Rail 440: Why is the railway network always knowingly undersold?

A new study reveals that the broader benefits of rail travel, potentially worth billions of pounds, have been consistently downplayed. In the light of this knowledge, urges CHRISTIAN WOLMAR, the industry must fight its corner for its fair share of the available cash.

Despite the fact that there were no goodies in the public spending review, the railways are absorbing more public money – and incidentally public attention – than at any time in their 175-year history. A new minister like Alistair Darling is, rightly, bound to ask whether this is value for money and whether the railways can justify this spending.

So it is timely that the answer has been provided in a thorough study, The Case for Rail*, published by a group of organisations with an interest in the railways, ranging from Transport 2000 to the Railway Forum and, most important, produced by Steer Davies Gleave, whose founder Jim Steer has recently had his arm twisted to become the Strategic Rail Authority’s Strategy Director.

The authors point out that the case for rail has too often been taken for granted, even in official documents such as the SRA’s plan, and the aim is to make up for that omission. The first question is who uses the railways. It is all too easy for critics to argue that since its modal share is so low, the railway cannot possibly offer value for money for taxpayers.

Sure, in terms of overall market share, rail seems almost trivial, with around 7% of mileage. However, the analysis shows that rail plays an important role not just in markets in which its advantages are all too obvious, such as inter-city travel and commuting, but elsewhere, too. For example, the report gives some surprising figures that illustrate the strength of rail outside what is perceived as its core markets of London commuting and long-distance travel.

An analysis of trans-Pennine travel in the 1990s shows that for city centre to city centre transport, rail was carrying two-thirds of the Manchester-Sheffield market, 56% of Liverpool-Leeds and 71% of Leeds- Newcastle. There are many other areas where rail plays a vital role, and one of the most interesting findings of the report is its importance in reducing social exclusion – what was known as poverty in old language.

Although it is true that middle-class commuters into London represent a high proportion of rail users, they are largely self-financing in terms of revenue support. By far the bulk of the subsidy goes to regional and local lines outside the South East which are precisely those used by people in lower income groups. The report found that more than half of rail users – measured in terms of the number of journeys, rather than mileage – are not in the top two social groups, A and B, and this rises to 60% on regional services.

As an aside, this strengthens the view of those, like myself, who argue for a much greater involvement of local government – either through the creation of more Passenger Transport Executives or the new regional authorities – in funding local railway services, and that spending should be seen as part of the social or economic development budget rather than transport expenditure.

The other role of the railways in terms of social inclusion is their regenerative effect. There is no doubt that Peterborough, say, is a far more prosperous place than it would be without having a connection to London in, with a fair wind, under an hour. In a rational world, these diverse economic benefits of the railway would be separated out and paid for under different Government expenditure headings, but, as anyone who has followed the governance of the railway for the past decade knows, we do not live in one.

The recurring theme of the report is the way that the railway is undersold in terms of its environmental and social benefits. One cause is the very methodology used to assess schemes which tends to place far too much weight on the simple economics, without properly putting these in the context of wider objectives pursued by the Government. The authors cite a neat example involving two schemes costing the same to reduce the journey time between two towns by half an hour, one rail and one road. Since 80% of existing users travel by car for the journey, the road scheme would always get the go-ahead on simple economic grounds. But if other Government objectives set out in the 1998 transport White Paper, such as reducing car dependence, improving personal choice and achieving sustainable mobility, were taken into account, then the rail scheme may well prove to be the better option.

One interesting example is the Robin Hood Line between Nottingham and Worksop reopened for passengers in the 1990s (at a cost, incidentally, of just £28m for 32 miles). A study of current passengers shows that 35% of commuters using the line could not have made the journey by car and 28% of work trips were made by people who had changed jobs due to the railway. These types of economic benefits are not captured in a simple accounting analysis of the costs of building a railway.

Another aspect of the underselling of the railway is in terms of its environmental benefits. The notion that the railways are good for the environment is often glibly trotted out by industry spokespeople but with little explanation. The report attempts to quantify the environmental and safety benefits of passenger services, estimating them at almost £2bn a year, with another £1bn coming from freight. These types of figures should always be treated with a fair pinch of scepticism since they rely on a whole variety of assumptions, but they nevertheless demonstrate that the subsidy for rail is well repaid through other benefits.

Now that the case for rail has been so clearly stated, the industry must make use of it in arguing its corner for resources. This is likely to become harder in the next few years as a recession now seems inevitable given the continuing collapse in share prices. In fact, as a creator of jobs and a social regenerator, the case for rail becomes even stronger at times of economic downturn.

The industry, though, currently lacks a united body with a coherent spokesperson able to put forward this argument, as shown by the fact that it took an underfunded voluntary organisation, Transport 2000, to initiate this important research. The Railway Forum has the potential of being this organisation, but only if the industry can unite behind it and delegate authority to it, even if sometimes its pronouncements may be at variance with some of its members’ short-term interests.

Now that would show the privatised railway has become a grown-up industry.

So where is that flair and efficiency?

Indeed, there is a long way to go. In his first major speech as Transport Secretary, Alistair Darling told train companies at the Railway Forum conference in early July that they had to bring in ‘the flair and efficiency’ they promised when they won their franchises. He will find out that persuading the companies to do so will be an uphill task.

The minimum fare of £10 for holders of new Network Railcards now effectively reduces their use to journeys over 40 miles. However, those rules do not apply to the old cards which can still be used, some for over a year more, as the result of a little publicised promotion that entitled holders to several extra free months if they bought the card by last May.

The problem emerges, as reader Anthony Baxter found, when travellers attempt to buy a discounted Network Railcard ticket for less than £10 at the hundreds of ‘Quickfare’ machines at stations in the South East.

These machines have always barred buyers from purchasing tickets before 1000, which is fair enough, as Network Railcards are only valid after that time. But when Mr Baxter recently tried to buy a £2 Network Railcard return ticket at 1100, a warning flashed up on saying “Please enquire at ticket office.”

When he mentioned to the clerk that there was a problem with the machine, he was informed that because of the changes, the machines had been reprogrammed to no longer issue discounted tickets under £10 for Network Railcard holders at any time. These now can only be bought from ticket offices which can often involve a 5-10 minute wait even offpeak. Another example of the train operators working in the best interests of their passengers – sorry, customers?

Plenty of hot air, but where’s the light?

The publication of the second interim report on Potters Bar by the Health & Safety Executive seems to be inexplicable. The report was a cursory piece of work that offered little new towards explaining what happened apart from setting a few hares running. First, the suggestion that a fifth of the points in the area also had loose bolts sounded alarming until questioning revealed there was no set measurement for the torque to which bolts should be tightened. Apart from worrying ill-informed members of the public, exactly what was achieved by allowing this evidence to be published?

Secondly, the revelation that an enforcement order had been made against Railtrack concerning a set of points in North London also sounded significant. The fact that the HSE refused to reveal the precise location of the points seemed designed to increase speculation about the safety of the track when in any case, everyone quickly found out that the points concerned were in Wembley and had long been clamped shut.

All this seemed to be an attempt to show the HSE was doing something, rather than attempting to throw light on the causes of the mysterious accident at Potters Bar, in the face of increased public pressure to be seen to be taking action. As I have said before, the HSE should not be pandering to public opinion but should be quietly demonstrating its expertise. Let’s hope the new Rail Accident Investigation Branch becomes a bastion of informed and dispassionate analysis like its counterpart dealing with aviation, rather than the cowed and self-serving organisation which the HSE seems to have become.

* Transport 2000, ATOC, EWS, Railway Industry Association, Railway Forum, Rail Passengers’ Council, Passenger Transport Executive Group (Steer Davies Gleave, London).