Open letter to the new transport secretary

 

Dear new transport secretary,

 

You poor sap. I wonder why on earth you have taken this job and I am sure you will soon, too once you are faced by hordes of angry rail passengers. You are in for nothing but trouble and then worse. Its bad enough on the roads and in the air but I will confine myself to the issues you face on the railways.

 Superficially, all is hunky dory on the tracks. Usage is at an all time high, there has been continued albeit slow growth despite the recession and there is an investment programme that has trainspotters drooling. The safety record is one to be proud of and there is even talk of a high speed line, as well as electrification and shiny new mega stations in Birmingham, Reading and London.

 But there are potential elephant traps in every corner of the industry and it is not long before you are going to fall into one of them. Tough decisions are on the immediate agenda.

 The obvious place to start is the investment programme. The biggy is Crossrail which has already absorbed a couple of billion or so and is going to be terribly difficult to cancel in its entirety, but there is going to be enormous pressure on you to cut off the ends. Your job is to protect the tunnel as, once it is built, it will look silly not to use it (though Eurotunnel and High Speed One have both discovered that building huge shiny new infrastructure and then pricing it out of the market is a favourite of the Treasury) and hope that the other sections can be added later.

 Then you have to ensure that Thameslink which has already slipped a year does not get delayed any further. The last thing you want is to infuriate this particular bunch of commuters who have suffered woefully under First Capital Connect already this year

 However, the biggest headache on the investment side is Network Rail. Its budget of £5.3bn is going to be under fire. Ostensibly it is protected by the High Level Output Specification process and I had thought until recently that it is sacrosanct. However, talking to various senior people in the industry and politicians, it is clear that they feel that NR’s money is a target for cuts, putting an immediate halt to any expansion plans. Moreover, it is going to get worse – NR will face enormous cuts in the next control period starting in 2014.

 Moreover, Network Rail is a slow burning disaster area because it is a company that is out of control. It behaves like a private sector behemoth but in fact it is a public sector tiddler which overpays its executives and refused to be accountable. And it has survived by accumulating debt, £31bn by 2015 and growing. That is unsustainable. My advice is nationalise the damn company as soon as possible, and put the executives on the far more modest salaries which the absence of risk in their business merits.

 As for rolling stock, the 1,300 new carriages promised a couple of years ago are simply not going to happen. The best analysis suggests that around half will be obtained, which means a lot of passengers struggling in lousy old trains.  Oh, and then there is the PPP on the Underground which is bound to be cut back, just as the Tubes are swamped with people as London is expanding.

 So get real. The last thing you want is precious money that could be used to maintain the investment programme to be absorbed in the fanciful high speed plans. It is not going to happen in your political lifetime or even probably in your earthly one. Quietly kick it into touch and starve the project team of any serious funds, confining them to draw a few blue lines on Ordnance Survey maps

 It is on franchising, though, where the situation is going to be most pressing. Several franchisees are already in ‘special measures’ which means that the revenue risk has effectively been taken on by the state in the cap and collar arrangements . This is an intolerable situation as it disincentivises (sorry horrid word but accurate) the train operators. It means there is no point in investing in boosting traffic as 80 per cent of the income simply goes to the Department. In fact, quite the opposite. Any savings boost the bottom line of the operators, and therefore the service is bound to decline. Watch for more operators plunging into the cap and collar arrangements. Lord Adonis promised there would be no deals but that, too, is unsustainable. Get the industry out of cap and collar, even at the cost of extending franchises. I could say be brave and just nationalise the lot as they run out, but that sensible move is in no one’s manifesto.

 Up to now I have thought that the railways, popular among the public and seen as important part of the infrastructure, might have been immune from cuts because of the Byzantine structure created by privatisation. Certainly that is what the politicians have intimated, but in fact I feel they have been living in cloud cuckoo land. Desperate politicians will find ways round the rules and the railways are not protected by a strong lobby. And you, dear new Secretary of State, will be the fall guy. Tough.

 

Best of British (Rail}

 

 

Christian Wolmar

Shares