Darling facing a rough year

In the dog days of the Christmas and New Year break, journalists scrabbling for a story suddenly hit upon transport issues. First was the fact that Labour had failed to deliver on most of the promises in the ten-year Transport Plan published in 2000. Then there was the threat of direct action by residents near Heathrow, who are to have their homes bulldozed if a third runway is built. And, finally, there were passenger protests about the ‘rich man’s railway’, engendered by the higher than inflation fare rises.

The fare rises for season ticket holders, which are regulated to 1% above the rate of inflation, were almost 4%. But train operators, under pressure because they are paying higher franchise premiums, have increased off-peak fares by an average of 4.5%, with those on Great North Eastern Railway rising by 8.8%. Passenger groups are warning that travellers must expect such rises annually as the government struggles to reduce subsidies to the rail industry.

This brief flurry of interest in transport issues rather wrecked Alistair Darling’s holiday break, as the transport secretary was forced on to the airwaves to defend his policies. Normally, Darling keeps his head well below the parapet as transport is the dog that never seems to bark. Although it is an issue that affects every one of us daily and we all grumble about congestion on the roads, late trains and non-existent buses, people seem to accept transport failings as a fact of life.

Indeed, Darling must look back with great satisfaction over the three and a half years he has been in the job. True, there is no great legacy of futuristic infrastructure schemes or even much sign on the ground that things are improving. But that is not the point. He was sent to Marsham Street to get transport out of the headlines after Stephen Byers’ short but eventful reign in the job and has succeeded magnificently in that limited ambition.

However, that might not be good enough any longer. Wherever you look in transport, trouble is brewing – on the roads (as a national road charging scheme beckons), in the air (projected unpopular airport developments), on the trains (the soaring tax bill) and even through the Channel Tunnel (with Eurotunnel facing yet another financial crisis this year), all in the context of the global warming issue, which is causing increasing public concern.

Moreover, Darling finds himself with a tough opponent across the Commons chamber for the first time. The new shadow transport secretary, Chris Grayling, is not only a veteran of the Commons transport select committee – and therefore knows something about the subject – but also a hardworking young MP with an eye for detail. It was as deputy shadow leader of the House, a position tailor-made for obscurity, that he kept the pressure on David Blunkett – over the then work and pensions secretary’s directorship of DNA Bioscience – so effectively that he eventually got his scalp.

It was Grayling who kick-started the attack on Labour’s failure to implement the Transport Plan, having noticed that we were halfway through the decade. The Tories have shown little interest in transport over the past few years, as Grayling’s predecessor, Alan Duncan, illustrated by not knowing what a high-speed train was when interviewed by a railway magazine.

The plan was a good soft target, even though the government acknowledged its weaknesses and revised many of its more ambitious targets in 2004. It had been launched as a brave attempt by the then transport secretary John Prescott to set down some priorities. But the Treasury was ever suspicious, the objectives were unclear and the costs of the botched privatisation of the railways had been underestimated. As a result, few of the promises have been fulfilled.

Some road schemes have been shelved, few railway improvements have been delivered apart from the West Coast Main Line refurbishment, which went massively over budget and, most noticeably, tram schemes have been ditched. Whereas Prescott had promised that there would be ‘up to 25 new light rail lines in major cities and conurbations’, so far there has just been Nottingham and a couple of extensions to the Docklands Light Railway.

Moreover, in the past few months, Darling has cut such a swathe into plans for new lines, with Leeds, Merseyside, Portsmouth and Manchester all being axed, that the only project likely to be completed in the next five years is, suspiciously, Edinburgh, the site of his constituency.
The failure of the ten-year plan highlights the difficulties of making any positive political impact in transport. On the roads, the benefits of even quite major investment schemes are likely to be local and there is a limit, both practical and political, to the capacity of this island to absorb many more major road projects. That is why, reluctantly given the potential opposition, the government is trying to soften up public opinion on the notion of universal road-charging.

This is, in fact, the one area where Darling has been brave. Sure, it is fortunate for him that the sheer scale of the project and the technical difficulties ensure that no such scheme could be introduced for at least a decade. Nevertheless, it is remarkable that the government is preparing the ground both politically, by arguing for the need for such a scheme, and practically, through the Transport Innovation Fund. This will provide finance to local authorities that are prepared to test charging schemes on their roads.

The first £7m worth of allocations for pump-priming research from the fund were made in November to seven county councils. These are expected to ‘assess the feasibility of schemes combining demand management, such as road pricing, with better public transport, in order to tackle congestion and improve local travelling conditions’.

In part, this is a reflection of the frustration felt by ministers that no councils have made any real progress in following London’s successful congestion charging scheme. But that is partly a result of the fact that other local authorities do not have the unfettered power and lengthy period between elections of the London mayor.

So far, ministers have tried to reduce opposition by intimating that charging would be revenue-neutral – in other words it would replace existing fuel taxes. However, this is an increasingly untenable argument since one of its aims would be to stem the growth in road transport and transport minister Stephen Ladyman recently admitted that no final decision had been made on this crucial aspect of the scheme.

On the roads at least, the government is trying to address a very tough problem with an innovative policy. In other areas, it is not only the failure of ministers to commit themselves to new infrastructure schemes – with projects such as Crossrail and Thameslink 2000 as well as tram routes remaining in doubt – but their failure to match their supposed environmental concerns with their transport policies. A group of environmental pressure groups highlighted this contradiction in a hard-hitting report just before Christmas, which pointed out that between 1997 and 2004 motoring costs fell by 7% whereas bus and coach fares increased by 11% and rail fares increased by 4%.

The report also argued that transport was the fastest growing source of greenhouse gases, accounting for a quarter of the total. Aviation is the issue most likely to blow up in the forthcoming year, as the row over the expansion of Heathrow airport showed. The government’s 2004 white paper was remarkably acquiescent to the growth of aviation, with no regard for the environmental damage. It was the old model of ‘predict and provide’ – which failed so dismally on the roads – stating that passenger numbers would more than double to 500 million annually by 2030.

Indeed, Darling himself has stressed in the past that the government should not attempt to determine what mode of travel people use. Therefore 9,000 people fly between Manchester and London every day, even though there is a half hourly fast train service.

The potent issue here is not aircraft noise or pollution, but runway space. The first battleground is Stansted, where a very active and well-informed campaign is building up against plans for a second runway, which would be the first built in the Southeast since the war. Campaigners argue that the growth of the low-cost airlines cannot continue unabated, given the environmental damage, and that higher taxes will inevitably curtail growth. The government argues that aviation is a major source of jobs. It has shown little sign of being ready to reduce the demand for flying, despite the fact that the fares do not reflect the environmental damage being caused.

But the railways remain the biggest mess facing Darling. Ignore the fact that record numbers are using them and that there is, as ministers stress, plenty of new rolling stock running around on the tracks. The real problem is that they are absorbing record amounts of government money, some £6bn this year (if the extra borrowing by Network Rail is taken into account). The Treasury is eager to reduce that sum as quickly as possible. That led to a flurry of franchise announcements, where the operators have promised to pay large sums to obtain their contracts – which they will be able to fulfil only through high fare rises.

GNER, for example, started a new contract last year that involves paying £1.3bn over ten years (in Net Present Value terms) to the Department for Transport. Two other new franchise lettings, Thameslink/Great Northern and Greater Western (both won by First), involve similar levels of reimbursement to the Treasury, targets that the companies will struggle to achieve.
We have been here before. The first round of franchises in 1996/97 was based on far too optimistic assumptions about cost-cutting that resulted in several companies collapsing. This time it is revenue that is probably being wildly overestimated. When the private companies start coming back with their begging bowls, ministers will face an awful dilemma of having to cough up more or face reductions in service, just when the railways are needed more than ever to reduce congestion on the roads.

Moreover, with the abolition of the Strategic Rail Authority, ministers themselves will be in the firing line over these decisions, as the department is dealing directly with the franchisees.
Then, to cap it all, there is the little matter of the Channel Tunnel and the associated rail link, whose second section is due to open early next year. According to various insiders, the link has gone well over budget, with a shortfall of something like £800m. That will have to be made up, probably in a very roundabout way, by government funds, even though the project is supposed to be a public-private partnership.

The tunnel itself may go bust this year, too. The crunch is coming as the company is attempting to sort out its £6bn debt with its creditors, and also has to renegotiate the agreement with the railways using the tunnel. Given that there is no prospect of the debt being repaid, there seems little alternative to the banks finally moving in and taking over the company, and presumably handing it over to a new operator, but not before a major crisis, involving both French and UK governments and creating an enormous fuss in the media.
Transport has rarely got the political attention it deserves. The issues are too long term, complex and nebulous to attract the public imagination beyond the immediate problem of ‘why am I stuck in this traffic jam?’. This year, however, could be different both because a number of issues are coming to the fore and there is a more competent Tory opposition to make a noise about them. Darling will have his job cut out to prove that he really is a safe pair of hands when the going gets rougher.

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