Rail 519: Station clock strikes midnight for railway’s Cinderellas

Station improvements are another issue where wishful thinking has triumphed over the tortuous financial realities of privatisation, argues CHRISTIAN WOLMAR.

Stations have become the Cinderella of the rail network. Remember those promises that under privatisation the train companies would be liberated from the constraints of public spending limits and therefore investment would pour into stations? Well it seems that this hasn’t happened.

A sober report from the National Audit Office Maintaining and Improving Britain’s Railway Stations * recalls those heady times: ‘At privatisation the Department and OPRAF [the Office for Passenger Rail Franchising which became part of the Strategic Rail Authority] anticipated that TOCs would improve franchised [as opposed to the 17 major stations managed by Network Rail itself] stations beyond the basic requirements in response to commercial incentives to attract more passengers and secure higher revenues’. However, the NAO recognises that this approach has not delivered the ‘outcomes envisaged’.

The reasons are complex. One of the fundamental difficulties with the way that the industry was privatised is that there is often very little linkage between investment and obtaining the reward for that expenditure through increased revenue. Therefore it is often difficult for train operators to see that, say, improving signing at a station would lead to more passengers using the facility and would be a worthwhile investment. Moreover, TOCs feel that the franchise terms are too short to enable investment since a period of 10 to 20 years would be needed to get a decent return. There is, indeed, only a small window of opportunity right at the beginning of the standard five or seven year franchise to get any return at all, and if the operator is a new one, that may well be before the company knows its business well enough to make such investment decisions.

In any case, TOCs are not really expected to invest in the railway beyond paying the leasing costs of rolling stock. At privatisation, a fundamental mistake was made. Instead of stations being included as part of franchises, they were handed over to Railtrack which then leased them to the franchisees. There was a last minute behind the scenes attempt to change this before the Railways Act 1993 went through Parliament but apparently there was not enough time for the lawyers to redraft the legislation. Therefore, franchisees, who are most likely to be the financial beneficiaries of any improvement at stations have very little incentive to contribute towards the required investment because, at the end of the franchise, the station reverts to Network Rail.

The SRA realised this and crated a fund to modernise stations which originally was to have spent £225m at 980 stations but this has been cut back to just £25m for 68 stations, and not even all of those are now being delivered. The abolition of the Rail Partnership Programme in 2003 was also a setback for station improvement.

Indeed, money is increasingly tight. In the past, the SRA has allowed NR to undertake some improvements which then count as part of its regulated asset base, which is used as the basis of calculating its access charges. However, this comes from public subsidy and there is now pressure from the Treasury not to undertake any such work. Meanwhile, although satisfaction with stations has improved slightly, the NAO points out there ‘is a gap between rising passenger expectations on the one hand, and value for money and what the government and the industry can afford to spend on the other’.

However, it is not just about money. The complexity of the structure of the railway means that so many partners (or stakeholders, as they are now called) have to be brought together that it is very difficult to get schemes off the ground. I had a meeting recently with a very forward looking local authority which was seeking to get its local station modernised. Should they, they wondered, try to get the local franchisee involved? Or the potential bidders for the franchise which is due for renewal soon? Or Network Rail? Or the Department for Transport? Or Uncle Tom Cobbley?

The local authority had been surprised at how uninterested Network Rail was, despite the fact that there was plenty of opportunity for commercial development. Sure, there was a funding gap, but with a bit of clever footwork that could be filled – but not if Network Rail didn’t want to know. Moreover, as the NAO points out, Network Rail charges considerable sums for exploratory work on improving stations – £50,000 is a typical price for a simple survey.

NR is risk averse. It seeks to ensure that the risks of any new projects identified and then offset. The NAO is critical: ‘Some stakeholders and some members of our expert panel considered that Network Rail’s procedures for approving improvement projects are complicated and inflexible, and its fees for its work on station enhancements high’. Given the NAO always expresses itself in measured language, that is pretty damning of NR’s behaviour.

In November 2004, the SRA created an industry working group which has considered ways of attracting private finance into station improvements. One idea was to create Private Finance Initiative companies which might improve stations along a whole route. However, the NAO rather dismisses the idea as too complicated given it would involve changing current arrangements for station management between train operators and Network Rail. It is unlikely that the Department for Transport will bother to ‘take these ideas forward’, as the NAO suggests it will.

The improvement and redevelopment of stations is yet another example of where wishful thinking has clouded over the key issue in railway finances – that most schemes do not pay for themselves and therefore there needs to be public funding for at least part of them. It is all very well arguing that complex Private Finance Initiative schemes should be developed to attract private investment but at the end of the day the government has to decide whether it wants many of our stations to look like overgrown Victorian relics or whether they should have the modern facilities that will get more people to use the railways. Bowker’s law applies: the railway is ultimately paid for only by passengers and taxpayers.

Anti terrorism measures are a kneejerk reaction

The ‘must be seen to be doing something’ syndrome has reared its ugly head in the aftermath of the July 7 th outrages. I travelled on a Midland Main Line train to Nottingham on July 20 and found that when I wanted to dispose of my half-eaten pasty (don’t ask but it was revolting) I could not do so as the litter bins had been closed up with a metal clip. Yet, bags and rucksacks were strewn about the busy train and, indeed, big suitcases were on the luggage rack right opposite the litter bins that could have belonged to any traveller or to someone who had long left the train. Moreover, when I went to the toilet, the litter bin was still open and full of empty towels.

What, I wondered was this inconsistency about? Were terrorists not supposed to go to the toilet or did those of us who needed to use the facilities deserve less protection than our fellow travellers? I rang MML who explained that the company had been asked by Transsec (the Department for Transport’s security committee) what measures it could take if security levels were increased and that it had suggested closing up the litter bins. Therefore, after the first round of explosions, the litter bins were hastily put out of commission.

But what about those in the toilet, I asked? ‘Ah, we have left those for hygiene reasons’, I was told by a PR lady who clearly realised she was trying to defend the indefensible.

Then when I travelled from Birmingham to Taunton the next day on a Virgin Cross Country train, the litter bins were all still in use and there are no plans to take them out of commission. Indeed, MML is aware of that – does this mean that passengers on one operator’s trains are supposedly less of a target than others? In fact, only two operators have taken their litter bins out of commission.

This shows that such kneejerk actions are nonsense. Closing up litter bins on train where there are countless nooks and crannies in which to hide a bomb is just a ridiculous overreaction to a serious situation, and detracts from putting into force more considered measures. Some years ago I wrote about bikes being considered a danger by Transsec when cars were being allowed far nearer to trains and stations than cycles. Midland Main Line should rethink its ideas and, instead, concentrate on training its staff and ensuring they are alert, a far more sensible idea than inconveniencing passengers and making trains dirtier.

* Report by the Comptroller and auditor general, HC 132 2005/6, 20 July 2005.