Rail Review - Submission of Evidence on behalf of Campaign for Better Transport & Teneo - Prepared for the Williams Review, April 2019
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Rail Review – Submission of Evidence on behalf of Campaign for Better Transport & Teneo Prepared for the Williams Review, April 2019 Strictly Private and Confidential
Notice
This Report has been prepared by Teneo Consulting (“Teneo”) (a trading name of Teneo Business Consulting Limited, formerly operating as Credo) on the
basis of a proposal dated 26 November 2018 addressed to Campaign for Better Transport (“CfBT”), via email.
All observations and analysis contained in the Report have been made on the basis of the information available at the time of the assignment and has been
prepared as at 24 January 2019. We have not undertaken to update our report for events or circumstances arising after that date. Teneo cannot be liable for
any subsequent changes.
In preparing the report, Teneo relied upon, and assumed the accuracy of, information obtained from a variety of sources, including but not limited to:
interviews with senior rail industry executives; financial, government and economic statistics and forecasts; published market research; published academic
and economic research and public filings of financial information. Teneo accepts no responsibility and will not be liable in the event that information provided
to Teneo during the course of the assignment from such sources and relied upon by Teneo is subsequently found to be inaccurate. This report may make
reference to ‘Teneo Analysis’; this indicates only that we have (where specified) undertaken certain analytical activities on the underlying data to arrive at the
information presented; we do not accept responsibility for the underlying data and the analysis has relied on estimates and assumptions that appear
reasonable but have not been rigorously tested.
In respect of this submission to the Williams Review:
− We have held calls with and obtained information from the Campaign for Better Transport management team
− We have also undertaken telephone or in-person interviews with 10 senior executives within the rail industry, whom we quote anonymously but are
listed at the end of this Report
The Report comprises information within our terms of reference and the focus and approach described in the proposal. Save as aforesaid, Teneo does not
give any representation or warranty (express or implied) of the accuracy or completeness of the Report.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in the United Kingdom or other
jurisdictions and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.
Our work has been limited by the time made available and the scope of our work. We may also not be aware of all facts and information that might be
regarded as relevant. Furthermore, we have not corroborated the information received and, to that extent, the information may not be regarded as reliable.
We accept no responsibility for matters not covered by the Report or omitted due to the limited nature of the review.
Teneo shall accept no liability to anyone who should obtain a copy of this Report
Teneo 2Introduction; This submission focusses on the outcomes the railway needs
to deliver for its passengers and wider society, and the potential for
reshaping the network to better achieve those outcomes
Key elements of this report
OUTCOMES AND FINANCIAL CONTEXT CHALLENGES OPTIONS
Consumer
System design
Structures
Financial
Societal Operational
Network operations
Structural Financial
The goals the rail network needs to achieve
The most material barriers that currently A discussion of the key issues to be
for passengers, businesses and
exist to achieving those outcomes, and how considered when assessing the options for
communities – and the financial
these are likely to change in future the future of the railway
environment in which it operates
pp.4-45 & pp.52-60 pp.45-51 pp.61-74
Detailed research, analysis and evidence base on key outcomes
Informed Comment and constructive challenge of key themes via in-depth
by: interview programme with 10 senior industry figures
Views and expert opinion of CfBT and Teneo senior team
Teneo 3Agenda
The outcomes Great Britain needs from its railway 03
The challenges facing the railway 45
The financial environment in which the railway operates 52
Options to maximise the value of the railway 61
Appendix 75
Teneo 4Outcomes: overview Economic
Financing
Future plans for the railway must reflect the purpose of the Social
network and the outcomes it should deliver for Great Britain Environmental
Key outcome areas for the GB rail network
To understand the strengths and weaknesses of the
current GB rail network, we begin by asking the question
‘What is the railway for?’ Economic:
The rail network supports
In response, we have set out a range of key outcomes economic growth across Great
that the railway should deliver – not only for its
passengers, but also far more broadly in terms of Britain
context of the financial environment
Outcomes must be delivered in the
delivering value for the country as a whole
The outcomes that the railway needs to deliver can be
categorised into three areas: Economic, Social and
Environmental
Social: Financial:
– Across these areas, we set out on p.14 the nine The railway seeks
specific outcomes that the railway needs to support An inclusive and accessible rail to deliver value for
network benefits users and money from public
We view the Financial environment in which the railway transforms communities funding, alongside
operates as a key enabler of all of these outcomes appropriate support
– We discuss financial considerations in detail in Section from the private
3 of this report (pp.60-68) sector
Environmental:
The rail network contributes to
We believe the outcomes the GB rail network
a cleaner, more environmentally
should deliver align into three key areas: sustainable Britain
economic, social and environmental
Teneo 5Outcomes: overview Economic
Financing
Within each of these areas, successful delivery requires the Social
railway to achieve a range of key outcomes Environmental
Page
Outcome
ref.
EC1 Rail serves travel-to-work requirements for the optimal number of people p.15
Economic
EC2 Rail supports housing development, increasing the catchment of cities p.19
EC3 Rail provides access to leisure activities for the optimal number of people p.22
EC4 Rail offers a productive and supportive environment for work and leisure travel p.27
S1 Rail is available and accessible to as broad a section of the population as possible p.31
Social
S2 Rail has a diversified user base p.35
S3 The benefits of the rail network are optimally balanced between regions and cater to local requirements p.40
Environ-
EN1 Rail ensures that the transport sector reduces its carbon emissions in line with Government policy p.44
mental
EN2 Rail supports better air quality by minimising Britain’s exposure to pollutants p.50
In the coming pages, we assess the industry’s performance against each of the above, and identify where
– within the scope of this review – there are opportunities to improve the industry’s performance
Teneo 6Economic
Rail serves travel-to-work requirements for the optimal
Financing
EC1 Social
number of people Environmental
Economic 1
Desired outcome
The key outcome the railway exists to Rail serves travel-to-work requirements for the optimal number of
achieve people
Aspiration “Rail has the appropriate share of the travel-to-work market across all major
employment centres to allow people to access available jobs, and for
What would ‘perfect’ achievement of
commuting by rail to be affordable, reliable and offer acceptable journey
this outcome look like?
times.”
Key outputs to deliver this Assessed
Rail links commuters with their place of business to
What are the firm deliverables against 1.1 on
facilitate economic output
which we can judge success? pp. 16-18
Teneo 7Economic
Rail links commuters with their place of business to
Financing
EC1.1 Social
facilitate economic output Environmental
Use of the railway for travel to work varies significantly …and there is also material variation by job type (and
across the key cities of the UK… thereby wage level of employees)
Proportion of workforce that commutes by rail, by sector Proportion of workforce that commutes by rail, by sector
Financial Services 21%
Professional and Scientific
14%
Key: % of commuters travelling by rail Services
> 5% 5 – 15% > 15%
IT Services 14%
Administrative and
7%
Support Services
Real Estate 7%
Other 7%
Hospitality 5%
Education, Human Health
4%
and Social Services
National Average, 6.1%
Infrastructure, Motoring
3%
and Manufacturing
View of current Rail is a popular commuting method in urban environments driving significant economic
performance: value in these areas, but plays a small role in rural areas and lower-paid/ service sectors
Source: Left map – NOMIS 2011 Census Teneo research and analysis Teneo 8
Right graph – NOMIS 2011 Census, Teneo research and analysisEconomic
Rail links commuters with their place of business to
Financing
EC1.1 Social
facilitate economic output Environmental
Over time, rail has grown to support an increasing …though this has been heavily focused on London and
proportion of Britain’s GVA… the South East
GVA generated by rail % of GVA by rail
% of GVA by rail commuters (line)
commuters (bars) commuters (line)
0% 4% 8% 12% 16%
£140bn In 2017, 5.9% of GB workforce relied on 9.0%
the railway to get to work, generating London £61.3bn
£126bn in GVA, a £79bn increase vs. 2002 8.0% South East £23.6bn
£120bn
7.0% East of England £13.0bn
£100bn North West £5.6bn
6.0%
Scotland £5.1bn
£80bn 5.0%
West Midlands £4.5bn
£60bn 4.0% Wales £3.9bn
3.0% Yorkshire and The Humber £3.4bn
£40bn
South West £2.9bn
2.0%
£20bn East Midlands £1.8bn
1.0%
North East £0.9bn
£0bn 0.0%
£0bn £20bn £40bn £60bn £80bn
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
GVA generated by rail commuters (bars)
View of current There may be opportunity to continue to build on the strong economic contribution of rail by
performance: widening the regions that benefit, but a range of wider factors must be considered first
Source: Left graph – Transport Statistics Great Britain, ONS Regional GVA, Teneo modelling and analysis Teneo 9
Right graph – Transport Statistics Great Britain, ONS Regional GVA, Teneo modelling and analysisEconomic
Rail links commuters with their place of business to
Financing
EC1.1 Social
facilitate economic output Environmental
However, the railway’s future success in supporting commuting journeys is dependent on adjusting to the strengthening
trend for non-traditional working patterns, following a gradual decline in the number of traditional commuters
Great Britain workforce by place GB workforce by
of work and commuting habit commuting habit (detailed)
Key
Work from home 31.8m
Works at the same place 2 consecutive days a week 100%
Other work
Works in different places each day
90% routines1, 4.5m
Works at the same place, out of home, everyday
100% Multisite, 2.0m
80%
90% Flexi-time, 2.9m
70%
80% Work from home,
The proportion of 60% 4.2m
70% people commuting to
50% Part-days / shift
60% the same workplace
workers, 5.3m
every day has dropped With less than half
50% 40%
by 7 %pts since 2002. of the labour force
40% More recent data would 30% still being
30% arguably show an Traditional 9 to 5 traditional Monday
advancing trend and 20% to Friday 9 to 5
commuters, 12.9m
20% further advances in commuters, which
10%
10% technology are the rail network
expected to accelerate 0% best serves
0%
this trend GB workforce broken down by
2002 2004 2006 2008 2010 2012 2014 2016
commuting habits
View of current Assuming working patterns continue to evolve at pace, the industry will need to adjust and
performance: adapt to serve these journey types and maintain its economic contribution
Source: Left graph – National Travel Survey Teneo 10
Right graph – ONS Labour Force Survey, ONS Labour Market data, Teneo modelling and analysisEconomic
Rail supports housing development, increasing the
Financing
EC2 Social
catchment of cities Environmental
Economic 2
Desired outcome
The key outcome the railway exists to Rail supports housing development, increasing the catchment of
cities
achieve
Aspiration “All major housing developments should have good access to the rail
What would ‘perfect’ achievement of network, providing regular and reliable services to the relevant local
this outcome look like? employment centres.”
Key outputs to deliver this Rail supports land use planning by increasing the Assessed
What are the firm deliverables against 2.1 catchment of cities, supporting new housing on
which we can judge success? developments and expanding the travel-to-work area pp. 20-21
Teneo 11Rail supports land use planning by increasing the Economic
Financing
EC2 catchment of cities, supporting new housing developments Social
and expanding the travel-to-work area Environmental
A relatively low proportion of the population can access …with those living under 20 minutes away from a station
the rail network within walking distance from home… using the rail network significantly more
GB population by time taken to walk Proportion of population that uses rail multiple times a
to the nearest rail station week, by time taken to walk to the nearest rail station
100% 20%
90% 17%
More than 30
80%
minutes 15%
70%
60% 11%
50% 21-30 minutes 10%
8%
40% Only 44% of the
11-20 minutes population lives National Average, 6%
30%
within a 20 5%
20% minute walk of 3%
6-10 minutes the nearest 2%
10%
railway stations
5 minutes or less
0% 0%
Time taken to walk to the nearest railway 5 minutes or 6-10 11-20 21-30 More than
station less minutes minutes minutes 30 minutes
View of current Proximity to a station is a key to the attractiveness of rail - and therefore providing ready
performance: access to the network is key if future urban developments are to achieve a high rail share
Source: Left graph – DfT Public Attitudes Towards Transport Teneo 12
Right graph – DfT Public Attitudes Towards TransportRail supports land use planning by increasing the Economic
Financing
EC2 catchment of cities, supporting new housing developments Social
and expanding the travel-to-work area Environmental
Analysis of new housing developments shows that this …and while there are some isolated examples of new
accessibility gap is only gradually being closed… station development, generally approvals are low
Proportion of new developments within 20 mins Number of new Network
walking time of their nearest rail station Rail stations opened Spikes in the number of new stations relate to
the reopening of the Ebbw Valley Railway in
100% 14
2008 and the Borders Railway in 2015
90%
12
80% Greater than 20 mins
70% 10
64% of new
60% developments are 8
built within 20
50% Non-london within 20 mins
minutes walking
time of a rail 6
40% Trend line
station, which is
30% only gradually 4
reducing the gap
20% London within 20 mins between those with
2
10% and without easy
access to the
0% railway 0
New large-scale developments 1993199519971999200120032005200720092011201320152017
View of current There is more that could be done to integrate decision-making across planning for new
performance: housing developments and the growth and expansion of the railway
Source: Left graph – 24housing, Google maps, National Rail Teneo 13
Right graph – Proposed Railway Schemes at Trundledge.comEconomic
Rail provides access to leisure activities for the optimal
Financing
EC3 Social
number of people Environmental
Economic 3
Desired outcome
The key outcome the railway exists to Rail provides access to leisure activities for the optimal number of
people
achieve
Aspiration “Rail services provide a safe, convenient and affordable means of transport
to/from town and city centres, with service levels appropriately aligned to
What would ‘perfect’ achievement of
demand and when people wish to travel to help support economic vibrancy
this outcome look like?
across the country.”
Assessed
Rail provides accessible and affordable links to the
3.1 on
Key outputs to deliver this leisure services of town and city centres
pp. 23-24
What are the firm deliverables against
Assessed
which we can judge success? The network reflects the needs of a 24/7 economy with a
3.2 on
greater leisure and service focus
pp. 25-26
Teneo 14Economic
Rail provides accessible and affordable links to the leisure
Financing
EC3.1 Social
services of town and city centres Environmental
There is evidence that rail may currently under-serve …partly due to identified challenges in achieving good rail
short-distance leisure journeys… links to social activities
Proportion of journeys served by rail
travel (excluding walks under 1 mile) “The rail industry does not place sufficient
emphasis on the economic benefits of leisure
12% travel during off peak periods.”
Interviewee D
10.1%
10%
“For those living outside London, it can be
stressful to see a West End show if they are
worried about missing their last train home.”
8%
Spokesperson, West End musical
% of business /
This production now begins weekday shows
6% commuter journeys
half an hour earlier (7pm) – in part to help
on rail: 4.7%
people get home more easily afterwards
4%
CfBT research amongst football supporters
2.6% % of leisure
suggests that rail is by far the most popular
journeys on rail:
2% mode that fans ‘would like to use more’ when
1.4% travelling to matches. However, fans also
0.3% highlighted several barriers - including poorly
0% timed trains, ticket pricing and inflexibleEconomic
Rail provides accessible and affordable links to the leisure
Financing
EC3.1 Social
services of town and city centres Environmental
Instead, leisure activity is currently predominantly served by car
% of weekday % of weekend
Mode
leisure journeys leisure journeys
Leisure travel by mode by time of day (excluding walks under 1 mile)
Light rail 0.8% 0.7%
100% Rail 1.3% 1.2%
Bus 1.9% 1.8%
90% Other 5.8% 5.3%
80% Walk 8.7% 19.0%
70%
60%
50%
40% Car / van /
81.5% 72.1%
motorcycle
30%
20%
10%
0%
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
View of current Rail achieves a very low penetration of leisure journeys, suggesting a significant opportunity
performance: to encourage modal shift if barriers to access can be overcome
Teneo 16
Source: Graph – National Travel SurveyEconomic
The network reflects the needs of a 24/7 economy with a
Financing
EC3.2 Social
greater leisure and service focus Environmental
Supply of rail services is – at points in the day – out of pace with overall demand for travel Key
Rail journeys (% of total)
Proportion of weekday journeys 55% of rail journeys are made in the Journeys on all modes
and capacity by time of day (% of total)
am and pm peaks, carried on 40% of
total capacity Rail capacity (% of total)
14%
12% Rail serves little of the
By contrast, the inter-peak ‘school run’ demand – but
period (10am – 5pm) carries this is a peak for other modes
10%
38% of total rail capacity but
only 32% of total rail journeys
8%
Rail network underserves
6% evening travel
4%
2%
0%
Start of 07:00 - 08:00 - 09:00 - 10:00 - 11:00 - 12:00 - 13:00 - 14:00 - 15:00 - 16:00 - 17:00 - 18:00 - 19:00 - 20:00 - 21:00 - 22:00 - 23:00 to
service 07:59 08:59 09:59 10:59 11:59 12:59 13:59 14:59 15:59 16:59 17:59 18:59 19:59 20:59 21:59 22:59 end of
to 06:59 service
View of current Rail demand is tightly focused into the two daily peak periods, while there appears to be
performance: capacity available to serve a greater proportion of total off-peak demand
Teneo 17
Source: Graph – DfT Rail Statistics, National Travel SurveyEconomic
The network reflects the needs of a 24/7 economy with a
Financing
EC3.2 Social
greater leisure and service focus Environmental
The picture by day of week is similar, with weekends now a material market that appears under-served by rail
Proportion of journeys by Key
“Weekend travel is important to
Rail journeys (% of total)
day of week support the leisure industry, but in
Journeys on all modes my view the rail industry doesn’t
20% (% of total)
value this as highly as its role in
supporting commuting. Elements
18% like the engineering calendar do
reduce flexibility to serve this
16%
market.”
14% Interviewee A
12% “You could say that many of
the urban rail networks don’t
10% fully appreciate the role that
rail should be playing in
8%
serving the leisure and
6% business markets. You do
get the impression that the
4% Rail predominantly serves a weekday market; within Approximately 25% of journeys across all commercial incentives are
this, ONS data suggests approximately half of rail’s modes are made at the weekend, which not there…to promote the
2% weekday journeys are in connection with commuting compares to only 16% of rail journeys development of off-peak
services.”
0% Interviewee C
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
View of current Rail’s proposition should align with broader journey demand, including for weekend travel, to
performance: maximise the economic benefits it can deliver
Teneo 18
Source: Graph – National Travel SurveyEconomic
Rail offers a productive and supportive environment for
Financing
EC4 Social
work and leisure travel Environmental
Economic 4
Desired outcome
The key outcome the railway exists to Rail offers a productive and supportive environment for work and
leisure travel
achieve
Aspiration
“The rail industry minimises the economic cost of time spent travelling and
What would ‘perfect’ achievement of
allows all passengers to be as productive as possible on the move.”
this outcome look like?
Key outputs to deliver this Assessed
The rail network minimises the ‘dead cost’ of economic
What are the firm deliverables against 4.1 on
travel
which we can judge success? pp. 28-29
Teneo 19Economic
The rail network minimises the ‘dead cost’ of economic
Financing
EC4.1 Social
travel Environmental
A material number of passengers would be more productive if the on-train environment was better suited for work
Every year there are 64% of rail commutes and 50% of business journeys Of passengers with connectivity
Number of occur during the peak. 14% of these passengers are
971m business and issues, 83% claim they would be more
journeys standing (and therefore unable to work).
commuting journeys productive if the connection was more
Net result: 81m non-productive journeys due to
1,200m on the railway reliable
crowding
Net result: Potential 298m journeys
971m could be made more productive
1,000m
Business 81m
152 m
800m
360m
298m
600m
Commuters Wi-Fi connectivity is the most
400m 820 m 75% of rail passengers use, or would like to common improvement requested by
use, the internet - but 54% of these have passengers
531m
200m problems with poor connectivity Gains here have the potential to
Net result: 360m non-productive increase passenger satisfaction and
journeys due to connectivity revenue
-
All Commuting & Business Non-productive - Non-productive - Poor Productive journeys Opportunity - Potentially
journeys Train too crowded connection productive journeys
View of current Indicatively, almost a third of business and commuting journeys could be made more
performance: productive through from improved facilities for working
Teneo 20
Source: Graph – NTS, ONS, Steer Davies Gleave, Teneo modelling and analysisEconomic
The rail network minimises the ‘dead cost’ of economic
Financing
EC4.1 Social
travel Environmental
The potential value that could be unlocked by making
… With industry experts recognising this as a key priority
travel more productive is very material….
Lost economic benefit or ‘dead cost’ from increased congestion and poor
connectivity on the railway
“Free wi-fi is a priority for many as being able
100% to keep up with work, connect with friends...
[it] helps make rail travel more productive.”
90% Claire Perry, Former Rail Minister
80% If those 298m “Good connectivity means I worry less about
passengers are the overall journey time. I just need certainty
70% equipped with the over the time I will arrive in London and then I
Benefit if connectivity improved
tools to be productive,
can do my work on the train.”
60% we forecast £4.6bn
£4.6 bn economic benefit Interviewee A
50% based on current “Network Rail is well-placed to use its
productivity levels expertise and assets to deliver lineside
40% connectivity, but the incentives aren’t there
because the benefit will accrue to operators.”
30% If all standing business Interviewee E
and commuter users
20% were able to sit and be “We need to address the signal blackspots on
Benefit if crowding reduced productive on their the network. I wouldn’t be surprised if 5G is
10% journeys it could soon far quicker and easier than using on-
£1.5 bn generate £1.5bn
train WiFi, so ensuring strong 5G network
0% coverage will be crucial.”
Economic Benefit Interviewee H
View of current Giving these passengers the tools to remain productive would have material economic
performance: benefits for the wider economy, but requires collaboration between different stakeholders
Teneo 21
Source: Graph - NTS, ONS, Steer Davies Gleave, Teneo modelling and analysisEconomic
Financing
Economic outcomes Social
Summary of current performance and future opportunities Environmental
Current performance Trend over last decade Future pressure if no change
Economic 1 Changing working habits are increasing
Rail is well-positioned to serve Rail’s penetration of commuter journeys
the demand for non-traditional commuter
commuters in urban environments in has increased steadily amidst the growth
Rail serves travel-to-work journeys that rail is not currently well-
traditional 9-to-5 employment of cities
requirements for the positioned to serve
optimal number of people
3
Economic 2 The housing shortage in GB has Relatively few new developments are
Although rail successfully increases the
highlighted the importance of rail to within 20 mins of the rail network, and the
catchment of cities, a material portion of
Rail supports housing support the building of new homes that pace of expanding the network with new
GB does not live near a station
development, increasing are well connected to major towns/cities stations is fewer than 5 p.a.
the catchment of cities
2 ➔
Economic 3 Elements of railway planning have Drivers of city footfall (e.g. retail) are
Rail has low penetration of the leisure
presented barriers to serving changing likely to continue to weaken, and
market with a supply/demand imbalance
Rail provides access to travel patterns (e.g. possessions technology will continue to reduce travel
for off-peak journeys
leisure activities for the strategy) for social interaction.
optimal number of people
1
Economic 4 Rapid technological advances will
Poor connectivity and crowding adversely Rail has been slow to adjust to the
increase customers’ expectations around
impact rail users’ ability to remain increasing demand for connectivity; WiFi
Rail offers a productive an ‘always on’ connected and productive
productive while travelling availability inconsistent
and supportive environment
environment for work and
leisure travel 2
Teneo 22Economic
Rail is available and accessible to as broad a section of the
Financing
S1 Social
population as possible Environmental
Social 1
Desired outcome
The key outcome the railway exists to Rail is accessible and affordable to as broad a section of the
population as possible
achieve
Aspiration “Rail has a consistent mode share of trips made by each income quintile,
What would ‘perfect’ achievement of once normalisation adjustments have been made for the different types of
this outcome look like? trip people currently make.”
Key outputs to deliver this Assessed
Rail is an affordable mode of transportation for as many
What are the firm deliverables against 1.1 on
people across Great Britain as possible
which we can judge success? pp. 32-34
Teneo 23Economic
Rail is an affordable mode of transportation for as many
Financing
S1.1 Social
people across Great Britain as possible Environmental
The cost of rail fares is creating an increasing …and while rail does have some very low fares, these tend
affordability gap as fares rise faster than inflation… to be for more discretionary journeys
Indexed ticket prices and disposal income, 2008 - 2018 Indexed Standard Return Fares – London to Manchester
Key 1,100
The multiple between the
Ticket prices The rail network has become less and less 900 cheapest and most
affordable since 2008 as fares have risen expensive Standard fare for
Disposable income 700 3.9x
faster than growth in disposable income the intercity journey between
500
London and Manchester has
145 Growth since 2008 300 grown materially since 1993,
2.6x
140 100 and is now 3.9x (2019)
39%
1993 2003 2013
135
Key
130 Cheapest available fare Most expensive available fare
125 23% Indexed Standard Return Fares – London to Basingstoke
120 700
For less discretionary
115 500 journeys, this multiple has
110 2.0x changed much less over
300 2.0x
time (a combination of more
105
limited movements at both
100
100 ends of the range)
1993 2003 2013
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
View of current In recent years, the industry’s approach to fares has grown the affordability gap – and better
performance: value fares tend to cater to specific, mainly discretionary, markets
Source: Left graph – ONS, Lennon ticketing and revenue database Teneo 24
Right graphs – National Fares Manual 1993 / 2008, ONS, National Rail EnquiriesEconomic
Rail is an affordable mode of transportation for as many
Financing
S1.1 Social
people across Great Britain as possible Environmental
The cost of travelling by rail has risen faster than the cost of making a car journey
Growth in cost per km travelled,
by different modes of transport
255 Gains in car efficiency have offset fuel cost Growth
Key
increases, such that the overall price of since 2000
235 Rail fares motoring has remained broadly flat, while
rail prices have increased by 72% 128%
215 Bus and coach fares
Motoring: Fuel costs While bus fares appear to have grown faster
195 than rail fares over the period shown, they
Motoring: Fuel costs remain much lower in absolute terms
175 plus efficiency benefit 72%
155 47%
135
115
(2%)
95
75
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
View of current Over time, growth in rail fares has reduced its attractiveness relative to car – there is a
performance: challenge for rail to remain competitive if fuel costs should fall further
Teneo 25
Source: DVLA, LENNON, ONS, Society of Motor Manufacturers and Traders (SMMT)Economic
Rail is an affordable mode of transportation for as many
Financing
S1.1 Social
people across Great Britain as possible Environmental
Using travel within London as an example, use of the rail network by low income households far below that of higher income
groups
Indexed transportation usage by household income and mode of travel (£25,000 - £29,000 = 100)
160
While London’s lower income households
make fewer journeys across all modes, this
140
trend is much more prominent on the rail
120 network – a reflection of its higher cost of use
100
80
Key
60 All modes
National Rail /
40
Overground
20 Underground / DLR
0
< £5,000 £5,000 - £10,000 - £15,000 - £20,000 - £25,000 - £30,000 - £35,000 - £50,000 - £75,000+
£9,999 £14,999 £19,999 £24,999 £29,999 £34,999 £49,999 £14,999
View of current The impact of rail’s current pricing structure (both absolute and relative) impacts access to
performance: the network for low income households. This also limits the social outcomes rail can deliver
Teneo 26
Source: Transport for London – Drivers of demand for travel in London reportEconomic
Financing
S2 Rail has a diversified user base Social
Environmental
Social 2
Desired outcome
The key outcome the railway exists to Rail has a diversified user base
achieve
Aspiration
“Rail is be a relevant mode of travel for all types of journey that people make,
What would ‘perfect’ achievement of
and have a similar share of journeys across customers of all age groups.”
this outcome look like?
The rail network offers a service that is used by a broad Assessed
2.1 cross-section of the population and works across all on
Key outputs to deliver this different types of journey pp. 36-38
What are the firm deliverables against
which we can judge success? Assessed
The railway is integrated with other transport modes to
2.2 on
offer users an efficient door-to-door service
p. 39
Teneo 27The rail network offers a service that is used by a broad Economic
Financing
S2.1 cross-section of the population and works across all Social
different types of journey Environmental
The railway currently serves a predominantly young, and affluent, customer group
Proportion of rail journeys
There are
many potential c. 33% of people There may be
approaches to Reducing fares Better catering to
do not have access There may be opportunity to make
segmenting the could increase non-commuter
to a car, and are opportunity to make the railway more
customer base accessibility to low journeys could
more likely to rely rail more accessible accessible for
of the railway income quintiles that diversify rail’s user
on rail for social to the young and old women (51% of
use rail less base
inclusivity pop’n – 44% of trips)
We take a 100%
high-level view Lowest income quintile 60 + Busienss
Business
(right) of some
of the key No access to a car Fourth income quintile
80% Female
social 40 - 60
Leisure
characteristics Third income quintile
of rail users 60%
Second income quintile
This helps 40%
understand Access to a car 20 - 40
where there is Male Commuting
opportunity to 20% Highest income quintile
serve a more
representative 0 - 20
cross-section 0%
of the By car availibility By income quintile By age By Gender By journey purpose
population
View of current The rail network in Great Britain could be made more inclusive and accessible by addressing
performance: the current bias towards young, wealthy commuters
Teneo 28
Source: Graph – National Travel SurveyThe rail network offers a service that is used by a broad Economic
Financing
S2.1 cross-section of the population and works across all Social
different types of journey Environmental
Rail has an uneven share of journeys for different purposes, …while leisure travel is still predominantly served by car
with a skew toward commuting and business travel… travel
Rail mode share of different journey types Shopping and Leisure journeys by transport mode1
8% 100% Other, 4%
6.9% Rail, 1%
7% 6.8% 90% Bus, 6%
6% 80% Walk, 21%
5% 70%
60%
4%
50%
3%
2.1% 40%
Car and
2%
1.2% 30% Taxis, 69%
0.9% 0.7%
1% 0.4% 20%
0% 10%
0%
Leisure trips by mode
View of current There is a clear opportunity for rail to grow its share of non-commuting journeys – a key
performance: opportunity is to gain share of leisure journeys from car
Note: 1) Car and Taxis include journeys where the traveller was either the driver or a passenger, whilst Other includes bicycles, London underground, air and light rail
Teneo 29
Source: Left graph – National Travel Survey
Right graph – National Travel SurveyThe rail network offers a service that is used by a broad Economic
Financing
S2.1 cross-section of the population and works across all Social
different types of journey Environmental
…and preferences for rail versus other modes also varies
There is also an uneven degree of use across age bands…
materially by age
Proportion of age bracket that has used rail in the last 12 months Total number of daily commuter trips in London by mode and age band
140,000 Key
Car driver Underground Rail
16-24 66% Bus Walk Car passenger
120,000
Cycle
25-34 64%
100,000
35-44 55% 80,000
45-54 56% 60,000
40,000
55-64 53%
20,000
65-74 51%
0
75 and
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
25%
above
View of current Evidence suggests rail is less attractive to older passengers – whereas car becomes
performance: increasingly more attractive – suggesting there is more to do to widen accessibility of rail
Teneo 30
Source: Graph – DfT Public Attitudes Towards TransportEconomic
The railway is integrated with other transport modes to
Financing
S2.2 Social
offer users an efficient door-to-door service Environmental
Current usage patterns show that most people that use the …and there are a number of additional barriers to making
train live close to a station… effective door-to-door journeys
Population and rail journey segmented by
Method of travel to train station
distance walk to nearest train station “Its always difficult to link other
100% 100% modes of transport with rail,
5 minutes or less Other often due to a lack of
90% 5 minutes or less 90% infrastructure, which puts a lot of
6-10 minutes Bus / coach potential rail users off.”
80% 80% Interviewee C
6-10 minutes Underground
70% 70%
11-20 minutes
60% 60% Car / van
Despite making up c.
50% 56% of the population, 50%
21-30 minutes
11-20 minutes people who live over 20
40% minutes from the station 40%
Approximately 50% of journeys
make up less than 25%
30% 30% to rail stations are made by
of journeys, suggesting
Walk walking, with users appearing to
20% More than 30 21-30 minutes that they find it difficult to 20% find it difficult to link other modes
minutes use as an integrated
10% More than 30 of transport
door to door service 10%
minutes
alongside other modes
0% 0%
Population Rail journeys Method of travel to train station
View of current Users currently find it difficult to integrate rail journeys with other modes of transport,
performance: limiting the proportion of the population that uses it
Source: Left graph – DfT Public Attitudes Towards Transport, Teneo modelling and analysis Teneo 31
Right graph and commentary – DfT Public Attitudes Towards Transport, Teneo interviews, modelling and analysisEconomic
The benefits of the rail network are optimally balanced
Financing
S3 Social
between regions and cater to local requirements Environmental
Social 3
Desired outcome
The key outcome the railway exists to The benefits of the rail network are optimally balanced between regions
and cater to local requirements
achieve
Aspiration “Rail provides a comparable service quality across each region with the
social and economic return on investment broadly equitable - where the
What would ‘perfect’ achievement of
returns are different because the network is of different size or extent, the
this outcome look like?
degree of funding reflects this.”
Assessed
The rail network meets the different social needs of
3.1 on
Key outputs to deliver this different parts of Great Britain
p.,41
What are the firm deliverables against
which we can judge success? Assessed
Rail needs to provide a strong return on investment
3.2 on
across all regions
p. 42
Teneo 32Economic
The rail network meets the different social needs of
Financing
S3.1 Social
different parts of the UK Environmental
Benchmarking analysis of the performance of rail in the different regions of the UK shows stark variation
Key
Service Quality Rating Analysis conducted by Teneo for CfBT in 2018 benchmarked rail
(out of 100%) Bubble size = Growth & Usage services in each GB region based on a large number of
Rating where bubble shown = 25% quantifiable metrics:
80%
70% Proposed Trips per
investment head
60% East Midlands Disabled
Scotland access 5-year
50% West Midlands growth
rate
Wales North West Value for
40% money Access- Growth
North East ibility & Usage
Yorkshire And
30% East of England The Humber Network Rail modal
South West access & share
London Service
20% integration
South East Quality
Customer Station
10%
satisfaction quality
Rolling
Punct-
stock
0% uality Crowd
0% 10% 20% 30% 40% 50% 60% 70% 80% -ing age
Accessibility Rating (out of 100%)
View of current There are very clear variations in usage of the railway, its accessibility and service quality on
performance: a regional basis across Great Britain
Source: Graph - ORR, National Rail Passenger Survey, National Travel Survey, DfT Rail Statistics, DfT Public Attitudes Towards Transport, Transport Statistics Teneo 33
Great Britain, CfBT research and analysis, Teneo modelling and analysisEconomic
Rail needs to provide a strong return on investment across
Financing
S3.2 Social
all regions Environmental
Analysis on government subsidies and effective ‘returns on investment’ also demonstrates wide variation across regions
Government subsidy (bars) Subsidy per passenger KM (line) “Return on government investment” calculated as the GVA generated
by commuters who use the rail network over the subsidy cost
£700m £0.25
Key London £305
£600m Government Subsidy
£0.20 South East £94
Subsidy per passenger km
£500m East of England £94
£0.15 West Midlands £13
£400m
South West £12 London, the South East and East of
£300m Scotland £11 England receive relatively low
£0.10
subsidies, but have a high proportion
East Midlands £11
£200m of people commuting via rail, driving
£0.05 Yorkshire and… £11 a relatively high “return”
£100m North East £10
£0m £0.00 North West £9
Wales £8
Great Britain £38
View of current The disparity in “return” on investment prompts the question on how best to focus
performance: investment for the most effective achievement of socio-economic outcomes
Source: Left graph – ORR, Teneo modelling and analysis Teneo 34
Right graph - ORR, Transport Statistics Great Britain, ONS Regional GVA, Teneo modelling and analysisEconomic
Financing
Social outcomes Social
Summary of current performance and future opportunities Environmental
Current performance Trend over last decade Future pressure if no change
Social 1
Rail fares have grown faster than
The absolute cost of rail fares is high, The RPI+X mechanism may continue to
disposable income and costs of
Rail is available and pricing lower income groups out of the put upward pressure on fares,
motoring, creating ‘transport poverty’ for
accessible to as broad a market accentuating the current affordability gap
a growing segment of the population
section of the population
as possible
1
Social 2
The railway disproportionately serves Continued changes in demographics and
The rail network has been slow to adjust
younger, more wealthy commuters – trip patterns may further increase the
to demographic shifts and changing trip
with far lower participation from other misalignment between rail’s offering and
Rail has a diversified user patterns
user segments the needs of the broader population
base
1
Social 3
Overall rail accessibility, service quality, Regional growth and rail requirements
The rail network may be unable to
usage and social benefit varies continue to diverge, but the network has
The benefits of the rail appropriately serve all regions and adapt
materially between regions and largely maintained a one-size fits all
network are optimally to changing local requirements
operators approach
balanced between
regions and cater to local
requirements 1
Teneo 35Economic
Rail ensures that the transport sector reduces its carbon
Financing
EN1 Social
emissions in line with Government policy Environmental
Environmental 1
Desired outcome
The key outcome the railway exists to Rail ensures that the transport sector reduces its carbon emissions in
line with Government policy
achieve
Aspiration
“The total carbon footprint of transport in the UK is minimised, and the rail
What would ‘perfect’ achievement of
industry play a leading role in achieving environmental efficiency.”
this outcome look like?
Assessed
Rail is an environmentally efficient way to serve
1.1 on
Key outputs to deliver this passenger journey demand both now and in the future
pp. 45-47
What are the firm deliverables against
which we can judge success? Assessed
Rail minimises carbon emissions of the freight industry,
1.2 on
both directly and by alleviating congestion
pp. 48-49
Teneo 36Economic
Rail is an environmentally efficient way to serve passenger
Financing
EN1.1 Social
journey demand both now and in the future Environmental
Rail Sustainable Development Principles highlight the …and the railway is key to helping support Great Britain in
environmental importance of rail… achieving its carbon emissions targets
Two of the RSSB’s Rail Sustainable Development Principles highlight The Climate Change Act 2007 set the UK’s emission reduction targets
the importance of improving the environmental efficiency of the rail – It aims to reduce greenhouse gas emissions by at least 80% by
system 2050, with interim 5-year budgets
1. Reducing our environmental impact
– Operate and improve the rail network in a way that minimizes the Although the UK has already reached the Government’s target 2018-
negative impacts and maximizes the benefits of the railway to 2022 levels, the transport industry has made limited contribution to this
the environment Mt CO2 emissions
2. Carbon Smart 1000 Key
– Achieve long-term reductions in carbon emissions through Transport Other Sources 2050 Target
improved energy efficiency, new power sources and modal shift 2008 - 2012 2013 - 2017 2018 - 2022
800
The Railway has already made significant progress against these
objectives, with emissions per passenger set to fall by 38% between 600
2002 and the end of 2019
– However, the cancellation of electrification schemes and changing
travel habits may cause a stagnation in these improvements 400
– The introduction of disruptive technologies in other transport sectors
could also make them relatively more environmentally sustainable 200
than rail
0
1990 1993 1996 1999 2002 2005 2008 2011 2014
View of current Despite limited reductions in transport emissions since 2007, rail travel and its environmental
performance: efficiency is key to achieve the 2007 Climate Change Act goals going forward
Teneo 37
Source: Graph – National Atmospheric Emissions Inventory, ONSEconomic
Rail is an environmentally efficient way to serve passenger
Financing
EN1.1 Social
journey demand both now and in the future Environmental
Of the major modes of passenger transport, rail is currently …and there would be material further emissions benefits
the most efficient in terms of CO2 emissions… from transferring additional journey demand to rail
CO2 g/ passenger km by transport mode, 2015 Emissions saved by switching 75% of car journeys to rail, 2018
200 g 140 Mt
126 Mt
180 g
120 Mt
160 g
Other
100 Mt transport, 54 Mt
140 g
53 Mt
120 g 79 Mt
80 Mt
8 Mt
100 g Rail, 2 Mt
60 Mt Cars currently make up c. Other
80 g 55% of transport emissions, transport,
but moving 75% of these 53 Mt
60 g 40 Mt
Cars, 70 Mt journeys to rail could reduce
40 g transport emissions by 38%
20 Mt and total emissions by 10%1 Rail, 10 Mt
20 g Cars, 16 Mt
0 Mt
0g
Current Reduction in car Increase in rail Forecast
Rail Buses and Motorycles and Car and Taxis
transport emissions emissions transport
coaches mopeds
emissions emissions
View of current Rail currently releases 85% less emissions per passenger km than other modes of transport -
performance: if 75% of car journeys could be shifted to rail, overall GB emissions would reduce by 10%
Notes: 1) In practice, all car journeys may not be transferable to the rail network and capacity / financial constraints would have to be considered
Teneo 38
Source: Left graph - ONS, Teneo modelling and analysis
Right graph - ONS, Teneo modelling and analysisEconomic
Rail is an environmentally efficient way to serve passenger
Financing
EN1.1 Social
journey demand both now and in the future Environmental
Going forwards, electric vehicles are set to become far …and are expected to be materially more environmentally
more common over the next 20-30 years… friendly than existing road transport
Forecast number of electric vehicles on the road in different scenarios
Electric Vehicles (EV) produce no emissions whilst running, making them
30 m Key: Forecast scenario more CO2 efficient than rail
Historical – National Grid forecasts that 6.7m to 25.1m cars in GB will be electric
by 2050, representing 19% to 100% of all vehicles on the road
High case
25 m
Central case Going forward, the railway will have to reduce emissions, potentially
through electrification, to compete with the efficiency of electric cars
Low case
20 m – Several electrification projects have been cancelled, such as the
Electric Spine, which is expected to have an adverse long term
environmental impact
15 m There are a number of active industry initiatives to develop hydrogen
traction, which only emit water, including project breeze (Eversholt &
Alstom)
10 m – The technology is currently being prepared for trial and could be in use
on commuter lines by 2021
5m Ultimately, the most environmentally friendly form of travel is no travel at all
– “It’s important to promote sustainable modes of transport, that goes
beyond rail – it means promoting walking and cycling too.”
-
2010 2015 2020 2025 2030 2035 2040 2045 2050 Interviewee C
View of current There may be opportunity to explore further electrification projects to ensure that the railway
performance: remains the most environmentally efficient way to travel
Teneo 39
Source: Graph - National GridEconomic
Rail minimises the carbon emissions of the freight industry,
Financing
EN1.2 Social
both directly and by alleviating congestion Environmental
Rail is also a more environmentally efficient method of …and there would be material direct emissions benefits
freight transport than road … from transferring additional freight demand to rail
Freight emissions by road and rail in CO2 g/ tonne km, 2009 Potential emissions that could be saved by switching 50% of road freight
journeys to rail, 2017
140g
15. Mt
120g 12.7 Mt
Currently, rail freight produces 12.5 Mt Water, 0.8 Mt
76% less carbon dioxide, 90% Rail, 0.3 Mt
100g
less NOx and more than 90%
less PM10 than road freight. This 10. Mt 5.8 Mt
80g can be further improved with 8.3 Mt
electrification Water, 0.8 Mt
7.5 Mt 1.4 Mt
60g Rail, 1.7 Mt
Road, 11.6 Mt Road freight currently makes
5. Mt up c. 92% of freight emissions,
40g
but moving 50% of these
journeys to rail could reduce Road, 5.8 Mt
20g 2.5 Mt freight emissions by 35% and
total GB emissions by 1%1
- -
Rail Freight RoadFreight
Road Freigt Current freight Reduction in Increase in Forecast freight
Emissions road freight rail freight emissions
emissions emissions
View of current As with passenger services, freight rail could directly reduce the environmental impact of
performance: transportation if penetration increased
Notes: 1) In practice, it may not be possible to transfer 50% of road freight to the rail network and capacity, water freight and financial constraints would have to be considered
Source: Left graph - Network Rail Teneo 40
Right graph - ONS, Teneo modelling and analysisEconomic
Rail minimises the carbon emissions of the freight industry,
Financing
EN1.2 Social
both directly and by alleviating congestion Environmental
Transferring freight from road to rail could reduce …to maximize these benefits and the efficiency of rail,
congestion and lead to indirect environmental benefits… further electrification is required
Reduction in congestion from switching road freight to
water and rail, 2015
One rail freight train can replace 43 to 77
HGVs. That saves 6.6m lorry journeys a year.
Network Rail research
All vehicles 5.5% Drop in congestion
“From Felixstowe up the West Coast is
currently electrified while inland and East
Coast is all diesel and less environmentally
Congested areas 20%
friendly, with the cancelation of electrification
schemes proving very detrimental.”
Interviewee F
- 10% 20% 30%
Greenhouse gasses and air pollutants are “Rail freight emits materially less emissions
emitted at their highest levels at low uneven than road freight with both direct and indirect
Environmental benefit
speeds (congestion) and at high speeds on congestion benefits that must be included in
motorways any business case.”
Reducing congestion allows cars to drive more smoothly, therefore Interviewee F
releasing less pollutants than when driven in a stop-start way
By taking trucks off the road, rail freight appears to reduce congestion
by 5.5% up to 20% in some areas, leading to environmental benefits
View of current Freight also has the potential to drive a range of indirect environmental benefits from reduced
performance: road congestion, particularly if electrification projects are pursued
Source: Left graph – Metropolitan Transport Research Unit (MTRU) Teneo 41
Right commentary – Teneo research, interviews and analysisEconomic
Rail supports better air quality by minimising Britain’s
Financing
EN2 Social
exposure to pollutants Environmental
Environmental 2
Desired outcome
The key outcome the railway exists to Rail supports better air quality by minimising Britain’s exposure to
pollutants
achieve
Aspiration
“The rail network drives the change towards a cleaner Britain, improving air
What would ‘perfect’ achievement of
quality in cities and reducing including NOx, PM and CO emissions.”
this outcome look like?
Key outputs to deliver this Assessed
Rail limits the amount of air pollutants released to be in
What are the firm deliverables against 2.1 on
line with other modes of transport
which we can judge success? p.51
Teneo 42Economic
Passenger rail limits the amount of air pollutants released
Financing
EN2.1 Social
to be in line with other modes of transport Environmental
Currently, rail’s performance on noise and air pollution presents more of a mixed picture
Rail emissions of other air pollutants relative to those of cars and taxis (per passenger km)
125% Rail Worse
CO at ground level can form ozone which
contributes to respiratory problems in
75% children and the elderly. Rail consistently
produces less CO than cars, but the gap is
narrowing
25%
2000 CO 2016 2000 NOx 2016 2000 PM10 2016
(25%)
NOx can form smog, acid rain, PM, and Particulate matter (PM) reduces visibility and
(75%) ground level ozone. Since 2005, rail has also contributes to respiratory problems. Rail
produced more NOx than cars, but this gap increasingly produces more particulate
is narrowing matter than cars
Rail Better
(125%)
View of current To minimise its broader environmental impact, secondary rail pollutants such as CO and
performance: particulate matter must also be reduced in line with other modes of transport
Teneo 43
Source: Graph – ONS, Teneo modelling and analysisEconomic
Financing
Environmental outcomes Social
Summary of current performance and future opportunities Environmental
Current performance Trend over last decade Future pressure if no change
Environmental 1 Increased penetration of rail travel has
Rail releases materially less carbon supported a reduction in carbon The adoption of electric vehicles is
Rail ensures that the emissions per passenger KM than cars emissions; However electrification expected to make rail a relatively less
transport sector reduces and taxis schemes have been cancelled causing a carbon efficient way to travel
its carbon emissions in stagnation in environmental advances
line with Government
policy
3 ➔
Environmental 2
Rail has made limited reductions in the Improvements in road technology may
Rail releases more air pollutants per
amount of air pollutants emitted while further reduce air pollutants, putting
Rail supports better air passenger km than other modes of
road transport has made relatively pressure of the relative environmental
quality by minimising transport
quicker improvements efficiency of rail
Britain’s exposure to
pollutants
1
Teneo 44You can also read
