares systems

48. 48 Freight - growth and strategy Lindsay Durham, RFOA

49. 49 Rail Freight Operators’ Association

50. 50 Rail Freight - strategically important to the UK 25% of the electricity consumed in the UK is generated by coal that moved by rail. rail freight helps drive economic growth by moving aggregates and cement into major conurbations for building and developments. In London, over 40% of such raw materials are delivered by rail 30% of all deep sea containers arrive or depart from the major ports by rail,carrying goods including food, clothes, electronic and white goods, raw materials, and chemicals for retailers and manufacturers

51. 51 A competitive sector - both with road and with each other Competition helps drives efficient behaviour The RVfM study concluded that rail freight operators had achieved: a 32 per cent improvement in staff productivity since 1998/99 48% growth with half the locomotives and two thirds of the wagons employed in the mid-1990s In the future, even more flexibility & efficiency is needed to keep up with competing modes and drive modal shift. Longer&/or heavier trains Operating more days of the week Simple, national access and planning regimes

52. 52 Rail Freight Growth 2004 to 2011 The key sector is now intermodal - since 2003/4 Rail grew by 61 per cent Road fell by 14 per cent, Rail’s mode-share is growing 3.6 per cent per annum faster than road

53. 53 Future growth forecasts Since 1994/95 rail freight has grown by 48% - to 19.23 billion tonne km. The customer mix has changed markedly : Coal for electricity generation has declined – and will continue to decline Intermodal has become the largest sector in the market The industry’s growth forecasts have been recalculated to take account of the recession 43-45 billion tonne km by 2030 - mainly intermodal Key enablers to achieve this include; Ever more reliant and flexible products to compete with road Rail connected warehouses – needing alignment with emerging planning policy Equates to annual growth of 4.3% in tonne km

54. 54 Strategic Freight Network “a core network of trunk freight routes, capable of accommodating more and longer freight trains, with a selective ability to handle wagons with higher axle loads and greater loading gauge, integrated with and complementing the UK’s existing mixed traffic network.” CP4 interventions were mainly gauge clearance projects. These have unlocked immediate growth – gauge clearance from Southampton increased rail modal share from 30 to 35% Key projects have been on time and under budget partly due to innovation - eg Southampton tunnel In CP5 we propose to continue the SFN Fund concept to drive : economic growth/modal shift environmental benefit/avoid road congestion A £350m fund could drive : Capacity enhancements: Felixstowe to Nuneaton Southampton to West Coast Main Line West Coast Main Line (North of Preston) Gauge clearance: Great Western Main Line W12

55. 55 Freight’s value for money strategy The principles behind the Strategic Freight Network are designed to support value for money initiatives; Maximising train lengths to minimise the paths needed and increase rolling stock utilisation Flexible use of capacity continue current practice of minimising operations during periods of peak passenger operation around major conurbations. Extended hours of operation to enable more services per week - increasing use of both capacity and resources Re-aligning freight capability where there is no demand. RFOA has drawn up a list of routes which could offer opportunities for savings and is discussing these with Network Rail. Consider whether lightly used passenger services can be flexed to accommodate freight RFOA is keen to work even more closely with NR, TOCs and the supply industry to reduce industry costs, to make best use of existing capacity and support Efficiency Benefit Sharing.

56. 56 Choices and options Calvin Lloyd, Network Rail

57. 57 Investing in better outcomes The IIP seeks to inform funders of choices to deliver better outcomes in terms of economic growth, user satisfaction, safety Investment in rail is an economic stimulant and some £4.9bn of investment choices, all representing good value for money (4.5 to 1), are recommended Some of these outcomes to be delivered by a fund approach with industry- wide governance CP5 Expenditure £bn (2011/12 prices) Committed programme4.5 Specified schemes2.1 – 2.4 Funds2.5 Total9 – 9.4 Possible funds: Level crossing safety fund (£300m) Strategic Freight Network (£350m) Station accessibility fund (£150m) Station improvement fund (£150m) NRDF (£250m) Passenger information fund (£200m) Journey time improvement fund (£200m) East Coast improvement fund (£500m) Innovation fund (£150m) CP6 development fund (£100m) Performance fund (£160m)

58. 58 Investing to support & stimulate sustainable economic growth Investment Choice Better Journey Opportunities Better Journey Times Increased Capacity Benefit Cost Ratio* The Northern Hub 4.1 Journey time improvement - exemplar schemes 1.9 London commuter market capacity 11.1 Congestion relief at strategic London stations ** City region commuter market capacity 2.5 Midland Main Line long distance capacity 1.4 - 1.8 Cross country train service connectivity 1.5 Western access to London Heathrow Airport ** Birmingham New Street to Tamworth corridor capacity 8.1 *Socio-economic BCR calculated in accordance with WebTAG guidance **To be evaluated after publication of the IIP

59. 59 Capacity: Peak train loadings

60. 60 Train service performance Overall vision to maintain performance at the high levels targeted for the end of CP4 Specific actions required to address poor performance days and groups of services, and bring their performance closer to the current average Other plans are being developed to improve the resilience of the network to extreme weather conditions The average level of performance across the network is therefore expected to improve to around 93% PPM It is proposed that a performance fund is made available to address emerging performance risks which are unforeseeable at the time of plan development.

61. 61 Other outputs Safety –The industry will meet its legal obligations to reduce safety risk to passengers, public and workforce so far as is reasonably practicable –Enablers include an improved safety culture and the proposed level crossing safety fund Carbon

62. 62 Impact upon affordability Income growth and efficiency are the key determinants of subsidy in CP5 The investment choices to deliver better outcomes in areas such as safety, efficiency, sustainable economic growth and meeting the needs of rail users require a further £260m of subsidy in the final year of CP5 These choices further increase Network Rail’s net debt by £4.8bn by the end of CP5, to £34.4bn in total

63. 63 In summary The IIP offers a rail network that: – will deliver rail’s contribution to Government’s vision of a transport system that is an engine for economic growth –tackles the key networks identified by the Eddington study to support a productive economy: urban areas and their catchments key inter-urban corridors connections to international gateways for passengers and freight –meets the key drivers of customer satisfaction in terms of performance, train capacity, station capacity and facilities, passenger information –supports a low carbon economy There are choices for funders in relation to the outputs, level of investment, fares and subsidy that will determine what is ultimately delivered in CP5 We must demonstrate our plans are sustainable, value for money and affordable

64. 64 Discussion

65. 65 Next Steps Paul Plummer, Network Rail

66. 66 Road map for 2012

67. 67 Strategic Business Plan Network Rail SBP Headline outputs & expenditure Strategies and policies e.g. asset policies, operating strategy Revenue requirement and financing 10 route plans Outputs Route Asset Management Plans Operate & support plans Initial Industry Plans Strategic Business Plan Industry SBP Industry output trajectories Industry strategies and plans

68. 68 Industry view on the HLOS Passenger satisfaction – industry action planning but no HLOS target Freight user satisfaction – use existing output metrics Safety – meet legal requirements to maintain safety and improve so far as reasonably practicable. No HLOS target proposed Performance – key output measure, propose to maintain PPM and CaSL metrics, but with potential to publish further disaggregated data Capacity – work with funders to explore options as to how best to specify Network Availability - industry discussing potential metrics Journey times – to be developed through the route planning process Carbon – no HLOS metric recommended Franchise specifications must be consistent with HLOS outputs

69. 69 Key industry work streams Planning Oversight Group and CP5 Group to oversee industry input Value for money: taking forward cross-industry proposals by RDG Performance: Further development of CP5 forecasts by NTF. Availability: working group looking at alternative metrics and route-based workshops to develop route availability strategies Route plans: Further development of strategies and enhancements for each route through bi- lateral discussions between Network Rail and train operators Asset management plans: Route Asset Management Plans are key plus work with supply chain Further development of other proposals including: – safety culture and specific level crossings programme –sustainability and carbon management framework –innovation and R&D programme And the franchising programme and reform agenda will require significant industry resource

70. 70 Finally….. “We've got a new Government, new management at Network Rail, and a raft of franchises coming up for renewal. It's a once in a generation opportunity to act and we will seize it. So with Theresa Villiers, the rail Minister, I will shortly publish a comprehensive blueprint for reforming our railways. Asking the hard questions about taxpayer subsidy....and considering the options for greater local commissioning of services. Looking again at the role of Government, Network Rail, and the train operators. Aligning the interests of all the parties. Making Train Operators more accountable to their customers....and Network Rail more accountable to the train operators. And giving railway employees a real interest in the success of the companies they work for. So when I say "all the parties", yes, that does include Bob Crow. As far as the railway is concerned, we are all in this together!” “Putting Britain back in the fast lane of global economies” Speech by The Rt. Hon. Philip Hammond MP – Secretary of State for Transport 3 October 2011

71. 71 Discussion