Podcast highlights: Season 3, Episode 1
The conversation kicked off with some of the pressures rail organisations are facing. They include:
- the high costs associated with infrastructure maintenance
- the financial implication of adopting new technologies
- the inefficiencies arising from fragmented data.
Johnny also touched on the lingering impact of reduced passenger numbers post-COVID. This, in addition to people’s changing working patterns, has reduced reliance on rail. The high cost of rail travel is also a barrier for many.
He also mentioned industry’s rising operating expenses and the financial penalties incurred due to performance issues.
This being such an extensive list of challenges meant there was a lot to unpack as the conversation unfolded.
Industry’s focal points
Johnny outlined several areas where the industry could focus its cost-reduction efforts:
- He stressed the importance of reducing operating costs by finding efficiencies. These could be driven by automation and AI.
- In addition, he advocated for increasing revenue growth by attracting more passengers and freight onto the network.
- Better technology and innovation were also mentioned as key for achieving greater returns on investment.
- Improving performance to reduce penalties and delays was another point made.
- Johnny also mentioned the need to reduce duplication. He views this as a significant source of needless expenditure.
- Finally, he touched on the importance of developing staff capability. He sees this as a long-term strategy for enhancing efficiency and reducing costs.
‘Fixing the roof now for later’
The conversation then shifted to the complexities of investing in long-term cost reduction.
First, Johnny talked about the endemic short-termism within rail. He mentioned that much of industry is fixated on control periods and immediate payback. He cautioned against this mindset, however, saying that essential upfront investments are needed to realise future benefits.
Accessing capital investment in a newly nationalised landscape was also identified as a challenge, with rail competing against other vital utilities. Johnny stressed the need for system-wide investment to ensure holistic progress.
On the flip side, Johnny also talked about the long-term benefits of investing in efficiencies now.
He used the analogy of ‘fixing the roof now for later,’ explaining that proactive investment builds resilience. This is particularly the case when it comes to addressing the threat of climate change.
He also pointed out that investing now is economically sounder than delaying. After all, he said, there will be an inevitable rise in the cost of money. There is also the potential for earlier revenue generation from improved infrastructure.
Looking at actionable steps, Johnny suggested focusing on maintenance efficiencies, given the likely constraints on major enhancements and renewals. He also called for a comprehensive rolling stock strategy. This will help ensure that the right assets are in place for the long term.
A commitment to improving staff competence and capability was also highlighted as a crucial area for investment. This, Johnny said, can be achieved by improving recruitment and development practices.
How we can help
The conversation then turned to RSSB’s role in supporting the industry.
Highlighting cost reduction as a key focus in RSSB’s Annual Business Plan, Johnny talked about the introduction of new A boards in some locations. These allow train drivers to accelerate sooner after certain types of speed restrictions. This results in large time and cost savings.
Data analysis revealed potential savings of up to £41 million over 5 years due to these reduced delays.
Looking ahead, Johnny outlined RSSB’s continued commitment to cost reduction. One key initiative is improving data interoperability through RSSB’s insights platforms. This will allow us to use APIs and AI to provide quicker and more valuable analysis to stakeholders.
He also highlighted the updated Cost-Benefit Analysis guidance and tool. These help members make informed safety investment decisions that offer genuine value for money.
Promising steps
There have been some positive moves to reduce costs already.
For example, Johnny commended Network Rail. They achieved £4 billion in savings between 2019 and 2024. That was despite operating in a very challenging environment.
He also celebrated the success of the Elizabeth Line. It has been a major contributor to revenue growth for the industry.
Johnny’s advice to industry
Johnny closed out by offering some key advice for the rail industry:
- Reduce duplication.
- Encourage innovation.
- Drive efficiencies.
- Remain customer focused.
Key takeaways
- The rail industry is facing large financial pressures. These are from reduced patronage, rising costs, and performance issues.
- Meaningful cost reduction needs a multipronged approach. There is work to be done in terms of:
- operating efficiencies
- revenue growth
- technological innovation
- reduced duplication.
- Overcoming short-term thinking is key for investing in long-term cost-saving measures and building resilience.
- There are several key areas for future investment. These should include:
- focusing on maintenance efficiencies
- developing a robust rolling stock strategy
- embedding climate change resilience
- ensuring staff development.
- RSSB is actively supporting the industry in these efforts. Initiatives include improved data analytics and updated cost-benefit analysis tools.
- According to Johnny, rail should prioritise:
- reducing duplication
- fostering innovation
- driving efficiencies
- maintaining a strong customer focus.
