In conversation with Sir Andrew Haines, Chief Executive of Network Rail

0:04 – 0:29

Right, let’s get on with the much more interesting conversations. It’s my pleasure to introduce Andrew Haynes, CEO of Network Rail, who are one of our most valued partners. We were delighted to have Lord Hendy to kick us off last year at the summit when he was chair of Network Rail. But it’s great to be opening this year with Sir Andrew. Andrew is a transformative leader in the rail industry.

0:29 – 1:07

Since joining network rail in 2018, he’s been a champion for a passenger first approach and he’s restructured the organization for greater efficiency and responsiveness. He has a distinguished career in both rail and aviation, including as the Chief Executive of the Civil Aviation Authority. And he’s been instrumental in shaping the future of Britain’s railways. He’s also playing a key role laying the foundation for the Great British Railways which will soon take on the current responsibilities of Network Rail. So please help me welcome Sir Andrew.

1:15 – 1:25

Massive welcome. Thank you. You’ve had a very long career in transport. Why did you have to say very long? You could have just said long or mildly said very interesting.

1:25 – 1:42

But you went for very long. Okay, we’ll go for interesting career in transport and seen a huge amount of change. Yeah. What are the changes that are up ahead and that most excite you? I think if I think about the changes I’ve seen first of all because I think they point a little bit to the future.

1:44 – 2:37

The single biggest change I’ve seen in the railways of course is a change in the economy which is a much more city centered economy and an enormous growth in the population. And that above everything else led to a huge increase in the people using the railways. From the mid-90s onwards, we had 70 years of continuous decline and suddenly really over that period, right the way up until Covid, big growth and I think the nature of our economy means that’s going to be more and more true. I think the second thing I would observe is for my time at the CA is the liberalization of aviation and what that did to empower passengers who now have far, far more choice. And if we can crack the green issue, which is by no means insignificant, actually I think can be a real driver of economic prosperity, but also frankly social mobility.

2:38 – 3:06

The people who now use aviation and not the same people were using it 40 years ago. And then the. The last big thing I’ve seen is governments of all persuasions prepared to invest heavily in transport. You think about HS2 with all its challenges, transpennine route upgrade, east west rail. We’ve seen a level of capital investment that we’ve never seen, I think really in the last century, never mind this century.

3:07 – 3:51

So you put all those things together and I think the future says there’s a really strong role for public transport, particularly in the areas where it’s really good at. Government seems to be prepared to sustain investment. We need a role for the private sector because actually a liberal environment does tend, a competitive environment does tend to create choice for consumers, but they all need to work as a whole. One of the reasons I’m very passionate about GBR is where we got to in the rail industry was they weren’t working as a whole. The system that was created in the 1990s envisaged more decline, more attrition, didn’t envisage growth, didn’t envisage big capital investment.

3:52 – 4:41

And that’s why we needed direct in mind. It’s also though very pertinent to this agenda. It was based on contractualization and contractualization is for my mind the biggest curse to innovation because what it does, it gives people very short term interests, very sectional interests and it doesn’t allow people to bring together so simplification and a director mind through Great British Railways alongside those three prevailing trends I think makes me fabulously excited for people who haven’t had a very long career thus far or interesting career or interesting. So if we just focus a little bit more on rail, why do you think rail in particular is so important for the UK today, particularly when it comes to boosting economic growth? Well, because it, because of what it’s really good at.

4:41 – 5:18

If you accept my premise that the economy is still going to be quite city centered, quite service based, then actually rail is still pretty much less. We’ve been able to move very large numbers of people right into the heart of those busy areas. We published a report a couple of months back on the future of cities which identified that if the top eight cities outside of London reached their productivity potential, we’d unlock about 47 billion pounds of economic activity every single year. And rail can be an absolutely critical part of that. I mean you mentioned places.

5:18 – 5:58

Yeah, we are still sat on huge opportunities to create much, much better places both for passengers but also for freight for local communities by harnessing that land. And one of the things I’m really excited about is something called development Devco that we’ll be launching any week now with government that allows us to powerhouse that in the same way as Places for London has been doing for tfl. Oh, that sounds really interesting. I know everybody wants to know more about Great British Railways. How are things progressing with its development and what’s going to be different and maybe focus a little bit on innovation.

5:58 – 6:26

Yeah, definitely. Well, how’s it progressing? Well, there’s a consultation document out now which is the necessary step to put a bill before Parliament, I think in the late summer, which would hopefully mean a second read in of that bill, the end of this year, royal assent, then middle of next year. So within two years we could see GBR set up in a substantive way. Almost certainly not the end set date.

6:27 – 7:01

What I think that enable us and in parallel with that then the government’s going through the process of public ownership of train operators. I would just like to say that shouldn’t be misinterpreted as no role for the private sector in rail or GBR. I mean, I suspect we’ll be spending probably 7 or 8 or 9 billion pounds a year in private sector activities even as GBR. This is about simplifying and removing the level of contractual interface rather than saying, actually the railways can only run if everything is nationalized.

7:04 – 7:44

As part of that, as part of GBR as well, we’ve already launched something called gbrx, which is my personal attempt to listen to what innovators have told me about why it’s so hard to do business in the rail sector and Network Rail in particular. It’s, it’s complex because of all this, all of all the, if you like, the fractured interest. We are very, very risk averse because we are very safety conscious, but we’re also very heavily regulated. We’re under immense scrutiny and actually we’ve got £600 billion of assets, which means we’ve always, we’re quite careful where we spend our money. So we’re very often, we’re quite opaque to people.

7:44 – 8:17

GBRX is my attempt to say this is a community that you can engage with that will be less risk averse, that will create a clean platform for you. You’ve still got to persuade us there’s a case and this is one of the areas that connected places Caterpillar can really help us, isn’t it? Yeah, yeah. And I know we’re already starting to work with GBRX and we’ve been an innovation partner for you for quite a long time now and obviously want to continue doing that into the future. What do you think we can do with you to make a better connected future?

8:18 – 9:08

Well, look, we’re already, I think doing some brilliant things and you mentioned Bristol Temple Meads and the station innovations, which I really love as that sort of partly because the agglomeration effect and partly because we’re almost immersing people in the technology. Then I think more of those centers, I think network GBR is going to be regionally based, so maybe we should have one of those in each region actually to draw in SMEs and innovators on that regional basis. We can’t run GBR from a big national center. That’s not the way to respond to devolved administrations. So maybe doing that more regionally, I think helping us and helping innovators understand where the business case works in a regulated environment, which by the way, is not criticism of the regulator.

9:08 – 9:34

I’m a big fan of a regulated settlement, but it does mean you’ve got quite constrained how you can spend money. You can’t simply move pots of money from one thing to another, even if you’ve got a really good business case and providing honest feedback for us as well. Great, that sounds really good. I’m going to ask one last question, which is in terms of regulation, I’m a big fan of understanding regulation. If there’s one thing that you would like to change, what would it be?

9:35 – 9:46

Well, I think it’s something which comes with gbr, which is to understand system risk and system value. What GBR allows us to do in future is to take a whole PL view.

9:48 – 10:14

If I give you a slightly geeky sample, but everybody knows what leaves on the line, everybody gets frustrated. It’s the worst period of the year for train delays. It causes significant safety risks. We’ve had two nasty safety incidents in the last five years because it leaves. But the way we’re currently fragmented means that there’s no business case for train operators to fit the technology that we know would make a radical improvement.

10:14 – 10:32

Not because they’re acting badly or rationally. They have no incentive to do that. Bring in. If you took a whole P and L view of that, you have a very, very different perspective. And you unlock innovation because you unlock the opportunities in the business case to do it, as opposed to saying, no, the contract doesn’t allow us to.

10:33 – 10:49

I’m a huge believer in what the railways has done in the last 30 years. But we’re the only privatization where productivity has declined, not improved as a result of privatization. And that’s because of fragmentation. A single P and L, I think, drives a massive opportunity for. For innovation.

10:49 – 10:57

Amazing. So it sounds like a wonderful future. Loads of challenges, but really, really brilliantly exciting. Yeah, can’t wait to get on with it. Thank you.

10:57 – 10:59

Thank you very much for joining.