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#4 Part 1: Challenges and dynamics of rail regulation with the ORR
105 Plays1 year ago
In this special two-part episode of ‘Voices of the Industry’, we are joined by John Larkinson, the CEO of the Office of Rail and Road (ORR).
In part one of this insightful conversation, John walks us through the intricacies of the ORR’s differing roles for health and safety and economic regulation within Britain’s strategic road and rail network. Facing challenges like inflation, dramatically changed usage of the network, decarbonisation aspirations and ongoing industrial action, the ORR has an influential role to play as the transport sector steers its way through these rapidly changing times.
Explore the history, current challenges, and exciting potential for the monitoring and regulation of our strategic transport network as we discuss investment, Brexit, and the financial implications of ageing core infrastructure.
Tune in to Part 2, where we discuss specific projects, decisions, and future challenges that impact rail infrastructure. Listen now - ‘Part 2: Projects, decisions, and future challenges with ORR’.
Key takeaways
- Explore how the ORR manages the complex landscape of health and safety and economic regulation amid challenges like inflation, post-COVID passenger declines, and ongoing industrial action.
- Gain insights into the evolving role of the ORR, from its history to the present day.
- Delve into the financial implications of ageing core infrastructure within the rail industry.
- Discover the potential for innovation and positive change in rail regulation.
Guests
- John Larkinson, a seasoned leader in the rail industry, John took the helm at the Office of Rail and Road in 2021, drawing on over 20 years of experience. From pioneering network regulation to safeguarding consumer interests, his expertise fuels ORR's mission to champion rail and road users. Whether ensuring fair access, holding Network Rail accountable, or analysing industry finances, John's passion for transportation shines through, driving efficient performance and safety across the rails and roads.
Host(s)
- Mike Goggin, Managing Director, Steer.
- Stephen Wainwright, UK Managing Director (Interim), Steer.
www.steergroup.com
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Transcript
Introduction to Key Figures and Their Roles
00:00:08
Speaker
Hello and welcome to Voices of the Industry, a podcast series bringing you leading industry voices who challenge thinking across transportation, infrastructure and cities. Hello listeners, thanks for tuning in
00:00:30
Speaker
Today's voice of industry is a bumper one. Our conversation with John Larkinson of the Office of Rail and Road was packed full of the challenging contribution of regulation to the UK's railways and roads. We didn't want you to miss out of the interesting insights and opinions that John and Stephen Rainwhite, our UK managing director, had to share. So we've split our conversation into a two-part podcast. I hope you enjoyed the first part.
00:00:57
Speaker
Hello, folks. Welcome to another edition of STEER's Voices of Industry. Over the last eight years or so, and over 30 articles and podcasts now, we have captured the views, experiences, and insights of key players in their sectors from across the globe. You can find those at steergroup.com under the Insights tab. Today is no different about the conversation, and I'm very pleased to be joined online by John Larkinson, the Chief Executive Officer
00:01:24
Speaker
of the UK's Office of Rail and Road, or the ORR as we say here in the UK.
Understanding the ORR's Regulatory Role
00:01:29
Speaker
It's fair to say that the ORR currently plays a key role in the UK transport sector. It is the independent economic and safety regulator for Britain's railways and the monitor of performance and efficiency for England's strategic road network. It aims to hold infrastructure managers network rail and high speed one to account and to make sure that the rail industry is both competitive and fair.
00:01:52
Speaker
The ORR also protects the interests of passengers and has other economic regulatory functions. It regulates health and safety for the entire mainline rail network in Britain, as well as London Underground, light rail, trams, and the heritage sector. I'm sure we'll just get into how the ORR operates and how it has to evolve with John shortly.
John Larkinson's Career Journey
00:02:11
Speaker
But let me first introduce you to John, my guest. John has been CEO of the ORR for over five years, first on an interim basis before being confirmed into the role
00:02:21
Speaker
in March 2021. With over more than 20 years experience working within the rail industry, he was Director of Network Regulation and Affordability as a first term of affordability that we're coming across today at the Strategic Rail Authority before joining the ORR in 2005. Whilst at the ORR and before becoming CEO, John had various roles including Director of Railway Markets and Economics as well as Director of Planning and Performance. John, welcome.
00:02:50
Speaker
Thank you for joining us. How are you today? Very good, Mike. And thank you very much for inviting me. Yeah, it's great to have you with us. Have I captured your career appropriately?
00:03:00
Speaker
I think you have that. I'm just going to add one thing, because my experience of rails started a little bit before I joined the real strategic rail authority, because I actually, for quite a short period, about nine months, I was seconded onto the rail privatization team at the time of privatization of the railways in Britain in what would have been about the mid-90s.
00:03:21
Speaker
those nine months actually got me interested in in rail and it was only sort of I then worked in consultancy for a while and it was only when I saw the strategic rail authority being set up which was around about the turn of the century that it sort of then gave me an opportunity to move back into rail. We share a common thing because I joined the railway in 93 and was experiencing privatisation within a train operating company and
00:03:46
Speaker
I think that sucked me in as everything was changing around me. There was a new landscape to play with, new tools and processes to develop it. It was an exciting time. The change has continued, I think, over
Introduction to Stephen Wainwright and His Experience
00:03:56
Speaker
the last three decades. I think that's a fair summary. It was, in some ways, a remarkable time. I just remember the speed at which things happened then. There's quite a bit of debate now about how fast or slow things do happen. I remember going in there and all contracts between each of the companies in the new privatized rail system.
00:04:15
Speaker
hope had to be finalised. And I remember being told they've all got to be done in the next nine months. And that was it. It's a pretty clear target. I remember a clear target. It was a very different time, as you say. We might well get back onto that because it's a lot easier to break something up than it is to put it back together again, as I think we're finding a bit now.
00:04:35
Speaker
Let me quickly introduce my fellow guest or host today, Stephen Wainwright. Stephen is a consultant professional. The last 20 years he's been with STEER in various roles, including leading our global aviation practice. Currently, Stephen is our acting UK managing director, leading the team here in the UK. His previous experience includes working with the CAA, the Civil Aviation Authority in the UK in air traffic and also advising on air traffic management across Europe. So he has a great understanding of
00:05:03
Speaker
incentives, regulatory asset bases, price controls, et cetera. Stephen, good afternoon. Thank you for joining us. Thanks, Mike. Welcome and hello to John as well. Thank you.
John's Educational Background and Career Shift
00:05:15
Speaker
John, I've said, I've tried to commit myself that as a rail professional, that we won't get sucked into a rail centric UK dominated or conversation today and that we'll try and broaden the consideration of where regulation comes into play in transport more generally so it's more accessible for our
00:05:33
Speaker
our global audience that are listening. I was going to start with, let's talk about personal, about how you got sucked in. You've already told me about the Privatisation Unit. Was there something else? Because I think I saw that you actually have two degrees, both in economics, but one of them is in health economics. And you weren't sucked into the challenge of UK health system as opposed to UK rail.
A Day in the Life at ORR
00:05:54
Speaker
Right. You put me on the spot there. Yes, I did.
00:05:58
Speaker
I do indeed have a British Master's degree in Health Economics and I believe I was one of the first six people to get one. It was an entirely new degree and obviously I was a lot younger back in those times and I had a very big idea that I was going to be having a sort of pivotal role in the future development of health policy in Britain but slightly naively I went for a job at what was then the British Department of Health and Social Security
00:06:28
Speaker
I got a job there as an economist, and I thought I was going in there to lead the health transformation. I met the chief economist, and he just took one look at me and said, we've got a good job for you on pensions. And that was it, really. And so you may say I didn't handle it very well. Maybe I was a bit naive in terms of my sort of only my second job. But yes, I actually became a pension economist for some time. It wasn't quite what I was expecting, but I'm sure it's still being good stead.
00:06:54
Speaker
I'm sure. And we might ask it towards the end of this about the parallels between health economics and rail economics. Two sectors with some pretty challenges and lots of strong opinions about them as well. So let's talk about your role. You're being chief exec now, as you say, confirmed in roles early 2021. What's your day look like? What's the daily regime of the chief exec of the RRM? What's what you drive the organization to achieve?
Importance of Transport Regulation in the UK
00:07:20
Speaker
Well, I could go for the classic cliche of everyone's different. But I think the thing about the ARO, we're actually a relatively small organisation. We've got about 350 staff. We're based in six offices across Britain. So my day is certainly geographically spread in terms of our range of operations.
00:07:40
Speaker
And because we're, as you say, a health and safety regulator and an economic regulator, and we also cover the channel tunnel as well, I would say it's extremely varied in terms of the type of work we cover. We have an independent board as well. We are an independent regulator. We have a board which is independent and very much guards that independence. So I work very closely with the board on decision making. And I think it's fair to say we have a very, very close interaction with government.
00:08:09
Speaker
your international listeners. The rail industry in Britain is very heavily subsidized. The strategic road network in Britain is paid for almost entirely by the government. And by definition, if you're a regulator of two industries with very, very high degrees of public funding,
00:08:28
Speaker
you're going to spend quite a bit of time with your relevant government department and with the treasury. And as I said, the final point is that there's a lot of interest in rail and road nationally in Britain. We spend quite a bit of our time dealing with external stakeholders, with the media, and also with a huge supply chain. There's a very, very big private supply chain going into one or two nationalised industries. So I'd say I'm regularly dealing with a wide range of organisations and people, but that's what makes it interesting.
00:08:56
Speaker
Yeah, a complex set of interfaces and organizational personalities to nurture and master, I guess.
00:09:04
Speaker
Indeed. The thing is, you've always got to keep in mind, what's the end game? The end game is that the users of the networks, both rail and roads, it's almost always easy to get lost in the system if you're not careful and stand back and say, let's just have another walkthrough about why are we doing this? We've got rail and road, we've got freight and passengers, and of course, we've got the taxpayer.
00:09:27
Speaker
and what you might say more broadly, that the public interest and ultimately we are guardians of the public interest. So, I mean, the ORR is, as you described, critical to rail sector, providing that monitoring role for the strategic highways in England. Just standing back from the specific role, the ORR in those two sectors, how important is transport regulation in the UK these days? Do you think it's grown in importance?
00:09:57
Speaker
Yes, I think it has. I mean, there are other transport regulators in Britain. I mean, we have an aviation regulation effect. There's a civil aviation authority and we don't deal with that. But I think if you think about why is it so important, just look at the scale of the industry. There's only one network rail. A network rail owns virtually all the rail infrastructure in Britain, not everything, but virtually everything. It's spending just on its core business over £10 billion a year.
ORR's Role with National Highways
00:10:24
Speaker
That is a big company by most standards. National highways is a bit small, but it's still a significant company. I think just the scale on rail of having a single monopolist of such a wide reach, having such a big impact on every other company, and it's publicly funded, so you have a political dimension, it does put a lot of emphasis on the regulator really holding the ring.
00:10:49
Speaker
there and bringing crucially transparency to the whole process in the nature of the industry. And your point there, is it growing in importance? I guess the different one for me there is around the National Highways one, because the legislation for that actually set up our role as a regulator. And I think the word in the legislation does refer to monitor, but we are a regulator of national highways. And the reason why I use the word regulator is that we have enforcement powers.
00:11:18
Speaker
We can require the company to do something. To me, that immediately, the monitors don't have that. I probably shouldn't say it, but also the legislation didn't quite capture, in that single word, the role. Those enforcement powers are crucial.
00:11:36
Speaker
If you look at the role of regulation there, it was very much as part of a package. The government wanted to see a package which got national highways more focused on the user again. So it's less of just maybe a very good engineering company and more sort of, why are we doing this? What are the users of the network working for? So that, in a sense, was quite a big structural change for highways, strategic highways in Britain.
00:12:04
Speaker
the relationship between a new company and a new regulator. And that took some while, I think, to settle in. You've been a company that's never had a regulator before, and you get one. And we had no prior experience in road, and we get that role. That was a big shift. I mean, I really remember the early period. It was just hard work all around. Yeah, about learning on both sides. Indeed.
00:12:32
Speaker
exposition around the role of regulation in the sector. Any perspective on how you think seeing this change in Europe? Do you see increasing demand for independent regulation? I think there is. And I think probably something which John's been obviously a lead of is a lot of the regulation was brought in in the mid 80s with private industries being privatized and companies being regulated through that process.
00:13:02
Speaker
I think increasingly there's a recognition throughout Europe that regulation needs to play a role with both private companies, but also publicly funded companies and corporatized companies. And incentives may be different in those organizations, but they still need to play a role in trying to achieve
00:13:22
Speaker
what john has also described is what the consumers need and that's a process i think has it's probably been happening for 20 or 30 years but it is something which is certainly a trend which continues thank you i'm intrigued by that with a unregulated market the consumer the user provides the incentive on the organization to adapt and i'm intrigued john a question i've got is
00:13:50
Speaker
Do you see the regulation as a driver of change that you are a catalyst and a force for good, which causes an organization to change?
Merging Economic and Safety Regulation at ORR
00:14:00
Speaker
Or are you more of an arbiter and judge to know whether they're going fast enough?
00:14:06
Speaker
I'd probably say that we tried to be more of a driver of change. I mean, just to illustrate that, we used to have quite lengthy debates, less so now, but back in the day, about enforcement, about emphasis on enforcement. You give the company a clear target if it doesn't deliver, you enforce.
00:14:23
Speaker
Personally, I always felt, well, I don't think most users of systems are actually massively interested in retrospective enforcement if things have already gone wrong. I don't think that necessarily gives people what they want. But by way of contrast, and I'm not saying this is completely black and white, I think you probably do have to vary a bit in different circumstances. But if you look at, say, network rail, and every year it's set, it's got an efficiency target,
00:14:49
Speaker
So you could wait to see whether it hits the efficiency target and then do something about it. You could try and punish it in some way, although because it's a nationalized industry, in effect, there are a few private incentives there. But what we just found a lot more useful, we did a lot of work with network rail on leading indicators of efficiency. How good a set of lead indicators could we get, which actually gave a pretty high degree of forecasting accuracy
00:15:18
Speaker
perhaps up to a year out, not in the years and years out, but within an annual business cycle. And that just proves so much more valuable, really, because we spend a lot of time getting them right. We track them together very closely. They prove to be pretty accurate.
00:15:36
Speaker
And that's allowed a much more nuanced conversation about, say, spreading lessons across the different regions of network rail, just to make sure everyone's picking up on all of those efficiency points, rather than just saying, well, we've failed, we've failed. And it doesn't work in all areas. I wouldn't say it was a panacea. But as a general rule of thumb, I really think that's worth driving for. Stephen, any view on European perspectives that you've seen or aviation perspectives of how
00:16:04
Speaker
Whether it's enforcement or for leading incentives, lagging or leading the indicators, is what the UK and what John and the RR are doing different to what you might have perceived in Europe or is that pretty consistent?
00:16:21
Speaker
I think it does come back to where the company's decision-making is coming from, what the governance of the company, where can you put the incentives. I'm very much a believer in having the balance right, really, across those different levers that are available to regulators.
00:16:43
Speaker
And using that balance, it may be tailored in a slightly different way, depending on the industry and depending on the ownership arrangements and the incentives of that company. But using a balance across those three, I think, is important. One of the important perspectives in that relationship of using the different levers available, I guess, John, is that
00:17:05
Speaker
as a health and safety regulator, that's quite different to the economic regulation role, or it plays. There's a relationship relation, those things. And I wonder how, because the ORR didn't start off with that role. It was given it later on. And I'm just wondering, how have you seen that come to bear in the organization? And what does it mean for the day-to-day operation and functioning of the ORR?
00:17:27
Speaker
You're absolutely right, Mike. Certainly, when I first joined the ARR, we were what you might call a pure economic regulator. We had no health and safety powers. Then a decision was taken and legislation was introduced effectively to move health and safety teams from what was then the health and safety regulator more generally into the ARR. That was a big
00:17:49
Speaker
big cultural change. I mean, it wasn't just a sort of technical change. It was a cultural change. You're bringing two very different groups of people together with very different backgrounds. And at the time, there were quite a few people, certainly people externally, who said, well, this is not right. This is not going to work. You shouldn't be mixing.
00:18:07
Speaker
economic decisions and health and safety decisions. And I think that's been proved as an argument. We'd be conclusively wrong. Absolutely no doubt. And I still have people arguing about this today, so I'm happy to debate it because people are still debating it. But I'm absolutely convinced that there is a more informed debate and discussion about both health and safety issues and economic issues because we've got those two groups of people together. And just to give, if I just had time for one really quick example,
00:18:37
Speaker
For the rail sector in Britain, rail usage is down, revenues are down. There's a lot of pressure to save money, not surprisingly, and it's technically funded, and you're looking to save money. So, network rail, I've had a proposal about modernizing their ways of working on maintenance. It's called modernizing maintenance proposal. In a full year, it could be gross savings around 100 million pounds a year. It's a big initiative. The main issues with it have been concerns about health and safety implementation of it. Could it be implemented safely? It's different ways of working.
00:19:07
Speaker
and we've approached that in a sort of dual way. We've looked at the efficiency sides of it, but we've had our safety inspectors go down to meetings at an incredibly local level in individual delivery units with trade union teams talking through exactly how we check the potential health and safety implications of it. And as a result of that,
00:19:27
Speaker
effectively by that sort of collaborative workings. The net morale have agreed it. It's gone for the safety processes. The unions have been very closely consulted. And I hope that that will effectively be a more robust proposal over time because of the degree of working from different angles as that has gone into it. I'm not saying it's perfect or there weren't debates on the way, but to me, it's more likely to hold.
00:19:52
Speaker
as an initiative and change and that's one of the benefits of having a regulator covering both angles from my perspective. And in the day-to-day operation of the organisation, how do you bring those different capabilities as you said? I can imagine at your top team, safety professionals, economic regulation professionals, does it?
00:20:13
Speaker
Does it come together at a lower level, at the cold face level? Absolutely. Yes. We have a process of escalating concerns that we have with network rail. So basically, we have a list of almost a watch list of things we're looking at that we think might turn into concerns. Then they get escalated literally into concerns with rank of them. And if you look at the way that process works,
00:20:39
Speaker
then people actively debate whether effectively this is, say, a safe fuel asset management
Political and Environmental Aspects of Regulation
00:20:45
Speaker
issue. It happened particularly on structures, as an example. We had an issue about backlogs of inspections or of structures, things like bridges and things like that. What's the best way of tackling this? Was it really a safe issue, or was it more of an asset management issue? And those sort of debates, as you say, at that sort of
00:21:06
Speaker
what you might call a working level, really the sort of coalface. I think they're great. I think they're invaluable. They just lead to better outcomes. Stephen, how does it how does you see it, perceive it working in the aviation sector? Well, I think I think it's evolved. I think in many ways, the UK was a leading proponent of how this worked. And there was there was a separate economic and safety regulator, but it was still part of the CIA. And I think you can really
00:21:34
Speaker
contrast that with how the regulatory oversight of air traffic management in Europe was introduced, which it was only really introduced in the late 1990s. There were indicators and performance areas which covered safety, capacity, environment, and cost efficiency.
00:21:56
Speaker
So it really reflected the evolution of regulation over that period, whereas a lot of focus in the early days was around the kind of costs and the cost efficiency. There actually are now indicators on equally important areas of safety, the amount of capacity that's available in the system, and the environmental impact of operating the system.
00:22:19
Speaker
So I think there's a matter of time, I think, and the benefit of other regulators plowing the way previously in that area. Stephen, you picked up that broader agenda, particularly I'm thinking now about the environmental and social delivery of transport, I guess, of asset management, et cetera. And John,
00:22:41
Speaker
How are things evolving? Because it seems to me now that the good news is we talk about transport and its outcomes a lot more clearer than perhaps we did before. We know why we have a transport system, but there is expectations about how those outcomes are now achieved through minimising carbon footprint and operating sustainably and delivering social value through these things. How does the ORR wrestle with, which I think is still an emerging agenda and emerging science in some of these areas?
00:23:07
Speaker
It is definitely an emerging insight. It's been quite a significant change over the few years. Back in the day, I don't remember much debate about biodiversity units and things like that. In asset terms, this is a relatively short-term issue, whereas now you look at
00:23:27
Speaker
National Highways run in the street road networks in England. They have targets around increasing biodiversity units. They've got targets they're held to account for. We publish the outcomes of those and whether they're making progress towards it and net gains. It is a big shift. In some ways, though, the shift the other way of the impact of the environment
00:23:51
Speaker
on the assets. I think in some ways it's just been even more profound. It's been a huge feature of our work over the last few years on rail and road, an area of quite big debate as well, especially when you've got a constrained funding environment, how you prioritise in that scenario. And it's led quite big shifts in spend by assets, more spend on drainage.
00:24:18
Speaker
for example, particularly on rail. We monitor that whole area far more closely than I remember 10 years ago, or whenever. The focus we put into the analysis of drainage assets, the resilience of drainage assets, and of worth works.
00:24:36
Speaker
The issue for us in Britain, unlike a lot of countries, is just how old our asset base is. We've got a lot of assets going back 150 years or more. They were designed in a world where people didn't have to think much about these things. That is really driving
00:24:57
Speaker
costs now in the system and some fairly ruthless prioritization because it drives a debate about, well, you might want to add lots of things, lots of nice things to this railway network and lots of enhancements and
00:25:12
Speaker
new lines and things. But if it's going to cost more to maintain your core asset base over the years, and at the moment, looking forward over the next five years, we will not sustain the condition of the core asset base. It's going to get a little bit worse. They're quite profound issues in terms of choices that will have to be made over time. And of course, they're not very glamorous bits of work compared to, obviously,
00:25:38
Speaker
not surprising that a lot of politicians, members of parliament in Britain, or their constituents, people would like a new station, wouldn't they? Or they'd like maybe a new line to connect them to another part of the country or something like that. And because those things add to the asset base as well. And I'm not sure we've quite entirely really confronted some of the very, very tough choices, tradeoffs that have to be made in the future. Do you think decision makers
00:26:06
Speaker
understand those difficult choices, those trade-offs, or they don't understand, they can't see them, or they can see them, but they're too difficult to take at this stage, and we'll wait a little bit longer.
00:26:19
Speaker
It's interesting, I suppose, in a semi-political context where it's often said in Britain that the Treasury are based on the custodians of the finances here. They're not interested in the longer term or they don't get these big picture things. Actually, I find they do.
00:26:39
Speaker
I find there very, very much do we get it. But of course, they're having to make choices and priorities too. But certainly, when we provide analysis of the road network or the rail network, there's actually an awful lot of interest in just what is happening to the core assets. Are they being maintained? Yes or no? And how does that feed through into the future delivery? Because
00:27:03
Speaker
Obviously, as a regulator, what's the point of having a regulator if they're not there at least as a custodian of the long-term public interest? Even if we think people aren't getting it, as you say, Mike, well, actually, it's our job to explain it, isn't it?
00:27:21
Speaker
There's no excuse for a regulator going to sort of victim modes and they don't get it. In our case, we've got to get out there and we've got to say, look, if you care about the long term asset base here, this is what's going to happen. But I find the Treasury extremely well informed about the long term, the need to maintain and sustain long term asset base. I'm intrigued by the capabilities of the ORR. I mean, because you say we're wrestling with new agenda, social value, sustainability, biodiversity, as you said.
00:27:51
Speaker
And now we're talking about seasonal impacts and trying to understand climate science. How do you equip the RRL with those insights and that capability to communicate to decision makers and to push your regulator ease? I'm not sure what you would call your subjects of regulation. I'll pass on the exact word. I think your question is about...
00:28:13
Speaker
The question is a very good one. It's actually very challenging because if you look at the number of areas we cover, we cover health, we cover safety, we're a competition regulator as well. We publish NASA statistics across rail. What you tend to find is that each specialist team, maybe two to three people,
00:28:32
Speaker
I am and hence it operation from my perspective as a chief executive operation this is a sort of fragility there in teams in terms of trying to get resilience and get teams overlap a bit to get to you got more resilience in the system and the most one that we spend a lot of time recently is just the impact of software and trains.
Brexit's Impact on ORR and International Collaboration
00:28:55
Speaker
Back in the day, a lot of it was about mechanical engineering. If the train failed, you have somebody who knew their mechanics and could find where it had gone wrong. Whereas now, we see increasing examples of where it's very hard to explain why something has happened. In terms of our skill base, we have hired more external support on that. We've also re-done our training regimes for some of our safety inspectors.
00:29:23
Speaker
to try and build a skill base around understanding software. Obviously, this is only heading in one direction, so there'll be a lot more of that. Like every organisation, we have to adapt to a change in requirement and we have to try and compete in some of those markets.
00:29:38
Speaker
they're quite hard markets competing. So the trick for us is to be quite precise about what we need, where we need someone who understands enough to ask the questions rather than can solve the entire coding problem by themselves, where we're probably better off going to a specialized private company.
00:29:57
Speaker
Yes, I was only having a conversation this morning with an industry colleague who, when I said I was chatting to yourself later today, was saying, ah, the ORR, they need to get into the regulation of data because so much will be dependent on the data going forward to influence the real world. It's the control of data that's going to be so important going forward. Another capability you're going to have to add.
00:30:20
Speaker
Whoever that was, we're pleased to know that at our board last month, we were debating our new data strategy. I wouldn't say we solved it, but we're on the case. In preparation for the podcast, I asked colleagues from Steere, and particularly the rail team here in the UK, what questions we should pose to you, John. This has come from the team, and I'm assuming there's a vested interest or a perspective on it.
00:30:46
Speaker
So they were asking you about that environmental social delivery angle, particularly about how it compares with other European countries. But the question then went on to ask about how has Brexit changed the relationship between ORR and its counterparts? Has Brexit given you some more freedom? Has it given you ability to compare and contrast perhaps with other regulation across Europe? What's your take?
00:31:13
Speaker
Brexit did have quite a profound impact on us. We were integral part of lots of groups across Europe dealing with what you might call things like technical standards or safety issues. And we actually, going back over the years, we've actually played quite a leading role in the development of many standards and indeed the approach to safety.
00:31:34
Speaker
in terms of a more risk-based approach, rather than a rules-based approach, you might say, to very general terms. All that went, I mean, that largely disappeared. And that was quite a big impact. I haven't personally seen, this is not a political comment, I don't know if there's any sort of particular gain from the OR from Brexit. What we have done is tried to maintain
00:32:01
Speaker
our contacts with European countries. A lot of them are relevant. We don't have actual data points. Data and intelligence gathering, comparing, contrasting. We've tried to maintain that, but it has been a fair change. Although, I suppose, going back to the point about
00:32:24
Speaker
We do actually see that on a day-to-day basis in terms of the regulation of the channel tunnel. We work really closely with our French counterparts in France. You do see the interesting difference of approach. It was only recently that
00:32:41
Speaker
a very very powerful electricity interconnector was put in store in the tunnel the first time as far as i know it's ever been done in a live running tunnel in any way in the world although somewhat somewhat money-related might migrate me on that but it raised so this was to allow basic electricity to be traded between britain and france and it's actually turned out to be extremely valuable both ways and during
00:33:01
Speaker
while some of the french nuclear reactors were down for maintenance the british electricity was shipped over so it's useful for both countries and it's been a very substantial revenue generator for the for the tunnel tunnel company but the safety issues around that and the debate about safety should that were very very technical very very intense debates
00:33:21
Speaker
with two different approaches to the way that safety is addressing legal terms and very different backgrounds from ourselves and our French counterparts into how we both got to the issue. But the fact is, we work together very, very well. We've got extremely good relations. So, you do have different approaches, but they can be overcome as long as the world's there. But
00:33:46
Speaker
For us, this is a day-to-day issue in terms of health and safety, and at the moment, and more recently, in terms of access to the railway. Because at the moment, just to explain, this is more generally, there's only one train company that basically really moves you between London, Paris, and other cities.
00:34:06
Speaker
And in recent months, three competitors have named themselves, which is quite a sea change in the operating environment.
Future of Transport Regulation and Technology Integration
00:34:16
Speaker
And now those operators are going to be travelling through different countries and through the tunnel. So again, we are in discussions with our counterparties around that. So these issues are still there. The issues of geography and competition, health and safety remain.
00:34:32
Speaker
Yes. Stephen, you've done a number of studies for the European Commission and European Parliament on helping to identify policy but also reviewing the impact of policy. Have you got any perspectives on how, I suppose, different nations and regulators have worked across well or whether you've seen that it really hasn't worked and some people have abdicated to comply or something?
00:34:54
Speaker
Yeah, I mean, that's a big issue, I think, Mike, in terms of how well people work together. And I think there's different experiences really. I think where things have evolved with working with regulators to get the regulations that perhaps were better than regulations being imposed and the regulators catching up with it.
00:35:16
Speaker
There are a few occasions in the EU where regulations have been imposed and it's taken quite a long time for the regulators to catch up. I think the classic one is something that all of us will be affected by is passenger rights. That's gradually come across all transport modes, originally in aviation, which is actually now in all transport modes.
00:35:41
Speaker
I think that has taken some time for cooperation and the systems to really catch up with the concept. Do you think it does depend on where you started from? Thank you. That was talking about, I suppose, regulation across geographical boundaries. John, I wanted to talk to you about transport system, rail and road. They connect to other things. They require the connection to other things. As you said, you were indicated earlier, there's
00:36:06
Speaker
there are more regulators in the UK than just the ORR. How is the interaction between different regulators, between modes, networks, utilities, how's that going? How do we ensure that that regulatory ecosystem which emerges is both efficient, coherent, agile, and supports the development and deployment of new technologies such as zero emission vehicles, which needs energy, which will be located on transport mobility hubs? And how is that working?
00:36:37
Speaker
Just think about whether it's best to illustrate more general or through some examples. So just taking your point about, okay, certainly electric vehicles, charging points, if you look at national highways, it was agreed fairly early on that there should be an aim to get a certain number of charging points at every service station. And that was, I think it was agreed pretty quickly actually.
00:36:59
Speaker
But then, as you say, there are interfaces, not just between regulators, but between government regulators, private companies, financial arrangements. They're never easy, but I think it's been shown that they can be done.
00:37:16
Speaker
You also get operational interfaces. If you look, say, at the work that National Highways does and the work that Network Rail does, often these intersect at points. They affect each other, or they might both be jointly working in an area. I do think that
00:37:32
Speaker
This matters to people at the local level, how much disruption these words cause. People think, well, couldn't they just talk to each other? This is a very common... You can see why people think, no, surely it's obvious that they could talk to each other. I do actually think over the last few years that Network Rail and National Highways have actually got better at coordinating, joining up their work. It's not always possible to iron these things out.
00:37:58
Speaker
And this partly reflects network rail and the National Highways increased regional focus. It's not all done from central HQ, where everything seems frankly slightly distant. There's much more regional planning. And so it might seem like, well, OK, how many jobs are you talking about? But do the individuals involved affected by them on the ground? These are quite important things. And so I don't think sort of
00:38:21
Speaker
almost like small-scale local corporations should be able to look up either. We tend to gravitate to this big, really exciting stuff, don't we? But these things matter at all levels. I just want to go back to the other level, really high-level point. The regulators in Britain do talk to each other. There are forums, there's even a Chief of Sex Forum for regulators in Britain, so they do talk to each other.
00:38:49
Speaker
And I suspect, though, that it's just a little bit different in rail and road because there are literally fewer companies and there are quite a few water companies or electricity providers and things like that. There's only one national highways and there's only one network rail. So the dynamics, I think, are a little bit different in terms of joining up between different organizations.
00:39:13
Speaker
But it happens. I think sometimes, though, people sort of use joining up in slightly different ways. I think what sometimes people mean by joining up is like, can't one of you put more money into it?
00:39:29
Speaker
So, I frankly feel sometimes we talk in euphemisms. And what people really do say, they're not actually interested in the process of joining of at all. They want more cash to go into a particular
Conclusion and Teaser for Next Episode
00:39:42
Speaker
area. And that is a slightly different point. So, folks, that's the end of part one with John. In the next part, we'll shift gears to discuss specific projects, including HS2, and explore how these decisions shape the future of rail infrastructure.
00:39:57
Speaker
I'm looking forward to sharing how we dive deeper into these topics in our next installment. See you then.