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Welcome to the Rail Technology Magazine Podcast. Keeping you up-to-date with the most current rail industry news, giving you an all-access pass to the key insights and innovations helmed by the decision makers in our industry
If Labour wanted to make a bold statement, it should look to make an announcement in the coming weeks and months to say more capacity is required. It's going to be in ten years time these problems start hitting us. We can't wait five or ten years to start implementing plans. Rail supports 710,000 jobs, 43 billion pounds in GBA, 14 billion pound in tax revenues. Every pound you spent on rail, spend on rail, you generate two pounds fixed in the wider economy. Rail is one of those transport modes of the future. Future the government needs if it wants to hit decarbonisation targets, if it wants global growth, it needs to support the railway industry.
This is the Rail technology magazine podcast, bringing you views, insight and conversation from leaders across the rail industry.
Welcome, everybody, to a new episode of the Rail Technology magazine podcast. I'm delighted to say that today I'm joined by Darren Kaplan, the, chief executive at the Railway Industry association, better known to many as Rhea. And what a time it is to have this chat on, the dawn of a new Labour government. Their proposals for a sea of changes to the rail industry. And that's what Darren is joining me today to discuss. Thank you very much for joining me on the podcast, Darren. So my first question for you, really, just to get the ball rolling, is your initial reaction to the proposed direction of the rail industry under the new Labour government?
Well, thanks for having me on RTM, Peter, and it's a pleasure to be here. yeah, so, it's interesting about the direction that we've come through since the king's speech was published, or so ago. I think the interesting first comment to make is that actually there's a lot of continuity between what was being talked about under the previous government to what has been talked about now. And it's clear that Labour have decided there are some areas, of course, where they can do their own thing on public ownership of tops and what they're doing with franchises. But actually, in a lot of the areas on the structural front, there's not a lot of difference between previous policy. So you've got GBR and head courses that derby, you've got, a whole bunch of plans to bring track and train closer together, to have a directing or guiding mind, to have a railways act that's in place and delivered within a year. and these are things that were being talked about, under the previous government. So I think Labour's taking the view that there are some things to go different, on to try new things, but there's some things where we're going to be, a bit continuity, which is an important thing for the sector. I think it's interesting about the people as well. So, Louise Haidt was the shadow transport secretary. Now she is the transport secretary. So the best stability there, because a lot of us were speaking to her before the election. And then the new rail minister, Lord Peter Hendy, whilst it was a surprise to him being minister, he's not a surprise to many people in the rail industry. And there's a degree of continuity in the sense of he knows rail. It won't take six months for him to get up to speed and he'll know some of the pressures that the railway industry. And from my point of view, the rail supply sector, is under. So there's some continuity on policy, there's some continuity in terms of personnel. But of course, the big elephant in the room is what they're going to do in terms of operating services and who's going to run those and what the, financial aspects of that are. from our point of view, the key thing is to make sure that whoever's running services, they're incentivised to increase passenger numbers and to increase revenues, because that's the way we have a growing sector going forward and where we have optimism for the future of rail. But, that's probably our first take, on the king's speech and the new government.
Fantastic. Thank you very much. Now, just on the subject of capacity, of course, we saw the NAO report came out earlier this week at the time of recording, and it's nothing that we didn't necessarily already know or suspect that capacity will be down in the north as a result of HS two, I believe the tune of around 17% on the line between Birmingham and Manchester. And that's something that we'll circle back to a little bit later on. I just wanted really to home in on the nationalisation of the talks, as you said. That is, still a few questions about that. And earlier this week we also had an announcement from Andy Burnham. He wrote to Louise Hague suggesting that. And, I've got the direct quote somewhere. He said, transport for the north advises that Avanti West coast contract should be terminated at the earliest possible opportunity. Now, we're already starting to see the ball rolling. With that in mind, potentially, as to the gradual nationalisation of the toxin, I'm just wondering, does it alarm you in any way, potentially, that that process could potentially start so soon, or is it something that you're already kind of prepared for really.
Yeah. It's not something so important to our part of the rail jungle, if you like. And our members whatever system is in place, we want to make sure it's a growing sector that we're supplying to it. I guess Keir Starmer's watchword has been also. Keir Starmer's watchword has been about stability and certainty. So I'd be surprised they do anything other than gradually take these companies into public ownership. because whilst they have a view on how they want to structure it in terms of public ownership or we hope they do want to hear that. I don't think a stop or stop start or a quick change approach is one they're going to look at. So we'll find out gradually at what they're going to do with it. Although I would argue that they've had quite a few years to know what they want to do with the railway system, they should implement it fairly quickly. But the metro mayors, you're right to point out, are a really important part of all this. rail is not now set centrally from either the DfT or from main client network or the other clients. it will be set by devolved authorities being more involved. And I think I read somewhere that devolved authorities could potentially be running these operating services in future as well. So someone like Manchester with the b network and then you've got the way they run transport that they might be load stars for the future under labour. We would like to hear and get more flesh on the bone from our point of view. The most important thing is that these services ah, run well and unfettered so that people come back to rail. pattern numbers have been quite positive since the pandemic. We're getting close to 100% of pre Covid levels if you include the Elizabeth line. And many of those Elizabeth line passengers are new to rail. And a, a report that was published fairly recently by steer, commissioned by Rear showed that passenger numbers are going to increase by between 37 and 90%, not so 97% to 2050 over the next 25 years because things like population growth, things you can do with ticketing and modal shift. So the future for rail can be very positive. And what I would say is that even with difficult service levels on some parts of the network, even with industrial action, you're still getting fairly passenger numbers. People are travelling by rail. So my point would be imagine how much better it could be if we resolve these political issues.
Now you mentioned there just a couple of minutes ago about, the devolution to the regional authorities, which is a point that I just wanted to pick up on it amongst all you said just then, because in Rias 2024 manifesto that you published just last month, you made four points, one of which was that you wanted to work with Metromeres as part of the rail industry. And Labour have been very big on the fact that they do want to push devolution more. You see the example set by Andy Burnham, for example, in Greater Manchester, and you look at Tees Valley, the, West Yorkshire combined authority, sorry, all these different, combined authorities that really started to make quite a large impact in their regional transport sectors. And that's something that Labour has said that they want to push even further. So I presume that is a very positive step for you that we might be seeing, I don't know, metro mess bringing up all over the place under a Labour government.
It could be, but it goes with the kind of, the grain of rail restructure. I mean, the whole point of GBR is to not have government, officials and ministers in Whitehall and Westminster making decisions. So you have devolution of decision making and network, well, have already devolved into regions around the country. So this is part of continuum that's already started. And you need to make sure you harness the benefits of local decision makers who know the local areas, know what demand is, know where the costs are, know what the suppliers are, know how to hopefully maintain and run decentral network. But you also need to have a situation where there is some kind of, national planning, some national coordination. If you have too much of a patchwork, well, and there's no coordination, then you're going to have problems with integrating the system around the country. So there are going to be issues ahead. But I think the way it's going with devolved mayors and devolved authorities and combined authorities, having more say, is just going with the grain of process that started a few years ago. from Ria's point of view, we now have what we call a nations and regions network around the country. We've got six areas around the country, and at a granular level, we are engaging with all these mayors and these combined authorities and local councils so we can deliver, decent, ah, supplier services to the railway. So hopefully, Rhea's going in the right direction and going in the right direction, ah, when it comes to the devolution of, rail decision making. Yeah.
And you said as well, within that manifesto, that you wanted to support a sustainable supply chain. So I suppose that's what this is already working towards, isn't it?
If you asked our members what the single most important thing is, it's stability, it's certainty. It's a visible pipeline of activity. And one thing about rail I've learned over the last seven or eight years is that you can forecast many years ahead when things need to happen. The railways, you know, when track needs to be replaced or nude or, you know, when you need a new bridge or a new station, you know well in advance when you need to replace trains or refurbish them, you know, so you can plan ahead. And so ironing out boom and bust and stop start investment, it's not rocket science, but it makes a huge difference to suppliers in the rail industry. It makes huge interest m to taxpayers because they get more value for money. So if there are measures labour can take, working with Network Rail and its replacement GBR, to smooth out investment, to have better procurements, processes, easily, understandable frameworks and so on, our members would benefit from that. So it is an ask of the government, as you say, we have got five ask of government. I mean, will every six months be kind of doing a rag rating and seeing how the new government is progressing against those five asks. But a sustainable supply chain is crucial to that. and also you get better value for money, because if you do the work when it's supposed to happen rather than be delayed, it's more cost effective as well. So there's all kinds of reasons for having a more sustainable supply chain.
I want to talk then, you know, when you're talking about, you know, the people you deal with on a day to day basis at RIA, and, you know, the importance of the things we're discussing here. We're talking a lot about procurement too, but also just with a slight view to infrastructure, too. And, I'm just going to revisit, you know, the Andy Burnham point from before. I know you said that's not necessarily your remit to do with the nationalisation of the talks, but an interesting point was that of all the. Of all the delays, that Avanti suffers, Avanti obviously being the central focal point of his letters to Louise Hague. Nearly two thirds of those delays were to do with network rail infrastructure rather than the operator themselves. So you talk about, obviously, procuring an investment into rolling stock, for example. But what about infrastructure? I know we'll talk about HS two specifically shortly, but there clearly does seem to be a clear issue that needs addressing there, too.
Well, yeah, it's a fair one. I mean, I think with rea, and our members, as I said, pipeline's everything to get the best, building of the railways and maintaining the railways. And sometimes there's a distinct lack of information. Full stop. So you'll know that we're associated with the rail network enhancements, pipeline and the fact there's been no announcement for four years and this is work that is taxpayers money that's being spent on railways, and yet we don't know what's happened to that 10 billion pounds. So having clarity and visibility of, what the government's plans are, incredibly, important. it is going to be interesting one for network CrOwell going forward, if you are going to have a more dual system because you're talking about a national network. but we're also talking about what goes on in metro regions as well. So it is quite complicated. And this is the tension I mentioned before about if you've got a, number of network rail regions and then you've also got a central network rail and what that follows, there are going to be tensions there. I guess part of rail restructures should solve some of the issues you're raising here. If you are bringing track and train close together, then you shouldn't necessarily have a system where train operators, whoever they may be, are, struggling because what's going on the track, if they're the same company. So if the same business is running track and train, or the same organisation is developing track or train, then hopefully those kind of incidents go down. So that is something that railway structure might help in the future.
Fantastic. Now I just want to move on then to an issue we've kind of skirted around the edges of a little bit and we've touched on it. It was the national audit office report from earlier this week about HS two. I know that's something that you wanted to speak about. So it was a striking report from the NAO that, recommended. Ah, well, first of all, the headline really, from a lot of publications was that the NAO was recommended. The Department for Transport may have to incentivize people not to travel by rail. Now, as a headline for the rail industry, that's quite an alarming statement to make. So I just wondered really what your, what your takeaway, your own personal takeaway from the report was.
What's kind of interesting about the National Audit office report, this week is it backs up what we and a lot of other people were saying. what was going on with HS two over the years, but also particularly what happened between August and October when the prime minister, Rishi Sunak, and his advisor, Andrew Gilligan, decided to scrap the, phase two leg. And it was clearly a political decision, and that's come through in this report. So the corollary of this knee jerk decision to scrap phase two is that they haven't worked out what's going to happen with seats and capacity north of Birmingham. And I think the view is, or their view is, or was at the time, that you just don't need more capacity. I know this, but I have a conversation with people in government, including Andrew Gilligan, who said there's no problems in the west coast mainline, there's no capacity crunch, and there won't be one in ten or 20 years time, which I don't know anyone else in the real industry, he believes that. So it's quite clear there's going to be a capacity crunch in the mid 2030s, particularly north of Birmingham. And there's no plan for more capacity because HS two has been, scrapped. and this report says that and it actually says, and I've got a couple in front of me, the Dot should continue to assess HS two's role in supporting the wider rail network to realise benefits and consider other options for improving capacity on the west coast mainline. So it's basically starkly saying that options from Primcasi are not there and there will be a capacity crunch. And the corollary of having, both Hs two trains and classic trains going into Birmingham, north of Birmingham, is you'll actually have less seats, potentially going between Birmingham and Manchester. And you're going to have the prospect you have more chance of getting from Manchester, London, by going from Manchester to Curzon street, stopping there for 20 minutes, getting another train down to London, because there aren't enough seats on the three trains from Manchester to, London. And it's already the case that Hansacre junction, where you have this bottleneck north of Birmingham, is one of the busiest mixed rail, interchanges and modes, in Europe. So you've already got capacity issue and it's going to get worse in ten years time because, as I said, passenger numbers are going to go up and there's studies to show that. So they've taken away capacity, they haven't got the previous government's tailored capacity, they haven't had a plan to reinstate it. And that's going to cause all kinds of problems when we need more, rail in the future, not less, particularly if the government wants to have, more people using rail, less cars on the motorways and so on. So there's an issue with that. There's also an issue with Euston, at the moment the train is planned, or the HS two trains are planned to go from Curzon, street to acton to old Oak Commons. We call it, ah, the Aston to Acton line. and there's no plans at the moment to give certainty to trains coming into Euston again. I'll read you another passage from the NAO report. And just a bit of latitude is quite an important passage. DfT has progressed with developing minimum requirements for the station that's used in and options for a new deliverable model ahead of ministerial approval. However, it is an m early stage in considering how cost and risk will be transferred and what the long term governance arrangements at Euston will be. DFT expects it may be several years before it could put all these arrangements in place. Now, Houston is part of the HS two network, route. It was reset in 2020, it's reset in 2023. It's now being reset now. And the dot or the doc is saying now it could be several years before these ranges were put place. So that means that trains, agency phase one between London and, sorry, between Birmingham and, Olduk Common is due to be completed between 2029 and 2033. we could be years before we get those trains down to London. So why would you go from Birmingham to Old, Oak Cummin, then get another train into London if you can get a classic train straight to Birmingham to Manchester? So I raise these as unintended consequences that clearly didn't come through from the decision when it was announced in October. It wasn't actually dog's dinner of an announcement. There were no benefits either to, rail users or the taxpayer or anyone else. And we're dealing with those problems now. My next point would be, Peter, that it's all very well to complain about the dog's dinner that Rishi silicon and Andrew Gilligan, cooked up for us. But going forward, this is now Labour's issue and if Labour want to make a bold statement, it should look to make an announcement in the coming weeks and months to say more capacity is required. It's going to be in ten years time that these problems start hitting us. We can't wait five or ten years to start implementing plans. We need to do them now. So I think that Louise Haig, Peter Henley and others should think about very clearly making announcements in the very near future about what it wants to do on, capacity. For north south rail. It's got allies all over the place, it's got metro mayor supporting it with this. Andy Burnham or, Richard Parker, the new, West Midlands mayor. everyone's aligned. The corridors are set, we've already got permission for planning position the corridors. most of the land is still safeguarded. No one's saying agency is going to come back, but you can get, more capacity going up from London to boundary if you want to, and you can resolve all these issues around a bottleneck, around hands acre junction if you do that. So don't delay all the studies there, all the consultations there, you know, the stuff off labour, get on and make a decision and give us more capacity.
Very striking point there. Now, just to pick up on some of the other, particularly striking numbers that I'm sure you picked out as well. But just I looked at that, I wanted to kind of return to you, based on what you've just said. You say it's unlikely that HS two, phase two, is going to come back at this stage. And to that tune, the DfT is establishing a strategy to sell the 592 million pounds of land that they built, sorry, that they purchased to build along that route. So, as you say, it looks as though phase two is a thing of the past. It's not coming back. One of the things was also mentioned was Birmingham, Curzon street. They're going to continue to build all the platforms there, but they're not going to use them all. And that was another key point that I wanted to come back to. Based on what you were just saying, does that provide an opportunity, potentially, that there are now these leftover platforms, as it were? Is there anything that could potentially be done with them or are they just going to be completely abandoned for all eternity?
It's a good point, but it is ridiculous. I think it's seven platforms instead of three or something like that, and they're going to build them because it's cheaper to build them than to scrap the other four platforms. I think it's important that Birmingham does become a terminal destination. It should be a hub. on the point about land disposals, it does say that the full programme to dispose of land and property will take several years to complete. So the government does have a say in this, can decide if they want to, to stop that land sale process and property disposal process and bring back plans, bring more capacity. As I said, we're not looking to say hs two type trains, but there are ways, and there are the types of trains that are medium fast and fast they can get you from Birmingham to Crewe into Manchester. So I wouldn't abandon the idea. I think there's a lot of support for that. And, you know, there's still the 36 billion pounds available to them for, the h two. Phase two. Just because the previous government allocated that to network north, that doesn't mean the current government is committed to it. But there is billions of pounds of money there. That's about 1.8 billion pounds a year. And it's not a cost, Peter. This is. We have to be careful with Ray. Always see it in terms of cost. It's an investment. Rail supports 710,000 jobs, 43 billion pounds in GVA, 14 billion pounds in tax revenues. Every pound you spent on rail, spent on rail, you generate two pounds, 50 pounds in the wider economy. So if you spend some of that money in rail capacity between Birmingham and, Manchester, you're actually investing in the economy and you're actually going to get taxed back as well. So we shouldn't just see it just as a cost. but what they're going to do about things like extra platforms at Birmingham remains to be seen. What I would say is part of the reason the costs went up over these two projects was there was so much changing in scope, we think it added about 40% to the cost. So you keep changing the scope of these plans, you add costs all the time. So at some point, a government's got to say, this is the plan, no changes. Ten years, we're going to deliver it. And if they've done it in the first place with a settled scope and a clear, plan, then we may not be in this position that we are in now. so let's not repeat the areas of the past in the future.
Raoul. Indeed, just to come back to that, point you made just there about costs and timeframes, the NEA report said that 27.8 billion pounds has also been spent on phase one. With HS two limited's kind of price estimates. In a worst case scenario, it could yet be another, almost 30 billion pounds, more than double what's already been spent, just to get phase one completed. And I just wanted to come back to the point you mentioned about network north as well, and the 36 billion pounds that was attributed to that by the previous government. And you're saying that's their funds that could potentially still be available to the Labour government if they want to reallocate that. One of the things that the Labour manifesto was specific about was that they do want to improve rail infrastructure in the north. Presumably a large sum of that 36 billion pounds towards network north would help to improve this infrastructure that they specifically said they want to improve in the north of England. So when you bear that in mind, do you think it is that 36 billion pounds really available to redirect into north south connections or do you think the Labour government settled on northern?
Yeah, it's totally up to government. I mean, the network north proposals, if you remember, included, putting Preston in the wrong place on the map and had transport scheme for Southampton, which last time I live, was nowhere near the north, also talked about, potholes, which is an important thing, but that's hardly, what a strategic national asset money should be spent on. So it's up to the government to decide what he wants to do with the money. I do know it's got its high speed rail cru to Manchester bill, so it's going to rescope, the northern part of the northern lake, for a northern powerhouse rail scheme. And we will support any work for our members up there. To our mind, you can do both. These schemes generate lots of economic prosperity, they generate connectivity, they generate local growth, it's all good for UK plc. And also if the government seriously wants to decarbonize and take lorries off the motorways and so on, then you have to have the capacity there to do it. So it's really down to decisions the government wants to make, how bold it wants to be. talking to Labour politicians in the past, they tend to be very positive about, round about what it can deliver. so we're going to, go along on that journey and hope that they can, deliver, their plans, whether they're renewals, whether it's enhancements, whether it's rolling stock. There's a lot of work there to be done if they do it in the right way. We've talked about infrastructure, but there's also the rolling stock side of this as well. There are some immediate decisions that need to be taken there. Ah, some of our major Oems, original equipment manufacturers, have not got a lot of work until 2026, when some of the HS two trains come on board and other trains, around the country. So it makes sense to have a pipeline of rolling stock work as well. that includes work right now, not sticking plaster, but a constant supply of rolling stock is what you have in most other countries that, do very well. We need to look at that as well. So Labour's got plenty to get its teeth into, whether it's infrastructure and capacity, whether it's rolling stock, whether it's signalling we need to replace. 65% of our signals are signalling over the next 15 years of additional signalling. There's so many things that need to happen, but if the government makes, the new government makes early decisions and makes them now gets on with it, the supply chains in place to deliver.
Fantastic. Just covered pretty much every aspect of the rail industry I could possibly want to return a question on. But there was just one thing that left outstanding that did appear in your manifesto last month. Ah, you talked about the new trade orders there. But one thing you also mentioned was low carbonous network upgrades. And I just wondered kind of what your general vision for that is. How do you perceive, what sort of low carbon network upgrades do you envision moving forward?
Part of the issue around decarbonisation is that often if you try and deliver decarbonized forms of infrastructure, so cement for example, it can be more expensive to use a decarbonized form of cement than the one that isn't. And what we're saying is that don't be afraid to spend maybe a bit more money in the short term to deliver longer term decarbonization benefits. And there's all kinds of ways of decarbonization rates. I mentioned infrastructure, but you've also got electrification. there's a lot we can do on electrication to decarbonize rail. There are battery powered trains, there's potentially hydrogen powertrains. This is the kind of network the government will in the future. it's a good economic sense, but obviously makes it very important, decolonization, sense as well. again, the suppliers are there to deliver this network. It's cleaner, it's quicker, it's more value for money for taxpayer, get on and make the decisions.
Just one final question then. It sounds like you've generally responded very positively to the king speech initially and you say you've already met with the likes of Louise Hague and obviously Lord Hendy seems to be a very common sense kind of appointment. So overall moving forward, just a general assessment of everything we've discussed. Discussed. in this episode, I presume you're very generally fairly positive about the prospects of the rail industry under m. The new government?
Yeah, I'm positive. I mean there's also non political points at which we positive about There are studies done, for example by unified, the European Trade association that say that globally rail is going to grow over 3% every year, 2027 so the market is positive. The passenger forecasts, as I mentioned before in the UK are positive. there's a lot of rail work on a lot of rails happening. And as I said, even despite difficult service levels on some parts of the network, even despite industrial action, pass numbers have bounced back pretty strongly and revenues are coming back as well. That's not to say there aren't challenges, but it does mean that there's a lot to work on and we're going in the right direction. And rail is one of those transport modes of the future the government needs if it wants to hit decarbonisation targets, if it wants local growth, it needs to support the railway industry. So we're positive. The people we've methemeral. I met Louis Hague before the election. I haven't met her since. But they're all very positive about rail. and you know, for us, I mean the big problem with rail obviously was the h two announcement. If we can overcome some of those capacity issues, then a lot of the a lot of the portents head in the right direction. So yes, I'm optimistic. Ah, our suppliers hopefully optimistic m and we as optimistic overall.
Darren Kaplan, thank you very much for joining me on this episode of Rail Technology magazine podcast. It's been a pleasure. Thank you very much. Thank you.
Peter.
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