If there were ever a poisoned chalice in government, it must be the portfolio as minister in charge of the railways. Even for people who don’t travel by train, the railways are a national obsession and make the headlines quite disproportionately to the number of people who use them. Political accident- proneness goes along with the job description.
So it says something about rail minister Tom Harris that he was the only minister in the Department for Transport to keep his job when Gordon Brown took over. He was well equipped to take the flak – and is known to love the challenge. As former head of PR for the Strathclyde Passenger Transport Executive, it fell to him in July to announce the government’s plans for the railways over the next 30 years, which pretty well bombed with the press, passenger groups and environmentalists.
When he made his announcement, Harris ended his briefing to journalists by stressing that the government’s plans should not be viewed as the prelude to a round of cuts on the railways. But he knew that this is how it would be seen, since the plan for the railways envisages a cut in half of the subsidy from the government and a sharp increase in fares.
A couple of months down the line, Harris still resolutely defends the White Paper. He is very upbeat about the government’s plans: “This is the first time in 50 years that any government has been able to present a white paper for growth.” He says that while rail enthusiasts were critical, the paper went down positively with the industry. Well, up to a point. Rail companies are reluctant to criticise government since they do not want to bite the hand that feeds them. Harris’s own involvement at Strathclyde means he has become very quick to master the complex intricacies of the industry. He says that the fact that the rail industry is a vital part of Britain’s infrastructure does not mean it can expect different treatment from other spheres of government activity: “Efficiency is increasing, and so there is not as much need for subsidy.
Why then, would you continue with the same level of public support?” That does not mean, he stresses, that the railways will ever do without “dipping into taxpayers’ pockets”. He distances himself from a comment given recently to the Guardian by an unnamed official to the effect that since only 6 per cent of the public use the railways, then why should the rest pay for it? Quite apart from the fact that this statement was wrong, since it refers to the market share of journeys by rail, rather than the percentage of users among the public (which is far higher than 6 per cent) Harris says there is strong justification for continued subsidy: “The railways have a benefit that goes far beyond those using it. The country needs the railways for the economic benefits.
The Eddington report on transport in the UK (commissioned by ministers from former BA chief Rod Eddington) was unequivocal on this as the railways move people about in an environmentally efficient way”. However, while the White Paper set out a few modest investment plans, such as remodelling Reading and Birmingham New Street stations, most rail supporters felt it lacked a real vision for the railways. Oddly, for example, it eschewed electrification on the rather dubious grounds that the technology might be superseded by hydrogen fuel cells within a 15-year period, not long enough to give sufficient return. Harris, though, felt the balance was right and is dismissive of demands for massive investment schemes: “There was always going to be disappointment from rail enthusiasts.
They always want more investment. Yes, you could spend considerably more over the next five years, but would it be a good use of public money?” On electrification, despite the evidence that it not only attracts passengers because it is cleaner and more reliable, but it is also environmentally more friendly, Harris toes the government line: “I’m not saying there isn’t a case for electrifying some parts of the network. It’s just that there is a limited amount of money in the pot and if you spend a lot of it on electrification, there will be less for other investment.”
Labour inherited a structure of the railways that was created by a privatisation that is widely recognised, across the political spectrum, to have been botched. There have been some changes, such as the effective renationalisation of the infrastructure after the demise of Railtrack, though ministers insist on the pretence that Network Rail is in the private sector even though its near £20bn debt is guaranteed by the government and there has been the creation, and then the abolition, of the Strategic Rail Authority. Fundamentally, however, the process of outsourcing the operation of the services to private companies through franchising and indeed the DfT is now using this to extract premium payments from many operators, rather than handing out subsidy.
In answer to the question why Labour has not changed this system, despite calls from many of its backbenchers, Harris sees it as working effectively. “The system means that the railway is specified by government but delivered by the private sector.” He emphasises that the franchise system is working well with private companies bidding against each other for the right to run a group of services specified by the DfT.
“Why change it if it is working? Performance is going up, there are more trains, why change it?” He does not see the need for the department to run some franchises of its own to determine the costs or even to allow the franchises to run their course and be run directly by the government. Nor does he think the DfT interferes too much: “When we took over the process of letting the franchises from the Strategic Rail Authority, there were dark warnings that we would not manage to carry out the function. In fact it has worked well.” He rejects the notion, put forward by many operators, that the government gets too involved in detail: “Unlike the SRA, we do not specify timetables. There is no one in this department who is expert on working on timetables and if I find anyone writing timetables I would be very annoyed. The train operators set the timetables according to our requirements. We specify a service pattern but not a timetable”. It is a fine distinction, but Harris is very keen to dissociated himself from the sort of row that resulted from cuts made by First Great Western late last year, for which they blamed the DfT and an unseemly tit for tat battle ensued.
“The government has a role in safeguarding our investment. We have become very savvy about franchising.” Yet, the leeway for operators to use their commercial nous is narrow. If they want to lease extra coaches, they have to ask permission of the department. Why? “Because we need to know what situation they will be in at the end of the franchise.” So what is franchising for? “The purpose of franchising is to generate competition among the train operators, to get them to think about how they deliver services and therefore to stimulate opposition. Competition helps to bring down the cost to the taxpayer of a particular franchise or indeed increase the premium payment.” But why are the train operators allowed to make a profit when they do not invest and the risk they take is relatively small? “Why do people complain about train operators making a profit? They make a profit for delivering what they are asked to deliver. No one complains about Ryanair making a profit”.
Yes, but Ryanair is a genuine capitalist company investing in planes to create new routes. Train operators take only a very limited risk: “Yes, and that’s why we share both the extra profits and the losses they might make.” The semi-privatised railways have a strange structure because, as many experienced rail managers say, the government has an unprecedented amount of control 17 SEPTEMBER 2007 | NEW STATESMAN | 30 over the industry. There is no buffer such as British Rail or the Strategic Rail Authority between it and the industry, which gives Harris far more power over the railways than his equivalent say a decade or two ago. The DfT has become the Ministry of Railways. Harris has no problems with that: “We have put ourselves in the position of being the strategic leader for the industry and that’s the right thing to do. If railways weren’t doing so well, then we would be less relaxed about the position. There are far too many people predicting doom and gloom for the railways.”
But is that not because there is an unprecedented amount of public money going into them? Here he uses the old argument which is that the money is needed to make up a backlog of underinvestment by British Rail. However, in fact, British Rail not only kept the railway in reasonable condition but also embarked on several expansion projects, of which there is a paucity today.
The plans in the White Paper are predicated on substantial growth rates for passenger numbers, as well as above inflation fares increases. The fares rises that are necessary in order to cut back subsidy, according to Harris. But is not the government trying to attract people onto the railways in order to reduce congestion on the roads? Here Harris goes into a lengthy explanation as to why the government cannot regulate all the fares. Under the current system, only savers and season tickets are regulated, with increases being limited to 1 per cent above inflation: “If we tried to regulate all fares, then we would have to subsidise them. We have got the balance right. Regulated fares offer a good deal and we are certainly not trying to price people off the railways.”
But what if the increased numbers of passengers do not materialise? Harris is convinced that there will be growth: “We don’t know precisely what the figures will be, but there is no doubt that the number of passengers on the railway will continue to grow.” Indeed, the White Paper is a gamble on continued growth. If the economy falters, and passengers shun the railway because of increasing ticket prices, the private operators will be in trouble, but so will the government. Despite privatisation the Department for Transport is very much in charge of the railways, and therefore the buck will stop with the ministers responsible for the policy.