The full text of Alistair Darling's speech to the SRA rail finance summit.

"As I speak to you today I detect of a new spirit of confidence in the industry.I believe that there is now a clear sense of direction and a real determination to make progress.

We've put the difficulties of Railtrack behind us. Network Rail is now in place.

Richard Bowker and his team have shown the SRA can provide strategic direction.

They together with the freight and passenger train operators are now working together with a common purpose, recognising that co-operation is essential for the future good of our railways.

We have the investment. And the industry is getting a grip on many long standing and fundamental problems it faces.

So there's no better time to build on that foundation, and get on and deliver a reliable and a safe railway. Delivering real improvements year on year.

And despite being one of life's natural pessimists - I'm optimistic about the future.

There are some good people in the industry at every level. Dedicated. Committed.

Prepared to take a long hard realistic look at the problems - and the solutions. There's a lot to do. But I'm increasingly confident we can do it.

The railways are an essential part of our transport strategy. And I'm convinced we can do more with what we've got.

And more still with the right investment. But we have got be realistic and hard-headed. Cost control is critical. The numbers have got to make sense.

We can only justify the investment if the public can see its value and there's tangible results.

But first let me set out the background to this against which we plan.

Background

We are the fourth largest economy in the world. In the last five years we have got 1.5 million more people in to work People are better off and have more reasons to travel.

That's why since 1997 rail journeys have increased over a fifth, whilst car ownership is higher than ever. And why last year half the population flew at least once.

As we all meet these challenges that come from success, so we also have to deal with the problems of decades of under investment and decisions put off. Years of uncertainty and resulting lack of confidence.

A successful economy must be underpinned by a transport system that can move people and goods as quickly and as efficiently as possible. Our continued economic prosperity depends it.

And we can do that in a way that's consistent with our wider economic social and environmental objectives.

We'll do it through a balanced approach. A whole transport strategy means using both road and rail. Striking the right balance between public transport and the car. Passengers and freight.

Objectives

So our objective is a reliable and safe railway. A railway where people chose to travel. A railway which underpins our prosperity and contributes to our quality of life.

That means journey times that are predictable. Trains that are clean and comfortable.

It means making better use of the existing network, that will, with the necessary investment provide more trains and faster journey times. And of course a culture where safety is embedded at every level.

The objective is clear. So how do we do it?

Investment

We now have a 10 year investment strategy in place. Committing substantial amounts of money to put right years of neglect. And a long term commitment for what will be a long haul.

And I want to emphasise the importance of partnership between public and private sectors. Bringing together the expertise as well as the investment of both public and private makes sense.

It can work. It does work. In the scheme of things it is a relatively new approach. So of course there will be problems from time to time.

Of course that partnership will adapt as we progress. But that partnership is the right way to improve our railways.

Just as we've seen benefits of the SRA, Network Rail and the rail Regulator working closely together, so we need the public and private sectors working together. Building on what we've done.

Get to grips with problems

With a strategy in place, the focus for the industry must now be on getting to grips with what needs to be done.

There will be difficult decisions to take. But there is a new willingness to be frank about what needs to be done. And a determination to get it sorted.

The public is rightly impatient for change. But if people see there is a clear sense of direction; if they can see you're taking the difficult decisions, making progress, they'll support you.

It won't be easy and certainly won't always be popular. But if you can show you're making progress - and that you're on the right path - you'll get the support you need.

The West Coast Main Line is a case in point. The industry is now getting to grips with a project which should have been addressed years ago. It's sorting out what needs to be done and how to do it. Getting a hold of the costs. Developing workable and deliverable plans.

The industry is facing up to deep seated and longstanding problems. In the coming months there will be many difficult issues to resolve.

But, whatever the problem, if you face up to it squarely, you can expect our support. As we have seen with the decision to temporarily close sections of West Coast Main Line. Difficult and frustrating but the right thing to do because it allows work to be done more quickly and with substantial cost savings.

No-one seriously doubted that it was the right approach. But be in no doubt you have to deliver. People expect the improvements promised will have begun to be delivered by the end of 2004.

I've said it before - you must look at the railways through the eyes of the customer. They'll accept some temporary difficulty if they can see that it's leading to a better service. But be in no doubt, they won't be happy until they see that better service.

So delivering what is promised . When it is promised is critical.

Making Better Use of the Railway

The West Coast Main Line is an example of a very large-scale investment. But we need to get more out of the existing network - as the SRA has set out.

We will achieve much more from the rail network if we apply a better set of priorities and better management to the capacity that's available.

The SRA is looking at what we should be doing to make the best use of existing rail capacity. This is exactly the kind of thinking we need.

With both road and rail we have serious problems with capacity. And the problems manifest themselves in different ways Leading to congested roads and overcrowded railways.

But what both have in common is the infrastructure is not being used as effectively as it could be. So we need to find ways of making better use of the infrastructure we've got.

And the timetable revision is critical. Now I know this won't be easy. But we can and must make better use of the infrastructure we've got.

Passengers quite rightly expect to have a realistic timetable they can rely on. They want to know when they'll arrive at their destination.

There will be some tough choices about priorities. But if you can show that the outcome is a better service, and I believe you can, then you can win the argument

We also need to get the franchising relationship right for the future. It requires a more robust approach. Rooted in active contract management.

The SRA is working on this now and I will say more later in the year. We need to get the relationship right - which will provide for greater stability and certainty which all of us want.

We have to be realistic about what we set out to do. And confident that we can deliver it. Improving and upgrading what we've got.

We must focus on the improvements that bring the most benefit. Ensuring sustained improvement year on year.

And let's be realistic about what heavy rail does best and where it's most effective. And recognise its limitations in some areas.

We need to ask whether light rail or a bus-based solution is better. You can often get more for the same money with more flexibility and quicker results.

Let's be pragmatic. What matters is that people and goods move as efficiently as possible.

Customers Perspective

There's a further point I want to make and it's critical to finance. People will only invest in the railways if they see a return. And that return depends on winning more passengers and freight on to trains.

So as I said to you in July at the Railway Forum - look at your trains through the eyes of your customers. Quality of service matters. Do not take customers for granted.

Some operators have shown flair and have won more and more passengers. The over 20% growth in passenger numbers owes much to the efforts by some companies to get more people on the trains.

But others have not done as well. And its not just reliability but clean trains, helpful staff. These things matter. Passengers rightly expect them. What goes on inside the carriage is just as important as what's underneath it.

I think someone must have been listening when I spoke at the Railway Forum. Let me particularly commend the guard on the 7.56 train Horsham to Victoria last week. The train was late. His apology to the passengers was both fulsome and revealing.

He told them 'I'm sorry this service is late this morning. It's usually late of course, but not this late. Sorry'.

That guard clearly cared about his passengers. But if I were to have a word with his employer, it would not be to criticise what he said but why he had to say it.

There is a limit to people's patience. People have choices - not just whether to travel by train but about whether they're prepared to back investment in trains.

We need to show we can deliver. And there is progress. And that there can and will be a better service.

Successes

As I've said to you before you should never be afraid to trumpet success.

For instance we now have a train protection warning system operating on more than three-quarters of all trains. And we can see the tangible results of this too. Incidents of signals being passed at danger are now at their lowest level since records began.

And elsewhere passengers are starting to see early signs of progress being made.

Take rolling stock. After years when no new rolling stock entered service, last year there were over 600 new vehicles, and this year I expect over 800 new vehicles to come into service.

The many thousands of passengers who are using these trains now have a safer as well as a more comfortable journey. And by 2005, 2800 more vehicles should be in service.

For passengers travelling between the North East and South West on the Cross Country services. Not only are the new Voyager trains more comfortable and more accessible but the frequency of trains this month has been increased by 40 percent.

An example of the private sector showing their efficiency - delivering on time and on budget. We need more of it.

This summer the last nine-mile stretch of single track between London and Birmingham was double-tracked on time and under budget. An excellent example of teamworking which has given passengers a better service between London and Birmingham.

And c2c have replaced all their old slam door trains with a brand new fleet of modern rolling stock which with upgraded track and signalling, is providing a significant improvement in performance.

None of these improvements have been problem-free. There have been too many teething problems. The industry needs to focus these to give a consistent high level of performance as well as controlling and driving down costs.

Costs

I want now to turn to costs. As I said earlier, this issue is critical. The investment is there to make sustained improvements to the railways. But it can't happen without firm control of projects and their costs.

We have made substantial money available for rail investment. And we're committed to rebuilding Britain's railways.

But we will take a hard line on cost increases. You cannot approach projects on the basis that if that's what it costs, so be it. Projects have to come in at an acceptable cost.

No company, no government, can ever sign blank cheques. Projects have to make economic sense - and costs have to be controlled. That means projects have to be realistic and capable of delivery.

Whenever I see costs starting to escalate I'll stop and ask why. I will want the SRA to look again at the strategy and ask if there are better ways of improving the service. We'll have to reconsider our priorities just like the way we have done with the West Coast Main Line upgrade.

Put bluntly, there may be substantial amounts available to invest but we'll spend it prudently. We've got a fixed budget and we intend to get the most we can from it.

So there needs to be a firm control of costs and everyone in the industry must get a lot tougher about it.

It needs thorough work in the early stages of a project. It means being realistic. And it means remembering you're here to re-build a railway not to spearhead property development.

Conclusion

None of this is easy. Decades of neglect cannot be turned round easily. Significant change rarely comes without some pain. There is still a huge task ahead of us. But I am confident that if we concentrate on our objective of building a reliable safe railway fit for the 21st Century, we will deliver it.

Someone said it was my job to provide covering fire while the industry got on with the job. Up to a point. My job is more than that.

I am determined to do everything I can to work with you to deliver a better railway. It's in everyone's interests to make this work.

There's a lot at stake. The industry will be judged by the public on what it delivers. We now need to get on with it."