Rail 581: Ministers fail to understand real value of the railways

The year 2007 should have gone down in history as epoch making, a break with the past offering a new future for the railways. But it won’t. It will be remembered as just another routine year in which the government had the opportunity to show real faith with the industry but, instead, ducked the big issues yet again and therefore left the railways still without the support they so obviously need and deserve.

We were expecting a 30 year strategy which, hopefully, would have set out the aims of the railway for a generation to come. It was expected that a detailed and visionary investment plan would be outlined but instead, we got a limp document offering little except fares rises in an attempt to price off the ever increasing demand because of the investment implications that such continued growth imply.

It has not, of course, been all bad news. The White Paper and strategy documents published in July promised some major investment such as Reading and Thameslink, reiterated the commitment to buy new trains (but when and where?) and began to flesh out the programme to replace the High Speed Train. More recently, Crossrail was given the go-ahead, we had the opening of High Speed One and St Pancras International, work is proceeding on the East London Line of the London Underground and a couple of the new franchisees are promising some, though rather limited, investment.

The disappointments, though, are in what did not get announced. A high speed line has been kicked well into touch and so, oddly, has any notion of electrification, though, since the publication of the strategy document there have been rumblings of a change of heart on both front, but, frankly, I will believe it when I see it.

The worst aspect of the year’s events is that any good news is outweighed by the fact that ministers in the Department for Transport just don’t get it – ministers simply don’t get the fact that rail offers far more than just a few time savings for travellers in terms of the environment and the economy; they don’t get that public opinion is gradually recognising that the increase in transport year on year is simply unsustainable not just from an environmental point of view but because the ever congested roads are making life more and more difficult for millions of people every day; and most important, as their ‘predict and provide’ policies for aviation show, they just don’t understand that climate change is the biggest threat to mankind since the invention of the atom bomb.

In sum, they neither get the smaller picture in terms of rail, nor the bigger one in terms of transport policy. Even when schemes are given the go-ahead, as with Crossrail, it is always begrudginly, and on the basis of spurious business cases. Business cases are the scourge of the industry. They provide a supposedly impartial assessment of schemes which allows the government to compare plans to spend money to see which one offers the most benefit.

In fact, they are a tool used by the Department for Transport to push forward a £13bn road programme that is serving only to displace congestion and encourage people to use their cars. As Jonathan Leake, in an excellent article published in the New Statesman (August 13) showed, the appraisal system for schemes is weighted hugely in favour of encouraging roadbuilding.

In order to pass the business case, schemes must have a positive benefit cost ratio but most of the benefits are made up of very minute time savings by motorists, which are given a value of 44p per minute (don’t ask, but there is a rationale).Yet, strangely, a cyclist’s time (that’s me) is valued at just 28p per minute while a public transport user is reckoned to be 33p.

Even if that made any sense, according to the Department’s rules, the environmental damage caused by roads to the landscape is reckoned to be only between £900,000 and £1.25m, as a one off rather than an annual cost. Of course assigning any value to landscpes, tranquility or biodiversity is a nonsense, but surely such a low assessment is a nonsense.

The worst, though, is the calculation of the price of fuel. Not only – and this beggars belief – is the fact that any fuel saving as a result of a rail scheme counted partly as a cost because the government will no longer collect the tax on it, but also when attempts are being made to calculate demand for road schemes the price of fuel is reckoned to be on the basis of $35 per barrel in 2025 because of reduced fuel costs and greater engine efficiency. Yet, oil hit $100 per barrel last month and many experts fear that peak oil, when supply is at a maximum, may have been reached already. You could not make it up.

Realistically, if proper values were ascribed to the damage caused by roads and a realistic assessment of their benefits were made – not through adding up millions of tiny time savings that no one cares about – then much more money would be channelled into environmentally sustainable rail schemes than into roads. Instead, rail is starved of proper investment, unlike in other major European countries where its value is appreciated.

Clearly, in the context of a world under threat from climate change, electrification is an obvious answer, given that there are several sustainable sources of power production and, even in economic terms, it may be far cheaper. The failure even to consider major electrification schemes shows the depth to which the rail industry doesn’t have the confidence of the government in carrying out major schemes. The Intercity Express Programme to replace the High Speed Train is fraught with disaster already as it has been drawn up in a way to pass on as much risk to the private sector as possible.Instead of providing a set number of trains, the contractor will be required instead to ensure that a certain number of diagrams will be fulfilled. That is a model used for the Northern Line which has caused an untold number of disputes and difficulties, and because of the refusal to electrify the main lines, the programme will be far more complicated as diesel, hybrid and electric trains will have to be provided. Passing on such a high level of risk will undoubtedly be extremely expensive and yet the public will probably never find out the real costs because of ‘commercial confidentiality’ rules.

Indeed, to anyone outside the confines of the Department for Transport, it is obvious that relying on fossil fuel for trains that may still be operating in 2060 is absolute insanity. Yet, ministers are happily commissioning trains that, even in the short term, may not make economic sense at all if the oil price continues to rise at recent rates. Moreover, even more strangely, the reason why electrification has been shunned is that the Department for Transport is worried that any new electric lines may be made redundant by the arrival of hydrogen technology within a 15 – 20 year time frame.

I’m sorry to end the year on a negative note. But a couple of meetings with ministers and civil servants recently have been really depressing. It is clear, as I said above, that like all their predecessors, they do not understand the real imperatives for the 21st century either in terms of rail itself or transport policy more widely. The most utterly depressing realisation I had this year was that of all recent transport ministers, John Prescott was the best. He may be a surly fellow with a chip on his shoulder the size of a London bus and a penchant for blondes to whom he was not married, but at least he tried. He wheedled High Speed One out of Tony Blair with a subterfuge by financing it with bonds, accepted a terrible scheme for refurbishing the London Underground because it was better than sitting on his hands and was prepared to get up in public and say he wanted ‘to get people out of their cars’. You won’t hear transport ministers saying that now. Can anything be more dispiriting than thinking we can’t do better than John Prescott? Not, I’m afraid, a thought to instil seasonal cheer.

Mystic Wolmar scores a perfect five

Older readers will remember that Mystic Wolmar had become derailed in the past couple of years, seeing nothing but fog in his crystal ball. Well, 2007 has provided a complete rehabilitation since these were his predictions

1. Tony Blair will finally go in a blaze of disgrace following terrible May election results and Gordon Brown will move next door (actually he lives there already) with a blaze of policy announcements, none on transport
2. The High Level Output Specification and Statement of Funds Available will cut back Network Rail’s budget far more sharply than the 31 per cent reductions expected in the current five year control period
3. The 30 year strategy for the railways will be a bitter disappointment, with few new schemes and very little vision
4. Douglas Alexander will be moved in the reshuffle that will accompany Brown’s coronation and he will be replaced by a woman 5. Crossrail will get the go ahead.

With a score of five out of five therefore, Mystic Wolmar lives on and will be offering his predictions for 2008 in the next issue. Of course he would be grateful for any helpful hints from his friends in the industry – you have the email address!

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