Rail 490: Darling won’t put weedkiller on nettle strangling railway

According to a summary of the draft rail review leaked to CHRISTIAN WOLMAR, the Government proposes a patch-up, with all the disadvantages of renationalisation with none of the benefits.

The leaked summary of the draft rail review sent to me is revealing in many ways, not least the fact it uses language that would never see the light of day in the properly spun version, which will eventually be made public supposedly in the ‘week beginning July 5’. It reveals that instead of the long-awaited solution to the industry’s problems we had hoped for, the review is a prime example of the government wanting to have its cake and eat it – and not the rational, workable structural change we were promised.

In a way, the review was doomed before it began. As is revealed, the new structure will be implemented within the framework of cuts, always a bad idea. Even the Tories were canny enough to put extra resources into the railways in the short term when they were privatised because they realised that you need money to grease the wheels of change. Instead, according to the document, the spending review outcome, due out soon, will “disappoint the rail industry and its users”, providing “a difficult backdrop against which to promote structural reform”.

Indeed, the document suggests that there will have to be a decision about the extent to which the planned £1.75 billion increase in direct government funding due in 2006/07, whenNetwork Rail is no longer able to borrow any more under theRegulator’s settlement, can be reduced by “a combination of fares increases and service thinning or cuts”. The answer, of course, is not a lot. Even a 20%fares increase – utterly impossible for an already unpopular government – would only raise about £800 million while closing the 1,000 miles of branch lines would probably save a mere £200m. And what a fuss that would create.

So it is hardly surprising, then, that the review starts in the wrong place. Far from asking what the railway is for and what value it offers society in return for the investment and subsidy, the review is clearly all about money. The first goal, stated on the front page of the summary, is for the Government to “regain control of public expenditure on rail”.

The document sets out an “iterative approach to determining rail spend”. The transport secretary will specify the outputs – such as number of trains, state of the network – and the new Office of Rail Regulation will price them. But does this really change things? As Tom Winsor has said several times, under the current structure theGovernment had the chance to do that but there was ‘radio silence’ in response to his request to specify what railway Transport and Treasury ministers were prepared to fund. He says: “You can’t have 100% of the railway for 50%of the money.”

Government to set cash rules

In future, according to the document, the Government will set the amount available and then ORR will assess whether that is the right amount for the outputs required. If not, then either more money will have to be made available or cuts in services will ensue. This may giveGovernment a bit more control over the process, but this is a pretty arcane point on which to review the structure of the railways.

The two officials overseeing the writing of the report – Sue Killen, the newly arrived director-general of the railways at the Department for Transport, and a treasury official, Nick Macpherson – have been set an impossible task. The principal problem is the game which has to be played over privatisation and nationalisation. The pretence has to be that this is a private sector industry which happens to deliver a public service with large ladles of taxpayers cash. The thrust of the review is that theGovernment will take more control but the private sector will continue to invest within the strategy set by ministers. Renationalisation is, as usual, ruled out because, apparently, the gains offered by the private sector would be forgone: “increased investment, customer focus and growth in rail usage”.At the risk of boring past readers of this column, I will avoid pointing out that none of those three points is wholly valid and, given that the railways now cost five times the level of BR subsidy, it is nothing to boast about.

However, despite this ostensible refusal to renationalise, the SRA is being abolished not, mark you, because it failed, but “because it does not have – and cannot be given – sufficient autonomy to become the single decisionmaker”. Yes, well, did John Prescott and his officials not think of that in the first place when he created it four short years ago?

So, instead, the transport secretary will “specify the key outputs [the network] is to deliver in terms of safety, performance and capacity”. Big projects, enhancements and the level of regulated fares will all be the responsibility of ministers. Surely, do they not realise that they are getting all the disadvantages of renationalisation without the upsides? This is far greater control than ministers ever had over British Rail and they will no longer have that organisation as a cutout on which to pin blame.

The safety commitment seems particularly perilous.What’s the output to which ministers will commit themselves – not to killmore than X people per year? Hardly – it is likely merely to specify a level for the value of a preventable fatality, the measure used to assess whether a safety investment is worthwhile.

By effectively setting the budget for NR, ministers are leaving themselves open to the risk that they will get blamed for an accident which happens as a result of, say, a particular set of points not being replaced due to shortage of cash.The railways will become an inevitable poisoned chalice for ministers, desperate not tomake any decision that could cost them their political career but faced with a myriad of decisions to which they will be held accountable, despite being at the mercy of the performance of quasi-private companies. People with little understanding of the industry have created yet another fantastically inefficient structure for non decision-making and failure to deliver for passengers.

And it is the passengers who will feel the inefficiencies because nowhere are the contradictions of having to keep these two balls in the air – privatisation and state control – more apparent than with franchises. They must remain in the private sector, but as I have often asked, what are franchises for? In future they will be longer but, effectively, as constrained as the management of a McDonald’s restaurant. NR will set the timetable and franchisees will merely be expected to deliver it punctually and safely. The whole panoply of performance regimes will, thankfully, go out of the window, as it is recognised that they merely governed the relationship between two state-funded bodies. There will, though, be precious little scope for the famous private sector flair, so why not just let public bodies run the services, as South Eastern is doing competently at the moment. That would save a staggering £4m, the cost of letting an average franchise.

The other main goal set out in the document is to ensure the new structure is flexible and therefore robust. This suggests that far from being the once-in-a-generation chance of sorting out the industry everyone had hoped for, the new structure will simply be work in progress – yet another attempt to patch up a framework that ministers recognise is unworkable and sub-optimal. Rather than grasp the nettle, live with the inevitable – although short-term – pain involved and sort out the structure once and for all, power has shifted to different players and the minister shall become the ultimate decision-maker.

One can’t help wondering that if in years to come successive transport ministers will look back and wish Darling had simply applied the weedkiller and destroyed the monster weed – the unworkable structure – rather than simply attempting to give it a new lease of life.

Not the way to run a railway

The fallacy of the notion that major cuts could be imposed on the railway without an enormous hoo-ha is demonstrated by the contortions which the SRA has had to go through just because no trains are scheduled to run on a small section of line inWest London for the next few months.

Instead, there will be a replacement taxi service that will operate on Tuesdays until December 7 between Kensington Olympia and London Waterloo, about a six-mile trip, during the proposed closure of the Sheepcote Lane, a small section of line that was hitherto used by a couple of trains a day. Now, before you all rush tomake use of this free taxi service, it only runs at 0345 from Olympia on Tuesdays and 0505 in the other direction.

As John Bourn, the reader who pointed out this bit of nonsense for me, suggests, “Is this themost pointless ‘rail’ service of all time?” As a serious point, though, this is the kind of issue to be addressed in a full-scale rail review – the railway has to be flexible enough to absorb change quickly. If there has to be such a kerfuffle about closing some bit of line that noone wants, is there any wonder that inaction always appears the most viable option?

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