Speech to the Rail 100 Breakfast Club Annual Dinner
[Check Against Delivery]
1. Thank you Nigel, and thank you for inviting me to speak at your annual dinner.
2. As we head towards the end of the year it is perhaps right that we should take a longer view.
3. Just on Monday Network Rail published its interim results.
4. They showed punctuality for the period is at a seven year high, that more than £1 billion has been slashed from the costs of running the railway and that continued high levels of investment are making a difference.
5. Passenger numbers are up 40% and freight has grown by 60% over the last 10 years. Safety is improving.
6. The previous week the National Audit Office recognised the success in putting the West Coast Main Line back on track.
7. It is just one example of the improvement that is going on across the network as a whole. Journey times between London and Glasgow have already been cut by 35 minutes. At the end of 2008 there will be further journey time improvements and further increases in capacity.
8. The result is that passengers are voting with their feet. Numbers across the length of the route are up to 30%.
9. I am not saying this is a time for complacency. It isn't. And I know that you, the industry, realise this. I am confident that there will be a continued focus on delivering for passengers and customers. And that is as it should be.
10. But we should not forget that we have come a long way and that this is the result of choices that have been made.
11. First sustained investment. I am proud to be part of a Government that is the first in a generation to put in sustained investment. Over the current 5 year control period it will be the equivalent of £88million every week.
12. Second, effective management. Stability in the economy is now being matched by stability in the industry. Closer working between track and wheel has been introduced. And there is now an improved and mature relationship between public and private sectors.
13. In short the industry faced enormous challenges. Chronic underinvestment, fragmentation and a botched privatisation.
14. But those problems we inherited from the past no longer limit and define the work we can undertake.
15. But it is also right that that we do not stop there. Now is the time to face the challenges of tomorrow.
16. Together we must ensure that strong growth, consistent performance and sustained investment, are not simply seen as the high tide of success but as the essential components of 'business as usual'.
17. And that is why tonight I do not want to dwell on the past but consider the future. In the next twenty to thirty years the railway will face a set of challenges as great as any in its long history.
18. I want to focus on two of the most important. Firstly the part rail must play in meeting the demands of a low carbon economy and second, on the eve of the publication of Rod Eddington's study, how we meet the needs of a growing economy.
19. Sir Nichols Stern's Review of the economics of climate change is a compelling call for action. And as I said only two weeks ago it must inform everything you as an industry do.
20. For just as the railway became a symbol of change during the industrial revolution of the 19th Century so it must become a symbol for change in the new low carbon economy of the 21st.
21. As Stern made clear taking the effect of carbon emissions into account now, will lead to substantial savings and underpin growth in the long term. He called for strong and deliberate policy action. I expect that tomorrow Rod will give further support for that.
22. For you it means that future growth on the railway should not come at the expense of environmental obligations.
23. The industry has already committed to steps that will help. These include the re-engining of the high speed trains and implementing regenerative braking using the existing capability in modern trains. This will deliver both improved energy efficiency and a lower cost.
24. But what about the longer term? A reputation for past 'Greeness' will not help. Other industries will innovate and stay ahead of the game. Car emissions have already decreased twenty fold in as many years.
25. Rail will need to match the pace of change to maintain its environmental lead. And this must form the centre piece of our strategic thinking.
26. For instance on the development of a worthy successor for the HSTs. There is a well informed debate going on within the industry about the concept and design for the InterCity Express. It leads directly on to discussion of the power source we should use.
27. Further electrification of the network is an issue raised frequently. Often it has the subtext that it is something that it is obvious we should be doing from the point of view of carbon emissions. But it is not a simple decision.
28. Electrification is expensive and adds to the complexity of the overall railway. Although we need to reduce our dependence on fossil fuels, thermal losses in power stations and electrical transmission losses can mean that the diesel railway could be of the same order of overall efficiency as an electrical railway.
29. Engines can already run on biofuel and fuel cell technology is developing fast, so portable power for railways is by no means a thing of the past.
30. So we will need to develop a fully flexible power strategy for the new InterCity Express that can swap between diesel and electric - a system that allows you to replace a power source without having replace the whole train.
31. This is an example of how environmental obligations must inform your strategic thinking in just one area. It should run through the vision of the railway.
32. The second challenge we must face is how we cater and provide for growth.
33. We have had a stronger and more stable economy than any country since 1997. There have been 57 consecutive quarters of sustained economic growth. The longest period of growth this country has seen.
34. And as the economy has grown and the performance of the railway has improved we are increasingly dealing with the problems of success.
35. Passenger numbers are increasing. And for rail that is good news. The financial health of the railways continues to improve. Train operator costs are coming down, Network Rail is expected to regain the ground lost by Railtrack by the end of this Control Period.
36. It means that 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.
37. Next year I will publish the High Level Output Specification. It will be a costed plan for the development of the railway over the next five years.
38. The choices it makes will have to be firmly routed in an understanding of the longer term. Increasing capacity where it is necessary will be a central part.
39. As I have mentioned, Rod Eddington will publish his report examining the links between transport and growth. It is absolutely crucial that we make the right choices for the long term, to get the very best we can out of the network.
40. I don't pretend that the choices will be easy. We will not be able to buy everything we want and priorities will have to be made. But the key principle of our railway is to support and enable the economic growth of the country.
41. It is therefore not a question of whether the railway needs to grow - it clearly does. But it is a question of where, when and how and at what cost.
42. Before we decide on a solution we need to know the problem. For rail that means we need to know where the demand is. Where people will want to travel to and from. Not just in the short term but in the long term too.
43. Any solutions need to be looked at in the context of driving the continued economic growth. And all the options need to be considered in the national interest.
44. These are big questions. They need to be addressed, Rod Eddington's report tomorrow will not be the final word but it will be an important part of our considerations.
45. So next summer, we will do, in railway terms at least, some radical things.
46. No Government before will have set out and in such terms the financial prospects for the railway with an independently verified budget, a specification for the railway to meet and a plan for how we will explore the future to inform current decisions.
47. But we will not reach that point on our own. We have time to discuss, consider and refine our plans. And you as an industry have time to talk to us about how you can best work together to implement them.
48. My Department is already organising some opportunities to do this over the coming weeks and I propose to chair a seminar in the New Year to bring these proposals together.
49. Together, we have a huge opportunity. To build and develop a railway that meets the challenge of the coming decades.
50. I look forward to working with you in that endeavour.
Delivered: 30 November 2006
(This speech represented existing departmental policy but the words may not have been the same as those used by the Minister.)
