Rail 742: the mysterious Rail Delivery Group

So what is the Rail Delivery Group? Since writing a few issues ago about this somewhat mysterious outfit (Rail 734), there has been a major change with its merger with the Association of Train Operating Companies. This was a response to the failure of the RDG to establish a presence either in the industry or with the wider public and an attempt to provide it with a clear task.

A bit of history here. The RDG emerged out of the McNulty report into the finances of the rail industry published in 2011 which recommended the creation of an industry wide body to push through the efficiency savings which he valued at around £1bn per year, some 20 per cent of the then cost of the railway to the taxpayer. However, the RDG was unable to make much headway because it lacked any statutory basis let alone any formal powers. Its website was a sad cobwebbed black hole with a set of cursory minutes and its media presence was minimal – no, correct that, non-existent.

There was certainly no evidence that it had managed to achieve any of the savings which McNulty had dictated. There was no attempt on the site to explain either what these were or how they would be delivered. Indeed, McNulty was terribly vague on how these might be achieved. Everyone in the industry, from franchisees to rolling stock companies and, especially, Network Rail were supposed to contribute. However, so far, government support for the industry has remained pretty static, though since fares has gone up and passenger numbers grown, it represents a smaller proportion of the total income of the railways. Passengers are now paying around two thirds – possibly even as much as 75 per cent – of the cost of running the network, with only a third coming from government. Therefore it is hard to point to any achievements resulting from McNulty.

Back to the RDG which is now merged in with ATOC. In an effort to understand what the RDG is trying to achieve, and how this new merged organisation is bedding in, I was given a background briefing by a couple of senior RDG executives. This was done in a genuine spirit of enquiry. What, I wanted to know, was this new organisation up to?

Let me say first of all that the very name is ridiculous and must be changed. Whatever it is doing, the RDG is not delivering rail or indeed rail services. How about calling itself Rail UK or Railways for Britain, or some such generic title rather than the completely incomprehensible Rail Delivery Group? I was told that the name is under discussion but since the merged organisation has now existed for three months, one would have thought that perhaps they could have worked that one out before. There are concerns that McNulty had specified the name of the group and therefore it should remain. Nonsense. The way the railway works is already fairly impenetrable to members of the public and having organisations with incomprehensible names helps no one.

However, discovering what precisely it is doing and where it is going is more difficult to ascertain. Many people in the industry including myself and Nigel Harris have long argued that the rail industry needs a clear and unequivocal united railway organisation batting for the whole railway network. Sadly, the RDG is not to be that body. Indeed, it is clear that the RDG is not there to represent the industry.

I was told that the RDG will have various work streams – perhaps a dozen or more – but, and here’s the rub, these would not be unequivocally pro-rail. In other words if, say, a study of efficient ways to carry freight along a specific route found that actually it would be better to put it on lorries, then that is what would be recommended. There is to be no pro-rail bias.

Nor does the RDG even encompass the whole industry. In order to qualify as a member of RDG, companies must have a turnover of at least £100m. Therefore, its membership is restricted to just 12 companies – eight owning groups, two freight companies, Network Rail and Directly Operated Railways (the government’s own train operating company which presumably will get booted out when the East Coast franchise is let). Therefore a genuinely independent open access operator – unlike Hull Trains or Grand Central which are owned respectively by First and Arriva – is unlikely to qualify for membership. Moreover, the RDG is somewhat dominated by foreign state interests with four of the companies being owned, partly or wholly, by French, German or Dutch national railway concerns. Note, too, the absence of the rolling stock companies which would certainly qualify on the basis of turnover but which are currently excluded because membership is essentially restricted  to operators, freight and passenger, and Network Rail. The Passenger Transport Executives, too, have not been invited to join. No reason has been given for these membership criteria.

The RDG executives were at pains to point out that various other players in the industry, such as the rolling stock companies and the smaller freight outfits, are included in the relevant work streams. However, this will not counter the idea that the RDG is the plaything of the big players and the rest of the industry feels left out. ATOC’s statutory functions, such as sorting the Rail Settlement Plan and National Rail Enquiries will continue to be run separately by an ATOC board.

The RDG in fact does not have any legal status, nor is it able to make any decisions. Nor does it have any targets or, indeed, any clear relationship with McNulty. In fact, rather ridiculously, the Office of Rail Regulation has suggested that the work of McNulty has been According to ORR, ’Network Rail is forecast to achieve efficiencies of 40 per cent in running the railway from 2004 to 2014. ORR is expecting Network Rail to deliver around 20 per cent efficiencies from 2014 to 2019, which will see the company itself fully meet Sir Roy McNulty’s efficiency challenge’. Well that sounds very good but not only are the very nature of these efficiencies difficult to determine – what is an efficiency saving, and what is a cutback? – but also given the massive challenges posed by climate change as well as the sheer amount of work being undertaken on the network, this is a very challenging target.

All this has left me more bemused than when I started asking about what had happened as a result of the McNulty report. We have ended up with an organisation whose remit seems pretty incomprehensible to many in the industry. The root cause is the failure of McNulty’s to admit that the very structure of the industry was the fundamental cause of its inefficiency and indeed the best effort to remedy that is the alliance between South West Trains and Network Rail which should be replicated elsewhere but has little to do with the RDG’s efforts.

Given all this, the RDG is in danger of being perceived as an industry stitch-up of the major players in the railway. There seems to be little openness or transparency about this structure and little ambition in its intent. Indeed, even the promise to communicate the work of the RDG is pretty limited given saying ‘The Rail Delivery Group holds an annual forum to briefed (sic) politicians, regulators, funders, stakeholders, Trade Unions and the wider rail industry on progress with the priorities being pursued by the Group.’ Surely this is not enough of an engagement. So I end this column as I started: ‘What exactly is the RDG and what is it for?’



A missed opportunity


So the proposed devolution of the rail two franchises in the North has, predictably, been diluted – or in fact virtually scrapped. Despite the warm words about ‘a partnership agreement’ that will be ‘a foundation for stronger involvement of the North of England in determining train services’ effectively control will remain with Whitehall. The Department for Transport will be responsible for all decisions, including setting the requirements of the franchise and selecting the operators. Apparently, as I predicted when writing about this in Rail 736, ministers were concerned about the proposed governance structure of Rail North, the consortium of local authorities that would have become the franchise authority.

In fact, that is pretty much a lame excuse. The decision is consistent with the traditional practice of governments. When it comes to the crunch, central government does not like devolving power. You only have to see that with the Coalition’s localism agenda which is supposed to give local authorities power while government policy forbids them from making any major financial decisions, even setting their own council tax. In fact, sources tell me that the main reason for the change was that the government was worried that the local authorities would not deliver the reduction in subsidy which it is seeking.

Instead, Rail North will have some kind of unspecified management role in the franchises. This is a missed opportunity but it provides a good opportunity for Labour which could gain a lot of kudos in its own heartland by announcing that it will reverse this policy and go ahead with the original plan of handing over control of the franchise – and crucially the budget – to a consortium of local councils.


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