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Complexity and capability

Tim O’Toole, chairman of the Rail Delivery Group, explains how the complexity of the rail industry can be its strength.

Speaking at the DDRF’s annual conference 2013, chairman of the Rail Delivery Group (RDG) Tim O’Toole, chief executive of FirstGroup, described the group’s “quarrels” with the McNulty report and their work so far on the potential of alliancing to deliver an environment where top level decisions could be made for the industry’s future.

He celebrated the achievement of the industry in managing huge increases in passenger numbers, and highlighted Government support, which is expected to continue for the next couple of decades.

“Things have never looked brighter over the longer term. To have all those passengers while improving performance and safety is really something that I think all of us should be very proud of.

“We need to come together and work with the Government – it isn’t just dumping everything on the DfT and expecting them to come up with all of the answers. We need to work with them and start to work through the detail of Richard’s report (the Brown review). The trick is figuring out who that ‘we’ is, and that takes us to the RDG.”

Hiding complexity from the customer

He added: “We have an extremely complex industry. We have all the TOCs, the FOCs, the ROSCOs, the supply industry, and this complexity is only going to increase with devolution of NR. This complexity is often made a part of an indictment that ‘it’s all so confusing and complex compared to the simplicity and clarity of British Rail’. But in fact I think the complexity is a strength.”

Complexity creates greater capability, he explained, and suggested that successful enterprises manage to hide this complexity from their customers. O’Toole gave the example of the Oyster card in London, which is heralded as incredibly simple and intuitive for passengers to use, yet covers the most complicated fare system in any metro across the world.

The McNulty report claimed that the complex nature of the rail industry made it difficult to see where the centre is, leading to a loss of leadership.

The RDG was formed from TOCs, FOCs and Network Rail to meet this challenge, and provide a cross-industry group at the top level – where members could make decisions “that day, to change something on the railway tomorrow”.

Quarrelling with McNulty

The RDG has not agreed entirely with the challenges set out in McNulty’s report, including a “very huge number of the savings that could be attained through prudence in train utilisation”.

Further analysis made it “fairly plain” that there was “no way those numbers are attainable”, O’Toole said, leading the RDG to dispense this recommendation.

The group also “took quarrel” with the characterisation that unit costs have been flat throughout this period of passenger growth, pointing out that unit costs went up in response to “the nervous breakdown of this industry with Hatfield and Ladbroke Grove” and have been coming down ever since.

However there were many recommendations that the RDG did endorse, he added, including the need for the industry to work more closely together.

The power of alliancing

O’Toole clarified that the purpose of the RDG was not to collect “the smartest guys all in one room to industrially plan how everything should come out”, but to ensure there is an environment that enables the whole industry to work together, and with government to create future advances and commercial advantage.

The best example of this is alliancing, he said.

Early conversations with the RDG suggested this will allow greater collaboration and improvement across the industry.

“The reason why you don’t see more of them is because franchising has to get going.

“You have to know who your partner is going to be for the longer term, but as franchising does get going you are going to see more and more bi-lateral agreements, support partnerships to do greater and more things.”

Next month the RDG is due to gain permanent status and participation in the group will become a licence condition posed by the ORR.

O’Toole concluded: “It will be a place where the senior level of the industry continues to meet to address cross-industry issues and create the environment for us to go forward.

“We’re going to look at industry structure and we have to make sure we’re working efficiently.”

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