Rail 405: SRA has failed to deliver the goods – a real vision for rail

The concept of the Strategic Rail Authority was a good one, which had the potential to be a useful cushion between the privatised railway and the subsidising government. But, says CHRISTIAN WOLMAR it has failed to deliver a robust and quality plan for Britain’s railway for the 21st century and hopes its recent strategic agenda is, perhaps, just a first draft.

The SRA has not exactly covered itself with glory since it began work in shadow form nearly two years ago. Let me put that a bit more bluntly. The SRA has failed every test it set itself and the strategic agenda published, at last, on March 12 does nothing to restore the organisation’s reputation.

Yet, the SRA started with almost universal goodwill. Anyone who had devoted more than a moment’s thought to the post privatisation structure of the railways realised that there was a gaping hole in the centre of the rail industry which is why the various companies behaved like an ant colony whose queen had passed away.

The SRA was to give direction to the scattered, and often mutually antagonistic, companies in the industry. It would provide the large canvas on which the companies would draw pretty pictures and a suitably big man would be appointed as its chairman. And so it proved. Everyone cheered when Sir Alastair Morton, the man who had driven a hole under the Channel when all had seemed impossible, was given the job.

But then, as in all good fairy stories, things started to go wrong. There will be fewer, longer franchises, announced Sir Alastair. But, after much thought, 25 became 22, possibly. Special purpose vehicles (SPVs) will undercut Railtrack to bring forward big investment schemes. But the SPVs clearly had not been fitted with a starting motor as they have not yet emerged. The refranchising programme was to start immediately and 18 of the 25, all those due to run out in 2003/4, were to be re-let by the end of this year. Fat chance with not a single deal yet signed.

Indeed, some of the franchises have become so bogged down that quicksand would be relief. There have been real howlers. The East Coast Main Line fiasco and the Central Trains non-allocation are but the tip of an iceberg. The SRA’s predecessor, OPRAF, might have had a simplistic view of what the best franchise was – the one that required least subsidy – but it did let all 25 in 18 months. The SRA has let none in the same amount of time.

The problem is the way that the SRA has gone about its business. For the first few months, it should have worked out what it wanted from bidders. Instead, it said that the private sector must come forward with ideas and then the SRA would pick and choose. So even the franchise map is not finally drawn. There might be an airports franchise or there may not be; Wessex may be run in conjunction with a neighbour or not; Thames may be linked in with ‘a neighbour’; and so on.

I like Sir Alastair even though he comes across as a big bull who terrifies the china, but I’m afraid that this time he has lost the plot. ‘The SRA must guide and lead, not command and control’ is the line but the industry was begging for a clear strategy. We had the bizarre spectacle of Railtrack’s Chief Executive, Steve Marshall, asking for a ‘benign dictatorship’. The industry was looking to the SRA to set the agenda and produce a vision for the railways. And, more specifically, to put out clear franchise propositions and then assess the bids which would be on a comparable basis. That would have avoided fiascos like South West Trains where two bidders are promising £2bn of investment and the third, Sea Containers, £4.5bn because it is planning a tunnel under half of London. As one bidder put it to me, ‘it’s like choosing between watermelons and oranges. They’re both juicy but they are completely different.’

So, with all this dithering, we all hoped that the strategic plan would provide the answers. But suddenly, the plan became an agenda and its publication was delayed for a year. First we had to wait for a 10-year plan; then the regulator had to pronounce on the access charge review; and then there was the possibility that Railtrack might appeal against the review, so the plan – oops, sorry – the agenda had to wait. In truth, this showed the weakness of the SRA. It was at the mercy of events and of other organisations – the regulator, the Treasury, the Department of Environment, Transport and the Regions; No. 10; Lord Cullen and Uncle Tom Cobbly and all – rather than trying to set a vision for the future of the railways.

Now, at last, we have the agenda, but it does not take us forward. Many years ago, Sir Alastair wrote me a letter suggesting I was wrong when I said that the cost of the Channel Tunnel had escalated threefold. He opened with the words: ‘Strewth, this is like shooting fish in a barrel’.

Well, Sir Alastair, picking holes in the strategic agenda is like swatting flies in the Sahara. It is a weedy document that reads like a Morton manifesto: ‘the SRA’s chairman, in a series of speeches, repeatedly discussed and steadily developed the SRA’s strategic vision. These statements were an extended form of public consultation.’ Oh, really? I thought they were the thoughts of chairman Sir Alastair laying down the line.

The Plan gives a cursory history of the railways since 1994 from the partisan view that a lot of mistakes were made but everything can be patched together. It then sets out a series of very vague objectives for a ‘safer, better, bigger railway’. On specific schemes, it repeats much of Railtrack’s NMS with, pleasingly, the Central Railway plan for a North-South freight route but warns: ‘Part 4 of this document lists a host of projects, large and small. Many readers will study it eagerly searching for a favourite or local project. The SRA would ask readers not to invest too much emotion in this list’ (my italics) because it is a menu rather than a plan. With Railtrack’s annual NMS, the 10-year plan and now this, we’ve had an awful lot of menus but, in the meantime, the customers have starved to death. Given that this is a wish list, it seems inexplicable that we have had to wait all this time.

What the agenda totally lacks is any consideration of the big questions. What is the railway for? On what markets should it concentrate? Do we want more commuter railways in London or better InterCity services? Is there are social agenda for the railways (as in previous columns I have suggested the idea of ensuring that rail investment should be considered in the light of how much it would help the socially excluded)? Fat chance. The SRA and Sir Alastair have had 18 months to consider these issues and yet there is nothing about them. The extent of the banality of much of the agenda is summed up in the following quote: ‘The future needs of Leeds, Manchester and Birmingham – to name but three – will not be the same as they were in 1980 or 1990.’ Make of that what you will.

Yet, the SRA is the customer for rail services which it is paying on behalf of the taxpayer and therefore it should know what it wants – tunnels under London, high speed links, more comfortable trains, more platform staff, slower trains, faster trains, blue trains, green trains and so on. And it must set out these choices clearly for its paymaster, the government.

If this were an agenda for a meeting, then it would be an interminable one with a large number of people speaking different languages and no set aims. No wonder that, according to The Financial Times, the Treasury is beginning to balk at the cost of the railway’s contribution to the 10-year plan and is happily shifting resources back into the roads programme.

The big idea in the agenda is one that has been touted around for months through judicious leaking – taking much of Railtrack’s enhancement role away from the company and giving it to other investors. The original idea of having Special Purpose Vehicles has been developed into the concept of Design Build Finance and Transfer – DBFT. These consortia, which will include the SRA, possibly Railtrack and train operators as well as other companies, will take on an enhancement project and, on completion, will transfer the scheme to Railtrack. The scheme will then become part of the asset base on which Railtrack’s access charges are based.

There is, however, a problem. Railtrack has run out of money because of the Hatfield disaster, its own incompetence and the fall in its share price. Any other investor will also need underpinning from the government and will face the same questions over rate of return and construction risk as Railtrack. Moreover, what will happen when the enhancement is completed. Will Railtrack be able to afford to buy these bits of infrastructure? And if not, will we start having a rail network owned by lots of companies with yet more, potentially dangerous, interfaces?

There is, too, the problem about how enhancements are developed. The fiasco over the East Coast Main Line shows that currently there is no clear ‘ownership’ of enhancement projects. One suggestion would be to recreate the sort of planning office which BR boasted that dreamed up and developed major projects. Instead of having several private sector companies working up schemes that are unlikely to ever see the light of day, the SRA should have the capacity to develop them to the bidding stages when they can be handed over to the private sector. Although this represents an upfront cost, in the end it is cheaper because it is the public sector which ultimately has to recompense private bidders. This is the way that schemes like the refurbishment of the East Coast Main Line and the construction of the Channel Tunnel Rail Link were done. But there is nothing about such an idea in the agenda.

Hopefully, the agenda is really just a first draft and we can expect more from the plan when it is published, as promised, in the autumn. However, the SRA will have to show a much greater readiness to take hard decisions, to consider wider issues and to assume the role of ‘benign dictator’. Maybe that will be easier to do if, as many commentators are now predicting, Sir Alastair opts for an easier life postelection.

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