Fewer trains, fares to rise, in shake-up of railways

Widespread cuts in the rail network and services, sharp fare rises and the possible renationalisation of Network Rail are being considered by the Government in the most far-reaching shake-up of the railways since privatisation.

The proposals are set out in a draft of the official review of the rail industry, obtained by this newspaper. The proposals from the review, set up in January by Alistair Darling, the Secretary of State for Transport, are due to be announced to Parliament next month. Ministers have already endorsed many sections of the draft.

Among many sweeping changes, the Government will take back much direct control of the running of the railways. The Strategic Rail Authority is expected to be abolished, even though Labour created it only in February 2001 with the aim of giving long-term direction to the industry. The document admits that the concept of the SRA was misplaced because it could not be given sufficient autonomy.

The review recommends that ministers should exercise much stronger direct control over the railways. A beefed-up Department for Transport will take over the allocation of the train operating franchises through a specially created agency, while the Transport secretary will oversee the rail network as a whole and “determine the role of rail and the size of the network [and] will specify the key outputs in terms of safety, performance and capacity”.

Network Rail, the not-for-dividend company which took over from the defunct private Railtrack in October 2002, will determine the timetable and, controversially, take over the setting of safety standards for the industry, a role which was taken from Railtrack after the October 1999 Ladbroke Grove train crash.

The complicated system of penalties and compensation for delays between Network Rail and the train operators, which essentially shifts public subsidy from one company to another, is to be scrapped. Instead, both will have contracts directly with government. Train operators will work to much tighter rules, with no power to alter the timetable, and will be judged only on punctual running of trains, rather than a host of performance indicators.

In a highly controversial move, the regional network of passenger committees will be abolished, which appears to be an attempt by the Government to weaken any likely protests about cuts.

The document warns that cuts are highly likely. It says the 2004 Spending Review, due out in the next few weeks, “is bound to disappoint the rail industry and its users”. Under the settlement for Network Rail’s budget determined by the Rail Regulator, the company’s spending is due to increase by £1.75bn in 2006/7 as it will no longer be allowed to borrow. The document warns: “We need to decide in SR 04 the extent to which we reduce the £1.75bn by some combination of fares increases and service-thinning or cuts”. To dent that sum would require major line closures.

The document allows for the possibility that Network Rail may have to be taken over by the government, which would mean its £13bn debts reverting to the Treasury.

The paper says: “The [new] structure [of the railways] should be amendable without new legislation … If Network Rail is reclassified to the public sector, the Government should be able to reinforce control via the contract [with Network Rail].” In other words, Network Rail would be run by the government, recreating a version of British Rail, abolished a decade ago.

The purpose of the review is to “regain government control of public expenditure on rail”, which has soared to a staggering £5.3bn this year, over four times more than British Rail ever received.

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