National rail reviewQ4 2007- 08

Contents

2

Network Rail monitorFurther details of Network Rail’s performance are published in the Network Rail monitor. It is a scorecard of high-level key performance indicators (KPIs) together with a commentary. The Network Rail monitor for quarter 4 2007-08 is at:

http://www.rail-reg.gov.uk/upload/pdf/365.pdf

National rail trendsNational rail trends (NRT) continues as the main official rail statistics publication containing a wide range of data from various sources including network usage and performance.

National rail trends is at:

http://www.rail-reg.gov.uk/server/show/nav.1528

FeedbackWe are keen to receive your feedback on the usefulness, content and format of this publication. Please contact Brian Hatfield on 020 7282 2073 or brian.hatfield@orr.gsi.gov.uk with your comments.

Page

1. Periodic review - draft determinations 3 Key output requirements 3

Periodic review process 3

Historic expenditure levels and CP4 determination (GB) 5

Efficient expenditure 5

Assessment of CP4 revenue requirement 6

Overall package 6

Incentives 7

Affordability 7

2. Network Rail’s performance 2007-08 8 Industry overview 8

Network Rail 9

3. RSSB - annual report 2007 13

2007 headlines 13

Key facts and figures 13

4. Training and development in the industry 16

Glossary 19

National rail review – eighth edition 5 June 2008

3

Periodic review processThe 2008 periodic review (PR08) is the process whereby we determine the outputs that Network Rail must deliver, and the levels of access charges paid by train operators for use of the infrastructure, during CP4.

The access charges we are determining in PR08 are the track access charges payable by franchised passenger, open access passenger and freight train operating companies. The station long-term charge is payable by users of stations. We are also establishing the level of network grant that the governments in England & Wales and Scotland will be allowed to pay to Network Rail in lieu of access charges.

Whilst Network Rail is a GB-wide company, and finances itself on this basis, we have established separate calculations for England & Wales and Scotland, in the context of the separate responsibilities that the Secretary of State and Scottish Ministers have for setting the strategy for, and funding, the railways.

Our determinations are the result of nearly three years work since we started PR08 in August 2005 by publishing our initial consultation document. There has been a significant amount of work undertaken across the industry over this time, involving a lot of detailed analysis and debate. From the start of the review we committed to conducting it transparently, exposing the issues and consulting on and explaining all of our key decisions. We are grateful for all the contributions made by stakeholders throughout PR08.

Today we publish our draft determinations for PR08. This sets out Network Rail’s required outputs, access charges and associated industry contractual and financial incentives for control period 4 (CP4), which will run from 1 April 2009 to 31 March 2014.

Based on the evidence we have collected and the analysis we have undertaken in PR08, we have established the lowest level for Network Rail’s revenue requirement and access charges that we consider is reasonable for the company to deliver all the required outputs and to finance its activities.

We are consulting until 4 September 2008 and welcome views on our proposals before we confirm our final determinations, which we will publish on 30 October 2008.

The final levels of individual access charges and associated price lists will be approved by us in December 2008, following calculation by Network Rail.Key output requirements

improvement in train service performance; ●providing for growth in passenger and freight demand; ●improvements in safety; and ●reduced level of disruption to passengers and freight. ●

We consider that the outputs can be delivered at significantly lower cost than Network Rail has projected and we have factored challenging, but achievable, assumptions for efficiency improvement into our calculations of access charges. The judgements we have made on the scope for efficiency improvement in CP4 should not lead the company to compromise health and safety or create risks that are not capable of being managed. Indeed, in our view, there is no conflict between safety and efficiency and a world-class company will deliver high performance in all areas of its operations.

We have determined that the revenue Network Rail requires to deliver the significant improvements in reliability, capacity and safety required in CP4 is £26.5 billion.

1. Periodic review - draft determinations

4

Reduced level of disruption to passengers and freight

Network Rail will be required to plan, manage and execute its large engineering programme to ensure that the railway is open for as much time as possible and the level of disruption to passengers and freight is reduced. We have funded Network Rail to develop the “7-day railway” concept, which will deliver more radical improvements in network availability. New measures of network availability for passenger and freight services have been developed. Ever more efficient

Network Rail will need to deliver all of the above whilst becoming ever more efficient. We have undertaken detailed studies, benchmarking Network Rail’s costs and processes against many international railways and other comparable companies. There remains a very large potential for Network Rail to improve its efficiency, although we have decided it is not realistic to expect the company to achieve the full potential by 2014.

The key requirements of our draft determinations, taking account of the high level outputs specified by the Secretary of State for Transport and Scottish Ministers, are as follows:Improvement in train service performance

By 2014 we require the percentage of passenger trains arriving on time (as measured by the public performance measure, PPM) to be at least 93% for London & South East services, 92% for long distance and regional services in England & Wales, and at least 92% in Scotland. Delays caused to freight trains must fall by at least 25%. Providing for growth in passenger and freight demand

Network Rail will need to deliver a range of projects across the network to accommodate forecast growth in passenger and freight traffic. There will be some large-scale projects delivering step changes in capacity and/or passenger experience, for example Thameslink, Reading, and Birmingham New Street, as well as many smaller scale schemes, such as extending more than 500 platforms to accommodate longer trains. The scale of the enhancement programme will be more than twice the level in the current control period. Improvements in safety

The Secretary of State has specified a 3% reduction in the risk of death or injury to passengers and rail workers from accidents on the railway for the whole of the British mainline network to be achieved in 2009-14. Network Rail will need to work together with its partners to deliver this target.

1. Periodic review - draft determinations

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to make significant increases in the efficiency with which it will deliver its enhancement programme. By not including all potential efficiency savings in our draft determinations, we are providing an incentive for Network Rail to outperform our assumptions (see Figure 2).

Historic expenditure levels (OM&R) and CP4 determination (GB)Total expenditure to operate, maintain and renew (OM&R) the railway increased from under £3 billion in 1995-96 to a peak of around £6.5 billion in 2003-04 in the wake of the Hatfield derailment and the significant increase in activity levels and unit costs. Expenditure is projected to be around £5 billion in the last year of CP3 and our determinations assume that expenditure will fall in CP4 to around £3.5 billion in 2013-14 (see Figure 1).

Efficient expenditureWe have carried out a detailed assessment of Network Rail’s proposals for its OMR and enhancements (OMR&E) expenditure requirements in CP4. The result of our assessment is that we have reduced total CP4 expenditure from £31.1 billion to £27.8 billion (11% less).

In making our judgements on efficiency we have considered the amount of improvement that Network Rail can make in CP4 and the speed at which it should be able to achieve this. We recognise the many challenges that the company faces in CP4 and the improvements it will need to make in train performance, safety and capacity, as well as in making further cost savings. To this end, we have decided to profile further significant efficiency improvements over ten years rather than the five years of the control period. We consider that Network Rail should be able to make efficiency improvements in CP4 of 5% per annum for maintenance and renewals, and 3.5% per annum for controllable opex. In cumulative terms, this gives overall efficiency improvements by the end of CP4 of 23% for maintenance and renewals, and 16% for controllable opex. We also expect the company

1. Periodic review - draft determinations

Actual and forecast OM&R expenditureFigure 1

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Renewals Maintenance Opex Enhancements Network Rail plan

CP3 CP4

Assessment of CP4 revenue requirementWe have combined our expenditure and financial assumptions using the standard ‘building block’ approach used by economic regulators, where renewals and most enhancement expenditure is added to the regulatory asset base (RAB) and remunerated through the amortisation allowance and an allowed return on the RAB.

We have calculated that Network Rail’s gross revenue requirement for the control period is £26.5 billion. This is recovered through track access charges paid by passenger and freight operators, station access charges, income from other sources (e.g. property rental) and network grant paid by the governments in England & Wales and Scotland to Network Rail in lieu of access charges.

Gross revenue requirementCP4 totals (2006-07 prices)

ScotRevenue

requirement

ORR £2.7bn

NR £3.0bn

Eng & Wales

Revenue requirement

ORR £23.8bn

NR £26.1bn

Gross revenue requirementCP4 totals (2006-07 prices)

ScotRevenue

requirement

ORR £2.7bn

NR £3.0bn

Eng & Wales

Revenue requirement

ORR £23.8bn

NR £26.1bn

1. Periodic review - draft determinations

Operation, maintenance, renewals and enhancement expenditureFigure 2

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have also implemented a rolling capex incentive mechanism, to ●equalise the incentive that Network Rail has to make efficiency savings, across each year of the control period.

Following cross-industry working we are making improvements to the possessions and performance regimes, including updated values, to provide correct price signals to Network Rail and train operators. Affordability We have examined the whole industry cost to the two governments of delivering the HLOSs. These costs include franchise support as well as the revenue required by Network Rail (less income from third parties, such as open access passenger and freight operators and property rental). We consider that both HLOSs are affordable within the available public funding.

Overall packageOur draft determinations of Network Rail’s outputs and access charges for 2009-14 are part of a balanced package, which we have carefully established, based on strong evidence, to ensure that Network Rail can finance its activities and that the incentive arrangements strike the right balance between risk and reward, and encourage Network Rail, working with its industry partners, to strive to outperform our determinations, whilst delivering improvements in performance, safety and capacity. The other parts of the package include:

the licence obligations (for which we are consulting on ●improvements to in parallel with the draft determinations);

the monitoring and enforcement of the outputs; ●

the financial framework and the various protections we have ●established for Network Rail against risks and uncertainties; and

the contractual and incentive arrangements. ●

We expect the balanced package set out in our draft determinations to be considered and judged as a whole.IncentivesAn important part of PR08 has been the review of the incentives that Network Rail and the industry face to work together and improve whole industry outcomes. To improve incentives we:

are implementing an efficiency benefit-sharing mechanism ●between Network Rail and train operators. If Network Rail can deliver its outputs for less than we have determined then it will share 25% of this ‘outperformance’ with train operators;

are retaining a volume incentive in CP4, to incentivise Network ●Rail to respond to demand levels greater than those assumed in Network Rail’s strategic business plan; and

1. Periodic review - draft determinations

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2. Network Rail’s performance 2007-08This article provides an overview of Network Rail’s performance in 2007-08. A detailed and wide-ranging assessment of its performance will be provided in our annual assessment, to be published in September.

Industry overviewFirst, we consider key dimensions of industry safety and performance.

Overall the level of safety on the railways has continued to improve. Despite the very serious accident at Grayrigg in February of last year, in which a passenger died, the fatal train accident rate remains at its lowest level ever. However not all the elements of the risk profile for the industry are heading in the right direction. The previous reduction in the risk from signals passed at danger (SPADs) appears to have levelled out. The Rail Safety and Standards Board (RSSB) Annual safety performance report1 was published recently and the key points are highlighted in this review in a separate article. We will be publishing our annual Safety statistical report later in June, which provides data on railway employee health and safety, incidents of collisions, derailments and bridge strikes and injuries and fatalities amongst the public.

There are no safety targets for the industry in the current control period (2004-2009), but the high level output specification (HLOS) issued by the Secretary of State specifies a 3% reduction in the risk of death or injury from accidents on the railway for passengers over the course of the next control period (CP4 – 2009-14).

1 RSSB Annual safety performance report 2007

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2. Network Rail’s performance 2007-08Figure 3

Data source: Network Rail, Period performance report data and ORR draft determination

Punctuality on the railway continues to improve, even though it carries higher levels of traffic. The network carried over 30 billion passenger miles in 2007, a 7.8% increase on 2006 and the highest figure ever recorded in peacetime. The passenger railway achieved a ‘public performance measure’ (PPM) of almost 90% at the end of the year, ahead of its target of 89.5% and 15% above the low point recorded in 2001-02 (see Figure 3). Network Rail played its part in this achievement through a reduction in the delay it caused to its customers, but the passenger train operating companies (TOCs) achieved even bigger reductions in delay.

Figure 3 shows how PPM has improved over time across the different sectors. It also shows the trajectory for the next control period, drawing on the HLOSs and our PR08 draft determinations, published today. Overall, the target for the industry is a PPM level of 92.6% by the end of 2013-14. This is within the context of a projected 4% growth in demand per year, presenting a significant challenge for the industry. Network Rail 2007-08 was the fifth full year of Network Rail’s existence. In that time the company has made significant progress in tackling the problems it inherited, although progress seemed to stall in key areas in 2006-07. In 2007-08 the company recovered some of the lost ground. Key regulatory targets set in 2003 were met and indications are that the 5-year CP3 targets will be met, with the possible exception of the efficiency target. Below we examine Network Rail’s progress and highlight key regulatory targets for the next control period (2009-14) from the periodic review draft determinations published today.

Health and safety

Network Rail is continuing its programme to develop a more positive safety culture across its workforce and the reduction in injuries that result in an absence from work of more than three days suggests this is having a positive effect, although the number of major injuries has not yet fallen. Despite a number of level crossing fatalities in recent months, there is no clear common thread to explain this. However we remain concerned that risk controls identified during assessment of user worked and footpath crossings in particular must be implemented in a timely way.

There are no safety targets for Network Rail in the current control period, but the HLOS issued by the Secretary of State specifies a 3% reduction in the risk of death or injury from accidents on the railway for rail workers2 over the course of the next control period.

2 Measured in fatalities and weighted injuries per million passenger kilometres (for passengers) and per million hours worked (for rail industry employees).

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Delay to freight services improved in the first quarter but then deteriorated over the remainder of the year, with Network Rail failing to achieve its internal target. There appears to be a number of reasons for this - the mix of freight traffic continues to change quite rapidly, particularly in the coal sector, and the continuing cable theft problem may be having a proportionately greater effect on freight services.

Delay per 100 train kilometres in 2007-08 was 4.32 minutes. Network Rail projects this to fall to 3.90 minutes by the end of 2008-09. In our draft determination for CP4 we have set a target of 2.94 minutes by the end of 2013-14.

Annual delay minutes by route

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After a small increase in delays to all services (passenger and freight) in 2006-07, Network Rail achieved a reduction in 2007-08, and betters the regulatory target for the year (9.8 million minutes) set in the 2003 Access charges review. However, the company did not achieve its own, more challenging, business plan target. The regulatory target for 2008-09 is 9.1 million minutes.

In Figure 4 we can see that there were reductions in delay across each of Network Rail’s routes in 2007-08. There was a welcome reduction on the Western route, following increases in delay in each of the previous two years. We have reported extensively in previous reviews on problems on the route and we have made it clear to Network Rail that we want to see performance levels closer to those already enjoyed by passengers and freight customers on most other parts of the network. We will be monitoring performance against targets in the Joint performance improverment plan (JPIP) very closely throughout 2008-09.

Network Rail’s Sussex route suffered a number of major incidents in the year and Southern, the operator affected has raised this formally with us. On the East coast main line the operator (initially GNER then National Express East Coast) has drawn our attention to a significant number of problems largely associated with the overhead electrification equipment. No formal intervention was requested in 2007-08.

2. Network Rail’s performance 2007-08Figure 4

Data source: Network Rail, Period performance report data

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Customer satisfaction

Network Rail’s latest customer satisfaction survey (based on 236 interviews with senior mangers and directors) shows that the satisfaction of train operating companies (TOCs) and freight operating companies (FOCs) with Network Rail deteriorated from the previous survey (autumn 2006).

TOC satisfaction fell back slightly, whereas FOC satisfaction fell back more significantly.

Below the top level numbers, the highest ratings were for ‘understanding customers’ needs’, ‘personal working relationships’ and ‘values relationship’ and the lowest ratings were for ‘integrated’, ‘decision involvement’ and ‘flexible’. This data is supplemented by numerous verbatim comments that indicate that operators feel that Network Rail:

is overly bureaucratic and slow in making decisions ●does not treat freight companies equally in decision making ●processesis overly hierarchical in structure. ●

However, more positively, the way that Network Rail handled autumn delays was complimented and the work of dedicated groups at route level is appreciated.

Network Rail has been successful in ensuring that customer relationships are effectively managed but that it needs to do more to speed up decision-making and reduce bureaucracy.

Freight operators and the Rail Freight Association have expressed increasing dissatisfaction with the behaviour and performance of Network Rail. Operators have been particularly affected by the volume of disruptive possessions for engineering work, and the number of late notice possessions - notably on the West Coast main line (WCML). They are concerned that Network Rail is saying that it cannot deliver the full WCML capacity expected by freight operators after December 2008.

2. Network Rail’s performance 2007-08Infrastructure

Network Rail’s management of the asset base shows a significant improvement over 2006-07, with the number of asset failures causing delay at its lowest annual total for eight years. There was a further reduction in broken rails to 182, the lowest number for at least 12 years and the number of temporary speed restrictions at the year end was 250, down from 349 at the same point in 2006-07, the lowest number since the current reporting processes were introduced in 2000-01.

We will not set top-level regulated output requirements for asset management or asset condition in the next control period (the exception being station condition). However, we will monitor against a dashboard of indicators including targets that Network Rail will include in its CP4 delivery plan. We expect to see continuing improvements in asset condition and further reductions in asset failures in support of improvements in train performance.

Projects

Network Rail’s progress in 2007-08 with small enhancement schemes funded by its ‘Network Rail discretionary fund’ (NRDF) was disappointing, spending only 40% of the budget. Because of the important role this fund will play in CP4 we have asked the independent reporter to review the process for selection, development and implementation of schemes paid for from the fund. It is important that Network Rail improves its delivery of investments in 2008-09 to demonstrate to the industry that it can implement these smaller schemes in a timely manner.

The WCRM project presents a major challenge to Network Rail. Following the events at New Year and our subsequent investigation, Network Rail agreed that it did not have a robust plan in place to deliver the upgrade work for the December 2008 timetable. Network Rail has now revised the programme for the remaining infrastructure work and supplemented it with additional possessions, to increase the certainty of delivery of the December 2008 timetable change.

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There is growing concern at the need to improve infrastructure performance on the route. Network Rail has established a team to investigate and better manage problems associated with old power supply cables until they are renewed.

After the problems at New Year, Network Rail achieved significant milestones at Easter and over the May holiday periods. Notwithstanding this, the WCRM programme remains a major challenge and Network Rail will need to remain focused as it progresses through 2008. The company needs to work closely with the TOCs and FOCs involved to ensure that all reasonable steps are taken to minimise the impact on their operations during the planned disruption on the route over the remainder of the year.Finance and efficiency

Generally, Network Rail’s financial performance has been satisfactory. It significantly increased the level of capital expenditure in 2007-08 in comparison with previous years. Nevertheless, Network Rail did not achieve its own forecast levels of renewals expenditure during 2007-08. This follows a similar pattern to previous years.

An initial assessment of efficiency in 2007-08 suggests that it has underperformed on operating, maintenance and renewals (OM&R) efficiency overall, due to a significant rise in renewals unit costs in the year. The extent of the underperformance depends on the definition of unit costs used. However, the unit cost data suggests that, at a minimum, Network Rail underperformed against the 2007-08 OM&R efficiency target by 6%, leaving the company at least 0.5% behind the target for CP3 to date3.

3 ACR2003 assumed that Network Rail would be able to make total OM&R unit cost efficiencies of 31 percent over CP3. The annual efficiency assumption for 2007–08 were 8% for maintenance and 5% for controllable OPEX and renewals

2. Network Rail’s performance 2007-08We also concluded that, in 2007-08, Network Rail reversed part of the efficiency savings achieved on renewals earlier in the control period and its efficiency is materially below the cumulative target for CP3 to date.Enhancements and renewals capability

Network Rail was found in breach of its network licence for poor planning and risk assessment in the Portsmouth resignalling scheme towards the end of 2006-07, for which we imposed a penalty of £2.4 million. At the time we urged Network Rail to apply the lessons from this to its signalling programme and to its project management generally.

It was therefore disappointing that there were overruns of engineering works at Rugby, Liverpool Street and Shields Junction in early 2008, causing serious and unacceptable disruption to rail users and train operators. From the subsequent inquiry, it was apparent that weaknesses in risk assessment and risk management, which we identified in connection with the overrun of the Portsmouth resignalling project in 2007, were also present in two of the three cases we investigated.

Network Rail also failed to provide operators and rail users with reliable information about the likelihood and extent of disruption. This exacerbated the situation and caused the overruns to have even more disruptive impact than they might have done.

We concluded on 28 February that serious weaknesses in Network Rail’s planning and execution of engineering work requiring possessions had resulted in a continuing breach of its network licence. We made an order requiring Network Rail to implement changes in its approach by 31 December 2008 and to submit a plan showing how it would do so by 30 June.

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Train accidents with passenger or workforce fatalities

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3. RSSB - annual report 2007RSSB presented their Annual Safety Performance Report (ASPR) 2007 to its stakeholders on 30 April 2008. The report’s primary purpose is to provide safety intelligence and risk information to RSSB members. However, it is also intended to inform rail employees, passengers, Government (and its agencies), and the public at large.

The report reviews the performance during 2007 across a number of topic areas and considers how key safety issues are being addressed by the industry. The report covers the nine key risk areas (KRAs) identified in the 2007–09 Strategic safety plan (SSP). The 2007–09 SSP is a departure from its predecessors in that it has been developed by bringing together companies’ individual safety plans, creating a link between the SSP and the duty holder planning process. A new approach to the development of safety targets was also adopted. The term ‘safety target’ was replaced with the term ‘trajectory’. The reason for the change is that trajectories not only establish the industry’s ambitions in the KRAs, but also explain the actions that are being undertaken to achieve them.

The nine KRAs are:

passengers at stations; ●

passengers on trains; ●

workforce - train crew; ●

workforce - track workers; ●

workforce - at stations; ●

engineering - track; ●

engineering - trains; ●

public behaviour - crime; and ●

public behaviour - level crossings. ●

2007 HeadlinesOverall, there is evidence that the industry is delivering on the commitments made in the SSP; in six of the nine KRAs, tangible progress towards delivery of the trajectory has been achieved.

In the remaining three KRAs, there is insufficient data to comment on the trend (i.e. there are no areas where there is evidence that the trajectory will not be met).

The KRAs that show the greatest improvements are Workforce – track workers, Engineering-trains and Engineering – track.Key facts and figuresFatal train accidents

Figure 5 shows the frequency of train accidents with passenger or train crew fatalities has fallen steadily over the past 60 years and is now at it’s lowest ever level. In four of the last ten years there were no train accidents with on-board fatalities.

Figure 5

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Work force fatalities by occupation

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3. RSSB - annual report 2007Passenger fatalities

Figure 6 shows passenger fatalities over the last ten years. Excluding train accidents, the number of passenger fatalities has remained constant over the last four years. Nine passengers were fatally injured in 2007. It is estimated that train accidents account for around one-quarter of passenger fatality risk. The other main sources of fatality risk are: platform edge incidents (such as falls onto the track), slips, trips and falls around the station, and boarding or alighting accidents (including falls between the train and the platform).Workforce fatalities

Figure 7 shows workforce fatalities over the last ten years. Two track workers were struck by trains and fatally injured. The fatalities at Ruscombe Junction and Kennet Bridge were the first to involve track workers since 2005. In separate incidents, a further two track workers received major injuries from being struck by trains. Track worker fatalities accounted for around 60% of workforce fatalities over the last ten years.

Figure 6

Figure 7

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3. RSSB - annual report 2007Fatalities at level crossings

Figure 8 shows the number of fatalities at level crossings over the last ten years. Most of the risk associated with level crossings is borne by crossing users – both pedestrians and road vehicle users. Nine pedestrians (including one passenger on a station foot crossing) died in level crossing accidents in 2007.

For more detailed analysis and the initiatives taken by industry to support the trajectories see RSSB Annual Safety Performance Report at the following link

http://www.rssb.co.uk/safety/spr/spreports.asp

Fatalities at level crossings by user types

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4. Training and development in the industryPeople are among the industry’s most critical assets, yet for some years after privatisation there was real concern that not enough was being done to attract and develop the people who will be needed to provide a skilled and committed workforce in future. Recently this has been changing.Network Rail Network Rail has been increasing its focus on the development of its people and in particular on new entrant programmes. In September 2008 it will be hiring over 450 people on to its flagship programmes which include:

an award winning apprenticeship programme, now in its fourth ●year with an intake of up to 240 people each year. This is a three year programme leading to NVQ level 3. The first year is residential, then in years two and three students are based in the business and have a further 12 weeks of residential practical training and personal and teamwork development;

40 students taken on to join the Rail Foundation degree ●programme run in conjunction with Sheffield Hallam University;

direct entry graduate programmes taking a further 130 people ●each year. After an accelerated 6 week induction programme at the Westwood leadership centre, recruits are placed into development roles across functions including engineering, operations, commercial, finance, Information Management and HR; and

a new and unique relationship with University College, London ●and Warwick University to sponsor 80 fully funded places on their first class MSc project management courses. The programme has been customised to meet the needs of project management in the rail industry and all successful graduates are guaranteed a job at the end of the programme.

Network Rail also continues to focus on developing its existing employees. Three years ago it bought a purpose built centre at

Westwood near Coventry where all its leadership development activities are held. Last year over 3,300 managers attended leadership training there.

It also runs accredited education programmes in conjunction with Warwick business school, which lead to an MSc or MBA qualification. To date over 1,000 managers at all levels have gone through these programmes.

For its 12,500 maintenance employees it has over 10 training schools delivering over 120,000 days training this year. For signallers it has two schools at Watford and Leeds, supporting the 6,000 strong workforce.

All these programmes are part of a wider people development strategy aimed at creating an appropriately skilled workforce and introducing new skills to the industry as a whole.

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undergraduates on year placements and graduate engineers. In 2005 it was expanded to cover the development of Incorporated as well as Chartered engineering candidates. The scheme is geared towards the professional registration of the candidates and is approved by the IMechE and IET.

Overall the report concludes that the volume and quality of training on offer is better than in other industries familiar to its author.

But at this point there is limited evidence of links between Network Rail’s training and development strategy and those of the train operators. One consequence of the break up of British Rail was that some training programmes have become more narrowly focused. Coupled with the fact that it is now more difficult (and riskier) for people to move between different parts of the industry, there is a risk that fewer and fewer people will have a good understanding of

4. Training and development in the industryTrain operatorsA report41recently published by the Association of Train Operating Companies (ATOC) shows that its members recognise potential manpower planning issues that could arise from the short-term nature of franchises, and that they are taking effective action to address these.

The ATOC report seeks to capture the range and scope of activities that individual train operating companies (TOCs) are undertaking in the training and development of their staff. It concludes that TOCs:

are showing commitment to training and development; ●average five training days per annum, which is “creditable”; ●adopt a strategic approach, with clear evidence of collaborative ●approaches, particularly for management development;have, in 12 cases, restructured graduate development ●programmes;have, in six cases, achieved Investors in people (IIP) ●accreditation; andcontinued to invest in training facilities, with 22 dedicated ●training centres nationwide.

As would be expected, there were variations between TOCs. For example, South West Trains, one TOC with IIP accreditation, excels in “customer care” initiatives. Midland Mainline’s approach was identified as particularly intensive and thorough. First Great Western is highlighted as having a clearly defined “people vision” and strategy to achieve it.

ATOC has recognised that the professional development of engineering graduates is a key requirement for the industry. Its ATOC professional engineer development scheme (APED) was launched in September 2002 and is supported by TOCs and Network Rail. The scheme was initially designed to cover

4 Training and Development achievements, prepared for ATOC by Frank Robertson, 2007

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4. Training and development in the industrythe issues faced by other organisations they work with, and be able to take a whole-industry perspective of key issues. This is an area which perhaps needs further consideration.

Rail’s success in meeting the challenges of the future will depend on the skills, motivation and capabilities of its people. The developments described here give great encouragement that the industry understands this and is taking training and development seriously. In developing our next corporate strategy (covering 2009-14) we are coming to the view that we should ourselves give rather more emphasis to understanding just how fully the longer term needs of the industry are being addressed, and working to ensure that our policies and decisions support this vital objective.

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Broken rail A rail which has a fracture through the full cross section or a substantial piece broken out of the railhead.

Control period (CP) The period, usually five years, for which ORR sets the outputs required of Network Rail and the associated funding and access charges.

CP3 Control period 3 which runs from 1 April 2004 to 31 March 2009.

CP4 Control period 4 which will run from 1 April 2009 to 31 March 2014.

Disruptive possessions

A possession of part of the network by the network operator which results in alterations to planned passenger and freight services.

Draft determination Initial view of how much funding Network Rail will need over a control period to maintain the GB rail network to a predetermined standard.

Franchised passenger operator

A company holding the licences necessary to operate the Passenger Services specified in a franchise agreement with the Department for Transport (DfT); Transport Scotland; Transport for London (TfL); Merseytravel etc.

Access charges The charge paid by railway operators for access to rail facilities which are the subject of an access agreement.

ACR2003 Access charges review published in 2003. Undertaken by ORR to establish the revenues and associated financial framework required for Network Rail to operate, maintain, renew and enhance its infrastructure.

Amortisation allowance

The allowance broadly equivalent to the cost of maintaining the network in a steady state.

Annual assessment

ORR’s comprehensive assessment of Network Rail’s performance in any given year.

APED ATOC professional engineer development scheme (APED)

ATOC Association of Train Operating Companies, an unincorporated trade association with responsibility for operating certain Schemes which are common to some or all TOCs. It is the official voice of the passenger rail industry and provides its members with a range of services that enable them to comply with conditions laid on them in their franchise agreements and operating licences.

Autumn delays Delays to trains which are caused by poor rail-head adhesion.

Blockade The closure of a route for an extended period, typically more than a weekend, usually to allow engineering works.

Glossary

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Periodic review The process by which ORR establishes Network Rail’s revenue requirements for a five year control period.

Possessions The closure of a section of line so that engineers may undertake maintenance or repairs.

Glossary

HLOS High Level Output Specification:- Under Schedule 4 of the 2005 Railways Act, the Secretary of State and Scottish Ministers are obliged to send to the ORR, a high level output specification (HLOS) and a funding statement before it starts an Access Charge Review. The specification and the funding statement will ensure the railway industry has clear and timely information about the strategic outputs that Governments want the railway to deliver in exchange for the public funds they are prepared to make available.

JPIP Joint performance improvement plan between a franchised passenger operator and Network Rail.

Non-track assets group

Animals on line; Cable faults (signalling & comms); Change of aspects- no fault found; Level crossing failures; OLE/third rail faults; Other signal equipment failures; Points failures; Signal failures; Signalling system & power supply failures; Telephone failures; and, Track circuit failures.

Open access operator

A non-franchised train operator who having met specified safety and other standards is allowed to gain access to the railway infrastructure.

OPEX Operating Expenditure: the key day-to-day expenditure of the company.

P13 Period 13 is the last four-week period of each financial year.

PPM Public Performance Measure: the percentage of timetabled trains arriving at final destination within a specified time and having made all booked calls, combining both Network Rail and passenger TOC lateness and cancellations.

Q4 Quarter four of the year - periods 11, 12 and 13; 6 January to 31 March 2008

Regulatory target A target set for Network Rail by ORR at the beginning of a five year control period.

RSSB Rail Safety and Standards Board.

SPAD Signal passed at danger.

Temporary speed restriction

Put in place as required to temporarily reduce the permitted speed of trains passing over a specific piece of track.

TOC Train operating company.

Track assets group Broken rails/track faults; Gauge corner cracking; and Temporary Speed Restrictions due to condition of track.

Trajectory Future targets e.g. for operational performance, established at the beginning of a five year control period.

WCML West Coast main line.