Monday 18 January 2021

 

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Realising the potential of GB Rail – detailed

Final independent report of the rail value for money study

London, 2011. 320pp tables

sample text:

In its Interim Submission to the Secretary of State, published last December, the Rail Value for Money Study set out its preliminary assessment of the costs of GB rail, the reasons why it considered that those costs were higher than they should be, and a preliminary estimate of cost savings which might be possible. The Study team has now completed its work and is reporting its findings and its recommendations for improved efficiency and value for money. The Study has taken place at a time when GB rail can demonstrate many achievements in terms of growth in passenger and freight markets, continued improvement in safety, increasing customer satisfaction, improved operational performance and significant investment. Particularly worthy of note is the way in which the industry has, since privatisation, reversed a 50-year trend of reduction in passenger traffic. However, despite its many successes, there is a widespread recognition that the GB rail industry still has major problems in terms of efficiency and costs. This Study has not examined possible cuts to the rail network. The Terms of Reference made (it very clear that the aim of this Study was to identify options for improving value for money to passengers and taxpayers while continuing to expand capacity as necessary. Accordingly, the entire focus of this Study has been on ways of improving efficiency and value for money on the basis of the existing network, and it seems clear that there is considerable scope for such improvement. As the Study has said on numerous occasions over the past year, this is Plan A. Only if all concerned failed to deliver the improvements which the Study judges to be both necessary and possible, would consideration conceivably have to be given to a Plan B – a smaller railway. The Study has confirmed the dimensions of the efficiency gap. It estimated initially that GB rail costs should be 20-30% lower than they were in 2008/09, and commissioned a detailed benchmarking exercise comparing GB rail with railways in four other countries – France, the Netherlands, Sweden and Switzerland. Although benchmarking is seldom an exact science, the clear indication from that exercise is that GB rail costs would need to be reduced by around 40% to match those comparators. As has been indicated by previous benchmarking done by the Office of Rail Regulation \ORR\), and notwithstanding the fact that Network Rail \(NR\) delivered a 30% cost reduction during Control Period 3, NR's higher costs are still a significant reason for this gap. However, Train Operating Company (TOC) and Rolling Stock costs also contribute to GB rail's higher costs, primarily because of the lower level of train (utilisation here, i.e. fewer passenger-kilometres generated per train-kilometre. Because all the reasons for the lower levels of train utilisation are not fully understood, and because some of these may be systemic and not capable of elimination, the Study considers that, for practical purposes, the target at present should be to achieve a 30% reduction …


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