Strategic thinking needed for the railways

Governments of both hues have shied away from the fundamental question about the railways. What, in the 21st century, when access to cars is near universal, is this 19th century invention for?

The corollary of this question facing ministers is therefore this: What strategy needs to be adopted for the railways?

Tony Blair’s administrations have a rather chequered history when attempting to set out a strategy for the railways. First, John Prescott published a ten year transport plan in July 2000 but the economics was completely wrecked by the Hatfield rail accident and its aftermath which led to massive overspending on the railways and the eventual demise of Railtrack. Then the Strategic Rail Authority, created by Labour precisely to give the privatised railways a focus, published a Strategic Plan in 2002. However, it was little more than a list of enhancement for which there was no money and when the SRA tried to issue an update two years later, it was barred from doing so by ministers (though a copy resides on my bookshelf).

Now hopefully, this will change. In a keynote speech at a conference organised by Rail magazine on March 15, Alistair Darling, the Secretary of State for Transport, announced that the Department would produce a 30 year strategy for the railways next year. It will not be an easy task. With the use of the railways having expanded by 40 per cent over the past decade, the trains are overcrowded and there is little room for extra services. Therefore it seems obvious that there needs to be expansion rather than the contraction of the railways feared by many because of the current huge cost of the system to the government.

However, in order to expand services, more government cash will be needed. While small increases in passenger numbers can be accommodated on existing services, once extra investment is required, that spending has to come from government, whether it be for lengthening station platforms, improving signalling to boost capacity or buying new trains. Government, therefore, has to be involved in the development of the railway system, and must be responsible for determining the strategy.

Already, the government, with the Railways Act 2005, has taken back the power to determine the railway’s finances, through a very complex and, to anyone outside the industry, virtually unfathomable, process. Next year the government will issue a ‘High Level Output Specification’ which will set out in detail precisely what it will require from the railway in the next regulatory control period, 2009-14. This will be accompanied by a SoFA, or Statement of Finance Available, which, of course, will largely be determined by the Treasury’s spending review. Now, Darling has added that together with these documents, the Department for Transport will simultaneously publish a long term (30 year) strategy for the railways.

This HLOS/SoFA system came about because of a row between ministers and the previous regulator, Tom Winsor, over Network Rail’s spending plans for the period 2004-9. Winsor says he asked the government what kind of railway it wanted to Network Rail to provide (in terms of, for example capacity and speed limits) and the government never answered, so he went ahead on the basis of no change, granting Network Rail a generous settlement of £22bn for the five year period. The Rail Review of 2004 and the Railways Act that followed set out this new, and as yet untried, system which is supposed to give ministers the final say over the cost of the railway, but subject to a regulatory assessment.

However, many rail industry insiders think that having a regulator sitting in an office in Holborn determining what Network Rail should spend in a five year period is a ludicrous system that is bound to lead to the wrong answer, either stiffling rail investment or costing taxpayers far too much. They point to Network Rail’s £800m underspending in the first year of the present control period as an example of how difficult it is to determine spending accurately in this way.

This process, however, makes the task of setting a long term strategy for the railways essential, although it is clear why governments have hitherto been reluctant to go down this road. First, railways are damned expensive and since privatisation far more so, costing over £5bn of taxpayers money annually. Therefore, setting out a strategy that requires more spending is not going to go down well with the Treasury, let alone the wider public. It is one of those bizarre little ironies that privatisation was supposed to take government out of the decision making process on the railways but the result has been quite the opposite, with ministers far more involved than they were under British Rail. Witness, for example, the recent proposed cutbacks on the Cornish branches of the Great Western line, which the franchisee, FirstGroup, says are a result of the government’s decision to fund only a minimal service on these lines.

Secondly, as that example suggests, there are a myriad of strategic decisions, both local and national that need to be made on the railways which will impact directly on the service. For example, there that other recent row, over whether the East Coast Line has sufficient capacity to take on more trains and, in particular, whether those should be services between London and Leeds operated by the franchisee, GNER, trains to and from Sunderland run by an open access operator, Grand Central.

Or take a bigger question: should London where 70 per cent of journeys begin or end get a bigger share of the overall cake whose size cannot be expanded, thereby squeezing less used services in the North, or vice versa? And what about the issue of local services versus longer distance trains. Several stations in Staffordshire have recently been closed because trains which previously called at them have now being speeded up so that they now thunder through these stations without stopping.

Therefore when the strategy document is issued next year, it will be widely welcomed by the rail industry which wants a blueprint to which it can work, but it will undoubtedly lead to protests around the country from passengers affected by the changes. That is possibly why Alistair Darling gave strong hints during his Rail conference speech that he did not expect to be still in the same job next year when the strategy, together with the High Level Output Specification and the Statement of Finances Available are all published. He will be passing on a poisoned chalice, but at least it will not be the vacuum that has been at the heart of railways policy for so long.

Christian Wolmar’s latest book, On the wrong line, how ideology and incompetence wrecked Britain’s railways, has just been published by Aurum, £10.99. He is a writer and consultant focussing mainly on transport issues. See www.christianwolmar.co.uk

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