Rail 457: SRA must work out the REAL cost and benefits of branches

Forty years after Beeching and 20 since Serpell, the spectre of branch line cuts is once again stalking the railway industry. However, CHRISTIAN WOLMAR argues that closing branches would save little money as the real cash-guzzlers are the regional services.

Those twin monsters of railway history, Beeching and Serpell, have been making such a strong comeback in the press recently that Tom Jones must be feeling jealous. There is a whiff of panic in the air and the rail lobby is calling up its reservists in readiness for war. With good reason. The old statistics about two-thirds of the railway getting all the subsidy to cater for barely 15% of the passengers are being trotted out. Bustitution, that hideous hybrid word, is tripping off tongues again.

Just as in the days in the run-up to the Beeching cuts (and the Serpell report), the railways are in a financial crisis with the SRA cutting back its budget and imposing reductions in the timetable. Apparently visitors to the Strategic Rail Authority say that it is like going to the undertakers, such is the air of depression. The logic, then, is obvious. Cut back on a few poorly used lines, save the subsidy and the costs, and the problem is solved. Sure, a few railway gricers and enthusiasts in the far corners of the country will suffer and whinge, but nobody much will notice.

But as we all know, it is more complicated than that. One of the conceits of those who devised the structure of the privatised railways in the early 1990s – stand up in particular Steve Robson, formerly of the Treasury – is that they argued that the new system would create much more financial transparency and enable, therefore, heavily loss-making lines to be identified.

In fact, privatisation has made what was a difficult subject even more opaque. There are three main areas of costs, which each broadly represent a third of the total, though the proportions will vary according to the circumstances of each line: infrastructure, rolling stock and operations.

Infrastructure is paid through overall track access charges and they are not broken down to the line level. The total is determined by the Rail Regulator, for the operations, maintenance and renewal of the whole network, and it is impossible to work out what a few miles of a branch line cost. Indeed, merely dividing the total by the number of miles is wholly misleading as many branches receive barely any maintenance whatsoever, so that their costs look disproportionately high.

Second, there is rolling stock, and here the costs have also risen because of privatisation. British Rail used to write off its rolling stock over seven years and therefore any old stock was effectively free, apart from the cost of maintenance. The pricing regime created for the ROSCOs at privatisation was designed to ensure that there was an incentive to buy new stock and therefore old trains were barely cheaper than new ones. This will change somewhat as the leases run out and it will cost about half as much (say around £60-70,000 a year, including heavy maintenance but not day-to-day repairs) to rent a Class 142 Pacer twocar set as a new ‘170’ but that is still very expensive for what is really a clapped-out old bus on wheels. A 15 to 20-year-old two-car ‘150’ costs around 75% of the Turbostar, which suggests that the economics of rolling stock leasing are, to say the least, ripe for a good dose of free market economics.

As an aside, the ROSCOs must be careful not to fall foul of the Competition Commission. Many of these leases are coming to an end now and the stock should be really much cheaper to re-lease. Only two ROSCOs, Angel and Porterbrook, have older diesel multiple units because the third, HSBC, was created as all-electric, and remember that the ROSCOs successfully lobbied against being controlled by the Regulator. They argue that they are the big investors in the privatised railway and are the good guys in this story, but it is not rational for their investment in new rolling stock on heavily-used lines to be partly funded by exploiting their monopoly position. The train operating companies, of course, do not really care because they know their leasing costs will be underwritten by the SRA which must, therefore, attempt to impose a reasonable pricing regime on the industry. In reality, there is no reason why the ROSCOs should retain the existing pricing system now that most of the contracts are running out and they should be required to reduce the price, or face a referral to the Commission.

So both these factors adversely affect the economics of branch line service operations, pushing up the costs and making them much less viable. Then there are the operating costs which are difficult to reduce – a single shift of driver and conductor costs around £90,000 a year.

As they currently operate, many of these branch lines perform little function. The notion that people use them to travel to the next village or the market town is fanciful. There really is little point keeping them open unless more people are attracted on to them.

The work of the Association of Community Rail Partnerships has shown that many can be made much more viable through harnessing the goodwill of the local people and improving the service. There have been amazing successes with patronage doubled on some lines, such as Marks Tey to Sudbury, but the latest issue of the association’s magazine of admits: “Railways have no God-given right to exist. They must demonstrate their value to the community and they have got to be run in the most cost-effective way possible. At present they aren’t.” ACoRP reckons that a prerequisite is integration: “Get one organisation to run the trains, maintain the track and look after the stations and rolling stock.”

Making these lines more useful, however, would need more money and in an ideal world local authorities would have a strong input, but they are highly dependent on central government funds and have little extra money available within their control. But that is a wider political issue.

In the short term, the SRA may as well recognise, however, that closing these branches will not save much money. A 1989 Monopolies and Merger Commission inquiry found that there would be little saving in closing branch lines. Many staff only work part-time on the branch and therefore would need to be retained; maintenance costs are probably very low and even mothballed lines will still incur much of the present cost for bridges and viaducts; and there is always some lost revenue from people who connect on to the main line.

Indeed, branch lines are not really the problem. Even if Dr Bowker – sorry, the SRA – closed all the couple of dozen branch lines, say 700-800 miles of the network (if the Highland lines are included), very little money would be saved. The real cost-guzzlers are the regional services. Running single and two-car trains with relatively light loadings around the country is an expensive business, but cutting them would not save that much in relation to the political flak it would engender. Reducing services to the point where they are useless, the old BR trick, is simply not feasible these days.

Again, these services often don’t make sense in the way they are currently provided but to do so in another way would require long-term investment. In East Lancashire, for example, there is a plan to develop a diesel tram service on the poorly-used lines connecting such towns as Blackburn and Burnley. Rail is seen by the East Lancashire Partnership as a catalyst for regeneration, which would be much more effective than spending money on roads or buses, but schemes like this are being stymied by the current shortage of money, as well as the complex structure of the railways which means it is difficult to see how they can be developed outside Passenger Transport Executive areas. Paradoxically, in the long run these plans would save money by reducing the need for subsidy.

As for savings, there are bits of railway that make no sense, such as the ghost trains that run once a week highlighted by the BBC’s excellent Northern rail correspondent Alan Whitehouse in his recent Back to Beeching documentary on Radio 4. Another example is the stretch of line between Dover and Folkestone, which costs millions to prevent it crumbling into the sea. In a rational world, high-speed trains from Folkestone to London via the Channel Tunnel Rail Link would be a much more sensible option. But who is there to make such a decision? In many respects, privatisation froze the railway and made it difficult both to make improvements and to reduce services.

I am loath to recommend the SRA to fund yet more research, but before threatening any branch lines, it must attempt to develop a methodology – in-house, perhaps, but open to public scrutiny, unlike its disgraceful refusal to make public the study which suggested that it would cost a staggering £154 million to electrify the Uckfield-East Grinstead and Hastings- Ashford lines – to work out the real costs and benefits of branch lines and regional services. It must make transparent the leasing costs and the track access charges, and then we could have a sensible debate.

Railway madness (No. 1)

Back in the early days of rail privatisation, I used to write a ‘mad’ column for The Independent on Sunday, giving examples of the crazy and unexpected outcomes of the rail privatisation process. It lasted two years and, I have since learnt, really irritated the Tory ministers pushing through their batty scheme. The column was entirely reader-led, as all the 100 cases were sent by people using or working in the railways.

While I am reluctant to revive the series, there have been several hilarious examples of the crazy way that our railways are run and so, over the next few issues, this column will mention a few. And if readers want to send more, they know where to find me.

What prompted this revival was the publication by the Rail Regulator, Tom Winsor, of a 39-page judgement on a dispute between Eurostar and Network Rail over the timetabling of trains that are never going to run, a hearing attended by the usual QCs and legal flunkies. The case resulted from NR’s refusal to put Eurostar’s night trains into the timetable, on the perfectly reasonable ground that the trains were never going to run because the stock had been sold in 1997 and the services were completely unviable anyway.

NR promised that the paths would still be available should the situation change but it wanted to avoid the hassle of timetabling. For its part, Eurostar reckoned that they were worth a staggering £5.5m annually and that as they were part of its contract, it was entitled to timetable the trains. Of course, in truth, Eurostar was hoping that NR would be forced to buy back the paths but since, apart from the odd possession, they are effectively useless, that was always a non-runner.

So this bizarre case between two quasipublicly owned bodies (Eurostar is a kind of blancmange whose losses are, ultimately, covered by the Belgian, French and UK governments) over trains that will never run, ended up in a full hearing in front of the overstretched Regulator. Being a sensible fellow and jolly good at interpreting the law, he found in favour of NR. Now someone please tell me that expensive arguments at public cost over non-existent train services are not just a tad barmy.

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