Speech to Rail magazine conference

Thank you for inviting me to speak at this conference today.

As this is my first speech to the rail industry since the derailment at Grayrigg last month, I want to begin by thanking all those people from the emergency services and indeed from the industry who helped the recovery. They worked in incredibly difficult circumstances and responded with dedication and true professionalism.

Of course our thoughts are with those who have been bereaved or seriously injured by the accident, both passengers and rail staff. 

It is right we learn the lessons from such an incident. I know the RAIB is working hard on its investigation and if there are lessons to be learnt it will make these clear as soon as possible. 

I know that improving safety is a priority shared by all in this industry and it is one that will play a key part in the development of the High Level Output Specification. 

It is this specification and our longer term strategy for the railway that I want to talk about today.

There is no doubt that the industry has come a long way in the last few years. It is worth reminding ourselves where we have come from and what we have achieved to date. But today I would also like to give you an idea of the scale of our thinking as we develop our plans.

Context: where we are:

The strategy we are developing is only possible because of the foundations we have built together in recent years. 

Decades of underinvestment are being tackled.  Overall safety is improving, performance is ten per cent better than five years ago and the industry is working more closely together and moving ahead with shared priorities.  

And this stability in the industry is matched by stability in the wider economy.

In fact this country has benefited from the longest period of sustained growth in our history.  Of all the major economies - America, France, Germany and Japan - Britain has enjoyed the longest period of growth and stability in recent years. 

These are not modest achievements. For rail, you only have to look at the 40% growth in passenger numbers and 60% growth in freight over the past decade to see how far we have come. 

But this growth also underlines how much further we have to go and by how much we need to raise our ambitions.

To ensure that what we have achieved to date is not seen as the high tide of success but the essential components of 'business as usual'.

To achieve this will take a step change in the way we plan and operate.  And as we think about the railway we want over the coming decades, this will mean we have some significant challenges ahead.

The green challenge:

Of course the industry will have to continue to deliver on the permanent priorities of safety, reliability and cost control.  But there are other key challenges we face.

The key question as we develop our plans is how can rail contribute and thrive in thirty years time when personal wealth is likely to be higher and environmental concerns will be strong.

So cutting rail's carbon footprint and to improve its environmental performance will become even more important in the years to come.

As Sir Nicholas Stern made clear last year, taking the effect of carbon emissions into account now will lead to substantial savings and underpin growth in the long term. We need strong and deliberate action.

It is ironic that earlier this week, some were criticising the Government because there are still around 40 domestic flights between London and Manchester every week day. 

But the truth is that the modernisation of the West Coast line has delivered real results.  Passengers are voting with their feet. Across the route between London and Scotland passenger numbers are up by about 30%. 

And in fact rail's share of the London Manchester rail/air market is increasing.  Up from 40% in September 2004 to almost 60% in April last year. 

But we need to build on this and make it a central part of our planning.  Our environmental concerns must inform our strategic thinking - just as they have done on the procurement of the InterCity Express fleet, which began its formal process last week.

Meeting the Capacity Challenge

Today I want to concentrate on how we are planning ahead to meet future demand and increasing capacity. 

This is vital, for all the reasons I have set out previously. It is a problem which will continue to grow.

Over a billion journeys were made by rail last year. And as the economy grows and trains become more reliable, people will want to use them more.

But for the rail passenger, a train that is crowded because of record demand feels just the same as a train that is crowded for any other reason.

So if we want a railway that supports Britain's needs and meets customer expectations in the years ahead, this is a vital next step.

As Rod Eddington's report underlined last year, the unprecedented period of economic growth will continue to place increasing pressures on key sections of the network.

It is something this Government has been acutely aware of - and have been planning ahead for. 

That is why, for example, one of our first priorities was to increased capacity on the West Coast Main Line and why we also supported growth on the Chiltern Line into Marylebone.

And that is why we specified some increases in capacity as part of the recent franchise renewals and why for the first time high speed commuter lines will run on the Channel Tunnel Rail Link into the capital from 2009. 

All of these measures have been part of a consistent policy to do what we can, when we can, to grow capacity and customer satisfaction across the network. 

And this has been done against the backdrop of the immediate pressing need to tackle the problems of the past. 

A large proportion of rail spending over the past decade has had to be spent putting right the excesses of Railtrack and dealing with the legacy of a botched privatisation. 

I make no apology for this.  That sustained investment has brought stability back to the industry and allows us to confidently face the challenges of the future.

And now the financial health of the railway is improving and this means we can begin to meet the future capacity challenge.

Train operator costs are down and by the end of this control period Network Rail is expected to have clawed back the inefficiencies that were the legacy of Railtrack.

And the fact that passenger numbers are up is especially good - because for the first time in a long time we can start to build a railway that starts to create the means for its own improvement and increasingly from revenue rather than subsidy. 

So this summer, for the first time ever, this Government will be able to set out a comprehensive specification of the capacity it will be purchasing across the railway as a whole.

We are developing that specification now and we have been discussing it with parts of the industry in recent weeks.

Of course we will not be able to solve all our capacity problems in the next control period that begins in 2009.  But it is an important first step. And it will be set in the context of a longer term plan.

We will have to prioritise, based on an accurate analysis of the problems we face, because the true picture of changing demand is complex.

For example, the demand for rail services across some areas of the South East of England is rising even faster than London - because centres like Reading and Croydon are now net importers of commuters; in other words, more people are going in than coming out.

In some major urban areas, structural changes in the economy have created extra jobs in high-value service sectors based in city centres - a market that naturally boosts demand for rail.  And it is in some of these major cities where annual growth could be the greatest.

So the first aim will be targeted improvements at the pinch points in the network and infrastructure improvements elsewhere.  We will need to consider these and prioritise where we can.

But it is also common sense that often the most cost effective and quickest way to add capacity in these congested areas is through lengthening trains.

In the last 10 years almost £5bn has been spent on 4,800 new trains and carriages, giving us the youngest fleet in Europe.

But the reality is that most of these have been a replacement of existing stock.  To improve safety and passenger comfort.  So, for instance of the over 2000 new trains brought as part of the Mark 1 replacement programme, only around 300 of these carriages were actually additional to the fleet.

We need to see what more we can do to increase capacity.

I understand that ATOC is about to publish a discussion paper to add to the debate on the HLOS.

It will argue for the running of longer and more frequent trains to make better use of existing capacity. This together with the removal of pinch points it argues could raise capacity by as much as 55% on some routes. 

To do this it estimates an additional 800 new vehicles will be required. 

I think in many ways they are right, but I differ in at least one important aspect.  I want to be still more ambitious.

So in the High Level Output Specification this summer, we will specify that 1,000 new carriages should be targeted at the most congested routes to effectively tackle passenger demand.

In this way, if the price is right, I anticipate that we will significantly increase the number of carriages on the network by 2014. 

My Department is actively considering exactly where these carriages need to be added and has very recently begun to discuss with train manufacturers how they can cost effectively be delivered.

It is in addition to the other replacement programmes; including the procurement of the Inter City Express fleet.

Of course these carriages are not the only answer. We will need investment in infrastructure as well and we will have to cater for that on targeted basis. 

And money will still have to be accounted for and our budget will remain tight. The lead in projects for some infrastructure improvements will be long. 

So, as I have set out today, our immediate challenge is to tackle capacity to meet future demand. These new carriages are an important first step. But it is right that we continue to take steps to improve capacity in the long term.  

That is why alongside the High Level Output Specification, we will publish a plan that takes us beyond the next five years to the decades ahead. It will give us the flexibility to meet future demands, and to increase capacity where demand is greatest.

Of course we will need to consider the role of major improvements and additional lines - such as Thameslink, Crossrail as well as in the longer term, the possible role of high speed rail. 

This gives you some ideas of the scale of our plans.

And as a result, together I think we can begin to look to the future with even more confidence. Ready to face the challenge of the decades to come. Ready to deliver the railway that passengers expect.

Delivered: 14 March 2007

(This speech represented existing departmental policy but the words may not have been the same as those used by the Minister.)