Latest Rail News

29.01.19

A quick backwards glance, then looking forwards

Source: RTM Dec/Jan 19

Neil Robertson, chief executive of NSAR, takes a shot at making some predictions for rail’s fate in 2019.

I was asked to make some rail predictions in the first week in January 2018. They were:

  • Prediction 1: Rail infrastructure business plans will have to do more to show how they will drive efficiency by reducing wage inflation due to skills shortages and increasing investment;
  • Prediction 2: A Brexit deal which reduces migration is likely, so strenuous efforts will be made to retain the EU skilled workers we already have, and the industry will seek to get its higher-level skills centrally on a revised highly-skilled migrant programme;
  • Prediction 3: Relatively steady as she goes politically (Theresa May and Chris Grayling will survive the year), but with a lighter touch (no money, no legislation). Will the private sector fill the vacuum? Or will the unions?

What a year! Like no other. What happened in respect of these?

  1. Efficiency and productivity have certainly moved up the agenda. Not as much as I hoped, but the ORR has started to show an interest in more robust economic regulation. The issue is gaining momentum, with the question now being, ‘what do I do about it?’
  2. The deal! I was right – there is a deal – but I didn’t expect it would only have 36% support. If we knew the answer to this, we could make a fortune shorting the right shares. I still say it’s 60% likely that a deal will go through;
  3. Perhaps most interestingly, this was also correct. Sadly, the vacuum was filled with questions of industry capability and also some political points about nationalisation. Who could have predicted that it would be Labour’s most popular policy? They have really struck a nerve with disappointed passengers.

And this year? I’m barely going to mention Brexit because we are all bored of it, other than to say our research shows the Europeans have started to go home, so the industry prediction that we lose 10% of our staff over time looks right. Wage inflation is also increasing in key areas. The new immigration proposals went further than many expected. As I write, the slightly more likely scenario is a deal, with no deal and referendum behind that – but still prospects, terrifyingly.

Industry capability will be high up the agenda, with training, partnership, open data, and third-party involvement all likely to feature. NSAR will work with industry to specifically look at the training aspect.

The shape of the industry is for the Williams Review. I anticipate some reasonably profound changes, with common economic incentives across route and TOC. We have developed some tests that can be used to see whether new proposals fit with our research around productivity, the need for investment in skills and kit, and the longer-term view that is needed. If you would like to see these, please get in touch.

We were delighted that a Rail Sector Deal was announced before Christmas – this will help move us forward on digital, skills, data, wider capability, and export. Basically, disrupting ourselves before someone else does. Watch this space.

Lastly, our recent symposium in Birmingham considered the skills needed in the future and how training will change with new technology (training is being disrupted faster than some other sectors). It’s great to see Network Rail Training preparing for this new world. 

The phrase ‘Dutch courage’ is said to come from the fact that only Dutch sailors would enter London during the plague, fortified of course with some strong spirit (Scottish football fans have followed this example for years.) You could be forgiven for feeling that you need a similar approach given politics, drones, etc. However, I think this year might turn out to be better for rail than many expect. See you in 2019.

 

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