Andy Bagnall, Chief Executive of Rail Partners: Interview

Andy has over 20 years of experience within government, across the private sector and most recently as the Director General at the Rail delivery Group (RDG), where he coordinated policy and advocacy activities.

Andy has held a number of policy and communications jobs, initially joining Rail Delivery Group as the Director of Strategy and Communications and then becoming Chief Strategy Officer. Prior to this, Andy was KPMG’s Director of External Affairs, and spent five years at the CBI as Director of Campaigns. He was previously special adviser to the UK government, serving two cabinet ministers in three departments over four years.

Sam Sherwood-Hale spoke to Andy Bagnall, Chief Executive of Rail Partners about rail reform, trebling of rail freight by 2050 and getting the best out of the public and private sectors

SSH: You were Director General at Rail Delivery Group before setting up Rail Partners in May this year, what led up to the move?

AB: Rail Delivery Group – or RDG – prior to Rail Partners spinning out, housed two key functions for the industry. First, it provided core industry systems – National Rail Enquiries, reservations, ticketing, the 24/7 press office for the industry, railcards, passenger assist, and so on. Secondly, it also housed the more traditional trade body functions of policy development and advocacy. In the White Paper it stated, and we broadly supported, the core functions of RDG transferring to Great British Railways, but importantly, there was provision for private sector operators to form a trade body if they so wished. Hence the policy and advocacy functions and some operator service functions spinning out of RDG. Ideally, the setting up of Rail Partners and the RDG transfer would have happened concurrently, but the RDG process has been delayed and Rail Partners members felt it was important to proceed with establishing a strong independent voice for private sector operators as we look to implement reform.

SSH: What was the inspiration behind starting Rail Partners?

AB: Rail Partners exists to make the railway better by capitalising on the expertise and commercial drive of private sector operators for the benefit of those who use the railway, passengers and freight customers, and those who pay for it, including taxpayers.

In choosing our name, we wanted to be explicit that collaboration is central to everything we do – working with government and the rest of the industry to deliver the shared ambitions of the ‘Plan for Rail’ white paper, and to secure the brightest possible future for rail and best possible customer experience, in turn securing all the benefits for Britain that a thriving railway supports. In short, we would like to see a reinvigorated public-private partnership.

SSH: What are Rail Partners’ priorities for rail reform?

AB: We’re at a fork in the tracks and if we choose the wrong track and implement reform in the wrong way, the destination is further cost pressures, reduced service levels and a negative experience for customers. If we chose the right track, getting reform right, we can return the railway to growth.

Great British Railways – or GBR –must be a guiding mind not a controlling one. And by that, I mean it needs to be a strategic public sector body at the centre of a reformed system with the necessary freedom from government but, critically, it must decentralise decision making, including to operators. It needs to help coordinate the decarbonisation of the railway and also a transformation of the customer retail experience by the wider industry.

The new rail contracts are key to an effective public-private partnership. Franchising was a successful system but needed reform even before the pandemic. The new Passenger Service Contracts – PSCs – have to harness the same private sector creativity and entrepreneurialism which, over 25 years, consistently demonstrated its strengths and ability to innovate in growing patronage and revenue, reducing waste, making best use of existing assets and driving a shift to using rail. Today, a lot of operator areas include more than one distinct market, so one size of contract won’t fit all train operating companies. The Government should set out a clear timeline for developing the new model contracts and a pipeline for taking them to market.

We also need an ambitious target for freight growth – we have called for volumes to be trebled by 2050. To achieve that, the right supporting policy framework must be put in place with a stable access regime and incentives to potential customers to switch from road to rail.

SSH: You said in response to Labour’s announcement reconfirming its rail nationalisation commitment that: 'The right reform for the railway is a reinvigorated public-private partnership that focuses on the customer’ could you expand on that?

AB: To distil the issues facing the railway to simply a question of ownership, is to negate the hugely positive track record of private sector operators and to place unsustainable expectation on the public purse permanently. To be clear, we aren’t calling for a continuation of the status quo. Accountabilities under franchising had become blurred. That is why a renewed public-private partnership is the right answer – with GBR as an over-seeing guiding, rather than controlling, mind and with operators contracted to deliver outcomes and drive up revenue rather than being too tightly specified.

SSH: How did Rail Partners go about bringing together independent owning groups, train and freight operating companies into one partnership?

AB: While the perception of the railway might be one of fragmentation, the relationships and commonality of purpose across the independent passenger and freight operators are significant. While primarily a policy organisation, it was also important to anchor the new trade body in the operational railway by providing technical services to operators. All parties felt that a solution-led organisation, that was a partner to government and ultimately GBR, was the right answer. The members bring together hundreds of years of domestic and international transport expertise and all passionately believe that, if we get reform right, in another 20 years we can be talking about another railway renaissance. They all want to play their part in that.

SSH: How can rail form a partnership which gets the best out of the public and private sectors?

AB: There are a number of areas where, if we get reform right, we can get the best from both the public and private sectors. This includes the development of new PSCs, the creation of GBR itself, and the implementation of that freight growth target.

When it comes to the setup of GBR, we believe in a strategic and collaborative approach. This involves ensuring GBR has a customer focus, rather than just expanding the remit of Network Rail which of course rightly has its primary focus on infrastructure management. It is then crucial that the relationships between the GBR centre and the GBR regions, provides those who are operating rail services with the ability in their contracts to respond to customer needs.

New PSCs and GBR must ensure that the operational and commercial expertise of operators is not blunted, and that contracts provide the right incentives and associated levers to enhance the customer experience and reduce costs to the taxpayer. Allowing operators to look outwards to the customers rather than inwards to the central bureaucracy of GBR.

Finally, an ambitious freight growth target should allow rail freight’s contribution to the UK economy to be maximised, and enable rail freight to play a central role in the delivery of the government’s legislative commitment to achieve net zero carbon emissions by 2050. An ambitious target will drive the public and private sectors to work in partnership to ensure delivery.

SSH: In your prospectus you call for a trebling of rail freight by 2050, how do you think we can go about achieving this?

AB: Rail freight is an asset-heavy sector; policy and investment decisions made today will directly affect the trajectory to 2050. That is why we have called for the overarching target to be underpinned by five-year interim targets to give immediate focus on growing the rail freight market – this will also help to ensure that as an industry we stay on track.

Setting a target is an important first step, but it must be supported by policies, incentives and investment to achieve freight growth.

This includes maintaining a stable access and charging framework which gives freight operators and their customers the confidence to make significant private sector investments. We have also seen freight customers and operators innovate during the pandemic to run longer, heavier and more direct services making better use of capacity and offering significant productivity improvements.

In the longer term, infrastructure investment is also key – and we have identified a series of infrastructure and infill electrification schemes which will unlock significant freight growth and help the sector to decarbonise.

SSH: Do you think there is currently enough incentive coming from the government around the ‘Green Economy’? What more could we do to decarbonise the railway?

AB: The Government has set ambitious net zero targets and committed to those in legislation, and rail can play an important part in supporting those ambitions. Rail remains the most carbon-friendly way to move freight and the lowest emitting form of mass transport. Attracting passengers and growing the freight market will make a real difference in terms of reducing transport emissions in the short term.

We have been frustrated previously by contradictory incentives which exist across the transport sector. For example, it was a disappointment to see the Government cut Air Passenger Duty on domestic flights from April 2023 in a bid to boost connectivity within the country – this will directly create modal shift in the wrong direction, from rail to air. We need a holistic ‘level playing field’ approach that incentivises customers and businesses to choose lower carbon transport modes like rail.

Improving on rail’s already strong lowcarbon performance is critical to achieving net zero. The Government now needs to commit to both electrifying the railway and utilising other decarbonisation technologies like hydrogen and battery trains where that can provide a more cost effective solution. We shouldn’t just see decarbonising rail as a cost – rather it has the potential to create thousands of new, ‘green’ jobs across Britain, mostly outside London and the South East.

SSH: Do you believe it is possible to begin the work setting up Great British Railways despite the delay in the legislation?

AB: The GBR setup has already started in the form of Great British Railways Transition Team, although of course legislation is ultimately needed to formally establish GBR as an arms-length body. That is why it is imperative for there not to be a long hiatus where the industry is left in limbo. While it is disappointing the legislation will be delayed until the next parliamentary session that starts in May 2023, we can continue the journey to create a reformed system through other changes that do not require parliamentary time. Dormant revenue incentives can be switched on within National Rail Contracts to encourage the whole industry to drive up revenue. And more detail can be shared with the sector about the direction of travel on new passenger service contracts, which do not require legislation to develop, including feedback from the DfT on last year’s market engagement exercise.

SSH: Do you anticipate passenger operators being given the flexibility needed to respond to customers evolving needs?

AB: At present, it is hard to judge given the delayed response to the DfT’s market engagement day and the lack of clarity on the design of GBR. It is our hope that under new passenger service contracts, GBR and DfT recognise the importance of providing passenger operators with the flexibility to respond to evolving customer needs.

This will ensure the private sector is used effectively to not only deliver for passengers, but in doing so drive down costs and bring back revenue to reduce the current burden on the taxpayer.

We believe that a spectrum of contracts should fall into three broad categories to deliver on the Plan for Rail’s goal of creating a simpler contracting profile and optimal results for taxpayers and customers. With concession-style contracts at one end of that spectrum, serving predominantly commuter markets, probably having less flexibility. Long-distance contracts, which are more commercially driven and flexible at the other end. And a mixed markets model in the middle, with differing degrees of flexibility depending on the markets served.

SSH: What do you think is the biggest challenge currently facing the rail industry?

AB: The biggest challenges the railway faces are interrelated issues coming out of the pandemic – the need to adapt to travel patterns that are almost certainly permanently altered, the cost pressures as a result of lower passenger numbers, the industrial action that is slowing rail’s recovery, not to mention the need to deliver structural reform that pre-dated the pandemic. We need to seek solutions that reduce the burden on taxpayers, invigorate the private sector to do what it does best, chasing revenue, responding to customers and improving their experience so that rail becomes a genuine choice for existing rail passengers and those who don’t currently use rail, alike.

SSH: What can our readers expect if they subscribe to Rail Partners’ newsletter?

AB: Readers who sign up for insights from Rail Partners will receive our blogs and publications on a variety of rail related topics – from operations and engineering, to contracts and the future of rail reform.