Rail 533: Closure document clears the tracks for widespread cuts

Brushing aside a Parliamentary put-down by Alistair Darling, CHRISTIAN WOLMAR insists that the proposed new closure procedures will be a powerful weapon for those who want to cut rail spending.

Oh dear, oh dear. I’ve made people cross again, and this time it’s not just the editor of this esteemed magazine. None ot her t han Alistair Darling mentioned me in Parliament, but did not even venture to use my name, such was his fury. And at the same time, I have infuriated the Association of Community Rail Partnerships (ACoRP), which works to try to increase usage on branch lines.

Perhaps it was just a coincidence that the Transport Secretary should launch an assault on me on the day that RAIL 532 plopped on to his desk with the headline ‘Do-nothing Darling’s “Mr Hyde” act heralds doom for LRT’ but clearly something had rattled his cage. The previous weekend, I had written a piece for The Independent on Sunday which suggested that the consultation document on closure procedures issued on January 25 was not as innocent as it seemed and that the proposals opened the way to widespread closures.

In response to a question from Chris Grayling, the Opposition transport spokesman, Darling said: “The story in The Independent [actually it was the Independent on Sunday but you cannot expect politicians to get it right] – I looked no further than the author’s name before returning the newspaper to the shelf – was a complete exaggeration, but that is what he does, and we just have to live with it.” He warned, however, “that to say that no network or service can ever change cannot be the right approach”.

I assume that he did actually read the article, rather than just put it back on the shelf, or otherwise how would he have known it was ‘a complete exaggeration’ which, of course, does not mean it was completely wrong. The key point made in the article is that once a ‘rail funding authority’, as those who buy rail services are called, unleashes consultants on to this type of exercise, they can come up with pretty much any answer they want because it is such a complex minefi eld of data leavened with arbitrary assumptions. Therefore, the IoS article (obtainable on my website at http://www.christianwolmar.co.uk/articles/independent/jan29,06.shtml) suggests that the detailed methodology being drawn up by the Department for Transport could result in widespread closures because it is based on a cost-benefi t analysis which, traditionally, has served railways badly.

The document (‘Consultation on the implementation of the Railways Act 2005 provisions on closures and minor modifi cations’;http://www.dft.gov.uk/stellent/groups/dft_railways/documents/page/dft_railways_611064.pdf) makes for fascinating reading. Essentially it is an attempt to apply standard methodology on project appraisal to the closure of the railway. This works through assessing the benefi ts, which mostly consist of time saved on journeys that are then monetised through an assessment of how much an hour of time is worth. (This in itself is a mini-minefi eld as various people are assumed to ascribe different values to their time: £21.86 an hour for a car driver, a staggering £36.97 for a taxi passenger, £30.57 for rail passengers – we are largely ABC1s – but only £14.06 for a cyclist, all in 2002 prices for people working; for nonworking people the numbers are greatly reduced).

There is reason behind this madness, but not the space to explain it here. On the other side, the savings relating to the closure of a line or group of lines, such as the infrastructure and operating expenses, will need to be set against the benefi ts of retaining it. All this will be calculated over a 60-year period (with discounting to take into account the fact that money in the future is worth less than cash in hand!). The timespan has to be long-term; there will be initial costs in closing a line and, moreover, early savings may well be diffi cult to obtain since there may still be leasing agreements for the trains and the operators may well have been guaranteed subsidy for those services.

It is a complex business and a far cry from the days when Beeching would give a crude calculation of ticket sales (often underestimates for places such as seaside towns which were most often destinations rather than departure points) and costs, and issue closure proceedings on that basis. But remember, at the time there was the protection of a public process through what were then rail consultative committees which have now been abolished. Indeed, the document stresses that “public hearings or meetings are not a statutory requirement of the conconsultation. The organisation conducting the consultation will want to consider the most appropriate method for obtaining representative views from communities affected by the proposal.” That leaves a lot of leeway in the hands of those seeking to close lines.

There is a detailed and fi endishly complicated worked example in the document which reveals that the expected real fares increase between now and 2012/13 will be 10.49% (which shows the extent to which ministers want to price off demand from the railways). Such ridiculous precision down to two decimal points is just the sort of thing that makes me so suspicious of this type of exercise: this is pseudo-science that is likely to demonstrate the retention of a line or group of lines as not worth the money. Consultants will be appointed and will know the result they are supposed to produce.

Sure, the document stresses that all kinds of factors will be taken account of in the analysis, such as the regeneration benefi ts of being connected to the rail network, accessibility and integration, but ultimately the numbers are unlikely to look good because of the sheer expense of running the railway in the current structure. The assessment will, too, take account of the value of any land released by closure which Network Rail ‘will be free to sell’ and that opens up juicy possibilities for the infrastructure company.

Outright closure will not be the only option, as the document says “in formulating closure packages, it may also be appropriate in some circumstances to consider options for ‘mothballing’ parts of the network or stations considered for closure”. This opens up real dangers since mothballing may be presented as a more acceptable compromise but, as campaigners well know, the cost of reopening a line is very high – and, of course, will require all the hassle of fi nding an operator who, inevitably, will require considerable subsidy.

The good people at ACoRP were angered by my piece because they say their office was inundated with callers asking when their local line would be closed or expressing concern about its future. I was told by fellow RAIL columnist Paul Salveson that such coverage was ‘unhelpful’ because it casts a negative slant on the railways.

In fact, the document is of great relevance to the future of these lines as it contains a warning that the type of initiative to boost rail usage through the community rail partnership, which I fully support, is unlikely to change the economics of a line: “Although increasing patronage and revenue is one of the aims of community rail partnerships, we are not aware that any long-term evidence in demand and revenue terms exists of their effi cacy in this respect.” (Appendix D, para 11).

In other words, in calculating whether such a line should be retained, the methodology will not take into account potential major growth in usage because it is unlikely to happen. It is clear from this that the DfT is taking a far more sceptical view of these partnerships than the Strategic Rail Authority under Richard Bowker.

Therefore, I would suggest that my friends at ACoRP should not try to shoot the messenger. The document is the most complete attempt ever to give an economic rationale for the closure of rail lines, and despite ministerial harrumphing, it is a very signifi cant weapon in the armoury of those seeking to reduce expenditure on the railways.

But can we expect immediate closure procedures on large chunks of the network? No, it will not happen like that. Next year we get the High Level Output Specifi cation (HLOS) which will set out what lines and services the government expects to require, together with a Statement of Funds Available – the wonderfully acronymed SOFA – both for the next regulatory control period which starts in March 2009.

As I have mentioned several times in this column, that is when the crunch will come. I think that Darling (or his successor) will do everything they can to try to avoid any widespread closures, but if the Treasury insists on the £1bn or so annual cut which is currently being discussed in Whitehall, then shutting lines and services will be unavoidable. And that is when the detail of this document will become all-important.