Thank you. And good afternoon everyone.
I’m delighted to welcome you all to 1 Wimpole Street today (17 March 2015).
A fitting venue for our rail competition launch – for 2 reasons.
First, because underneath us is a disused underground station - which the enthusiasts among you will know was used by the postal services to transport mail across London for much of the 20th century.
But also because this building has been home to generations of pioneers, since the Royal Society of Medicine moved here more than 100 years ago.
This is where vital research into malaria was conducted before the First World War.
And where scientists performed ground-breaking laboratory experiments on cancer tissue.
So there’s a long history of innovation here.
And I stress that - because we use the word ‘innovate’ so often these days that we’ve diluted its meaning.
Big corporations employ ‘chief innovation officers’.
Book publishers churn out titles like ‘Innovation Nation’, or the ‘Little Black Book of Innovation’.
Businesses throw the term around to describe things that they should be doing as a matter of course.
And by the way, us politicians – and the civil servants we work with – are no better.
Well, today, we have an opportunity to rescue the word.
Reclaim it – and restore it to its original definition.
Meaning something new. A departure from the norm.
Because through this competition, FutureRailway is challenging train operators to come up with some genuinely innovative solutions to improve our railway.
The fund this year is £6 million.
That’s £2.5 million more than 2014 - which was the first FutureRailway Train Operator Competition.
We want this sum to support 2 or 3 significant projects, rather than break it up into smaller amounts - where there’s a risk it might not result in tangible change.
We want to appeal to as broad a section of the industry as possible, but the focus must be on passenger train operations.
And we want you to collaborate with the supply chain - take advantage of what SMEs can add to your proposals.
Once bids are in, we will make a shortlist, and those bidders will present to the innovation board.
Any operator can apply – including open access companies.
And I want to emphasise that this is your scheme.
We want to hear about your ideas.
But if I could give you 1 piece of advice, then I would urge you to seek answers to problems that affect the customer.
When I think of what frustrates me most about rail services, I think about things like ticketing and passenger information.
I still find the process of buying a ticket archaic, even if the industry has made small improvements in recent years.
In this area, the railway seems to be light years behind other industries.
Passengers want a seamless experience.
To find, buy, and get hold of the right ticket for their journey, at the best price, before proceeding with their journey.
That should be the minimum requirement.
To really make things easy, maybe customers could have a permit to travel on their phone, with no gate-lines that slow them down.
Though that would move the innovation challenge towards revenue protection.
It’s also frustrating that so many potentially useful schemes get stuck during development and fail to progress beyond feasibility studies.
There’s a real opportunity here to get things moving.
For one operator to make a breakthrough.
And let me be clear - we are not necessarily after complex or highly technical proposals.
Innovation to me isn’t about how much work or investment is required.
It’s about changing the railway for the better.
If someone in your organisation has an idea to use a widget from the automotive industry, or develops an idea from another business to reach customers on social media, and they make a difference to rail passengers - then that’s innovative.
It could be about using existing technology to improve passenger information at times of disruption.
Or better still, to predict operational problems before they happen - so preventing disruption altogether.
Don’t feel bound by the past. The sluggish pace of change that has often characterised the rail industry.
Think about how you can achieve quick wins.
I’ve been impressed by a number of rail initiatives over the past few months - which maybe can help inspire bidders.
There’s C2C’s minute by minute automatic customer compensation scheme for the late arrival of trains by as little as 2 minutes.
Or its new contactless payment method by using a wristband loaded with credit, which I had the privilege of trying out for myself at Fenchurch Street the other day.
There’s the recent trial of the battery powered train, which James Ambrose from the project team will talk about later.
Or Abellio’s clever system of personalising responses to tweets which involve their services.
Recent Catapult workshops about the future of the East Anglia franchise also produced some good ideas, from train miles rewarding passenger loyalty (admittedly not the most original concept in the transport world – but as I said, it sometimes makes perfect sense to use what has worked well in other sectors), to real time capacity checks on trains and car parks.
Giving customers the freedom to make short term decisions about their journey.
These are all fantastic examples of clever, entrepreneurial thinking in the rail industry.
And I congratulate all the operators involved.
We are right behind you with these initiatives.
Indeed, we want to help you be more innovative.
That’s why we are leading the Innovation in Franchising programme, with support from FutureRailway, the National Skills Academy for Railway Engineering, the RSSB and Catapult Transport Systems.
£30 million of investment has been co-funded to create a fund of nearly £60 million to support a wide range of projects.
Over 140 organisations have benefited from the programme so far.
And there’s more to come throughout Control Period 5.
We have also made changes to the franchising process, because previously, operators had little incentive to innovate.
Now you will be able to invest with much greater security about return on investment.
Beginning with East Coast, Northern, and TransPennine, where 1% of revenue will be invested in long term innovation during a 3 year pilot.
For Northern and TPE, we are introducing a new residual value policy to encourage long term investment.
We’re also supporting a research programme at the RSSB, which is helping the industry explore some big new ideas.
And some excellent smaller ones too.
So with co-funding, total investment in rail innovation is expected to be £250 million during this control period.
Alongside these initiatives, we support the industry’s Rail Technical Strategy, which has set out a 30 year vision.
And together with BIS we’ve established a Transport Systems Catapult Centre, which is working with companies to develop and sell new technologies and services around the world.
I was impressed by what I saw there earlier this month and I would encourage you to see it for yourselves, perhaps during the Imagine Festival starting on 9 June - I am sure Steve Yianni who is here today will tell you more about that.
So. There has never been a better time for the rail industry to innovate.
The railway is entering a new era.
Of record investment.
Of longer, more secure franchise periods.
Of HS2, Crossrail and Northern Hub.
Of digital communications technology that can revolutionise the passenger experience.
And of new rolling stock - like the first Hitachi IEP train which I welcomed to UK shores last week at Southampton Docks.
There’s a real buzz about the industry.
And all this investment means there are greater opportunities for different parts of the railway to work together.
Partnerships will be an important part of this competition.
And sustained funding over the next Parliament and beyond means those opportunities will keep on coming.
Unlike the past, when stop-start funding made it impossible to plan ahead with confidence, we’ll keep the money coming.
Because investing in rail is also investing in our economy, and in jobs.
We want you to grow, because we want Britain to grow.
So can I urge you all to embrace this competition.
And help us rediscover the true meaning of innovation.