Bleak times ahead on the rails

The kernel of a Con-Dem policy on railways is beginning to emerge with various announcements by the transport secretary Philip Hammond, who shows every sign of being a roads man, and it’s not looking good for rail passengers. In headline terms, it’s higher fares, more overcrowding, fewer new coaches, cutbacks to projected schemes but let’s press on with the new high-speed line.

This does not add up. The National Audit Office report on rolling stock focused on the fact that Labour’s promises to introduce new trains in order to reduce peak time overcrowding have not been fulfilled. While in the short term this may make sense, as the recession has reduced demand, the Tories will now use this as an excuse to rein back the programme for new trains dramatically, and passengers will be strap-hanging again on the peak services as soon as the economy starts to grow. This is especially true of some lines in London where the population is expected to increase by up to one million by 2026.

There is little doubt that fares are going to go up in an effort to reduce the huge £5bn subsidy to the rail industry and this may relieve part of the overcrowding at peak times as some people opt for driving or taking the bus instead of the train. Currently, regulated fares – which cover season tickets and off peak services – are only allowed to go up by 1% above inflation, but the new government could change this and grab some of the extra revenue themselves. However, the Lib Dems had promised the opposite, saying in their manifesto that regulated fares would be reduced in real terms by 1% each year, so any change is likely to lead to a row within the coalition.

There is, too, going to be a lot of paring down of investment schemes. Big projects such as Crossrail and Thameslink are unlikely to be cancelled as that would seem like bad news, especially to our friends in the City, but also because it would be a waste of the money already spent.

All this is highly predictable from a cash-strapped government. Transport took 11% of the hit in the initial £6bn cuts, and yet represents only 4% of government spending. What is less clear is the rationale for pursuing plans for a high-speed line in this economic climate. The outcry from Buckinghamshire residents worried about a 15th-century bell tower will be just the start of the nimby wars against the scheme. It is going to get more unpopular as time goes on and given the cost – anything from £20bn to £30bn – where on earth is the money going to come from? Does anyone believe that the scheme could be funded without major cutbacks to investment plans on the existing railway?

Worse, Dave and his pals are eschewing the more sensible Labour plan of a Y-shaped route that would split at Birmingham with branches to Manchester and Leeds in favour of a crazy S-shaped line that would go to Leeds via Heathrow and Manchester. If Cameron were really serious about building a line quickly – the Tory manifesto promised a 2015 start – he would stick to the original Y-shaped scheme devised by an experienced team of engineers and planners during a year-long study rather than on the back of an envelope by a few Tory politicians anxious to avoid going through too many of their own constituencies.

Politically, this does not make sense. Existing rail passengers are to suffer deteriorating conditions while a gargantuan project is devised and absorbs all the spare cash intended for future passengers who may well, by then, be too busy sitting in front of their computers and videoconferencing screens to bother to travel at all.

[This was first published as a blog on the Guardian Comment is Free site on Friday June 4]
  • RapidAssistant

    All this wouldn’t have been as big a problem had there not been fundamental problems with the structure of the industry that have existed since privatisation – these are now going to be magnified by the implementation of these cuts. Getting Network Rail to try and do more with less, is going to expose the company’s out-of-control costs even more. Sure if this was 20 years ago BR would have seen its subsidy cut, and upgrade projects would have been cancelled – but there would have been little of these frenetic “rob Peter to pay Paul” scenarios that fragmentation has created.

    Equally squeezing the pips out of the operators, by increasing premiums on new franchises, and regulating them to death will soon have them asking if it is really worth their while. The DfT is highly unlikely to be as generous with cap and collar arrangements in the future. After all, the TOCs themselves know that increasing fares in an economic downturn will only make people stay off the train – defeating the very purpose. It will be interesting to see what takers there are for East Coast given that it has gone tits-up twice already, and what the new franchisee is prepared to offer.

  • Dan

    Good points – there are of course diff ways for govt to pass on costs – eg putting up fares is one, but also pushing people on to the roads to sit in traffic jams is in fact a way of passing on a cost from one sector (in our case the state which provides rail and road networks) to the individual (who sits in a traffic jam not engaging in other productive activity). This is a cost transfer too.

    It’s interesting, as despite the recession I still see lots of travel going on (roads still busy, trains crowded etc) – it is probably to do with changed lifestyles and patterns of work I guess – but it is notable.

  • RapidAssistant

    Very true Dan – I look at how busy my shopping malls are at weekends, and how many “10” registered new cars that are driving around. And I don’t live in a particularly affluent part of the country either. You’d never think that anything is wrong (although lets see what horrors await us on June 22nd…..).

    However – you can talk all you want about fare increases because the actual fare revenue is chicken feed money in comparison to the out of control subsidies, and cost shifting won’t do anything to get rid of NR’s debts. No-one has yet taken the bull by the horns and said how they are going to save the rail industry from the bankruptcy which it is undoubtedly facing.

    The scary thing is that history has a funny way of repeating itself – the Big Four being put out of their misery in return for nationalisation in 1947, the forcing of Railtrack into administration in 2001. Both were a result of the government sweeping problems under the carpet that they knew about for years, and waited until their hand was forced. I doubt that it will be any different this time.

  • Stephen Humphreys

    Is Phillip Hammond a roads mad or a cuts man? I live to the south of Nottingham, the A453 dualing was culled during the first round of cuts, and potentially the NET2 tram extension. So light rail and roads there.

    Isn’t the real problem with transport the fact that we make too many unnecessary journeys? Is an expansion of rail the answer or is it more remote working, conference calls, living closer to your place of work etc therefore reducing the need for capacity. We know that road traffic increases with new roads, it looks to me as if rail usage does with better conditions. Are these new journeys that wouldn’t have been made otherwise. If I remember correctly this is one of the reasons why HS2 is carbon neutral. Perhaps the rationale is “If we don’t build it they wont come”.

    As an aside Network Rail is going bankrupt which is hardly an arguement for the fact that it’s spent all the money it’s had responsibily.

    In the coming years rail is going to struggle as it has no voice. Who speaks for the rail industry? What is it for? We have the Wolmar question “what is franchising for?” but I don’t think we know the answer to “What is a railway for?”. Until we can articulate that then I don’t see that politicians who are not sympathetic to rail looking much beyond the figures.

  • Ian Raymond

    Good comment Stephen. Especially in asking “What is a railway for?”
    If the railway is to be a *socially necessary service* then we might expect service standards at (perhaps) a lower level than at present but with fares that do not price those of lower means off them (as is the case at the moment!). An example of this is Merseyrail (albeit with significant local authority support).
    If the railway is to be seen as a *business with minimal call on the taxpayer*, then we might expect higher fares for peak / discretionary travel, Ryanair-style yield management/marketing and all in “Jam ’em to the gunwhales” interiors (see x-Country).
    But if the railway is to be a *’green’ measure*, attracting both motorists and air travellers we need something different. Anyone remember Richard Branson’s visionary statement of wanting to ‘grass over the M6’? For this rail needs to offer both a quality travel experience, cross-mode integration to enable point-to-point journey planning AND reasonable walk-on fares. A recent journey from Birkenhead to Melrose took over 7 hours and 4 changes each way, costing £76 per person – a car would have taken under 4 hours.
    In terms of unnecesary journeys Stephen, one of the most beneficial things that could happen would be more “home working” for those whose jobs allow it; too much stock and service planning is necessarily concentrated on the two peaks of the day. But I’m guessing we’re at least a generation away from such society change taking place?
    Ian

  • Chris M

    Wasn’t there another post on the blog about Eric Pickles which has disappeared?

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  • Colin

    I have said on this website previously that we now have a Z list transport secretary who biding his time before he is moved on to a different department,whilst he is twiddling his thumbs his making dumb statements to appiese road the lobby and then showing his enthusiasm to wreck rail travel in particular, and public transport in general. The next five years will be awful for public transport. Yes the country can’t live beyond it’s means, but a wise government would invest in infrastructure project as a means of stimulating the economy, but alas this wont happen with this bunch of numpties.

  • Brian Woods

    Our so called privatised Rail industry has only boomed on the back of years of “loads of money” subsidies from the taxpayer currently £5billion a year compared to only £1billion in the last year of the so called inefficient British Rail.Too many pigs in the trough for too long, only now will the true costs of rail privatisation really start to show themselves as rail companies rush to protect their shareholders returns in increasingly difficult market conditions.Lets face it Rail Privatisation has been poor value for money for the tax payer because of its dysfunctional structure.The painfull reality is that shareholders will be protected while passengers will increasingly suffer as draconion cuts in rail investment bite in the years to come.

  • RapidAssistant

    Well Brian – it will be interesting to see what happens when and if the subsidy tap is turned down a few turns. Can the railway’s perilous financial model hold out? On the face of it, the financial ring fences created by privatisation are enshrined by legislation, and up until now have been a factor in allowing the subsidies to go out of control – but the old saying that where there is a will there is a way…..the coalition ministers concerned are undoubtedly going through the statutes with a fine toothcomb to see if they can wriggle their way out of the committed subsidy.

  • Steve T

    Interesting the NAO figures may be it has little belief on my commute. Strap hanging is definitely on the increase. We are just under 40 minutes from London Termini but most trains between 6:30 and 8:00 now leave with standing passengers which they didn’t a year ago (except the single Thameslink one which misses London Bridge). Evening services are much worse with passengers often unable to get on the trains. It seems overcrowding is getting worse and there is a desperate need for extra stock.

    As for HS2 – run it along the M40 – most places along that route are already blighted with noise from the Motorway so planning should be easier. Should make it easier for the route to go via Old Oak Common from Central London as the M40 also starts west of London. Logically would be cheaper to construct because it will be easy to transport materials to and from site (off the M40??).

  • David

    There’s a report in today’s ‘Derby Telegraph’ that the East Midlands Development Agency have withdrawn their £800k contribution towards the costs of alterations to the front of Derby station (changes to the taxi rank, bus stops, etc).

    Unless a new source of funds can be found, the matched contribution from the EU will also be lost.

  • Dan

    Does not surprise me David – it seems the quango agencies (like EMDA) are being told to pull out of all funding agreements that are not contractually signed off as the govt enforces it’s scorched earth cuts programme to help ensure there is enough money to keep the bankers in the lifestyles they are accustomed to.

  • Ian Raymond

    A lot of the development agencies themselves are under direct threat. Initially the tories said they would abolish them all, the latest thinking seems to be that if local businesses want them to stay they will but in a smaller format.

  • David

    According to the BBC News website reports covering today’s budget, ” . . . . improvements to the rail lines to Sheffield and between Liverpool and Leeds will go ahead.”

    Can anyone explain, please?

  • Dan

    What Guardian said: “The government will back four regional rail projects: the Tyne and Wear Metro: the extension of the Metrolink tram system in Manchester; Birmingham New Street; and links between Sheffield and Liverpool.”

    What was in actual speech : according to Telegraph:

    “First, even when money is so short, we will commit to these important regional transport projects: The upgrade of the Tyne & Wear Metro; The extension of the Manchester Metrolink; The redevelopment of Birmingham New Street station; And improvements to the rail lines to Sheffield and between Liverpool and Leeds.”

    So the BBC was at least accurate David – hard to know – I’d presume we are talking Liverpool – Manchester electrification schemes Adonis promised? – Not sure this relates to Sheffield or Leeds however….

  • Stephen Humphreys

    Meanwhile back in NR land “Network Rail bosses awarded £2.5m in bonuses” http://news.bbc.co.uk/1/hi/business/10403255.stm. It almost defies belief. £641,000 to Croucher alone.

  • Dan

    They are all in it though Stephen – snouts in the through – I got my Building Society voting papers yesterday – quick flick through – the remuneration package for one of the top dogs was well over £1m quid – salary and pension package. There’s about a dozen of them you get to vote for – every ones was trousering over 1/3rd of a million at my rough glance. At least tyou get to vote against them I suppose.

    We’re talking a trusty old building society for gawds sake!!

    What planet are they on?

    At least ‘we’re all in it together’ eh – makes me sick

  • RapidAssistant

    Whatever you say about him – Byres did at least have the backbone to pull the plug on Railtrack. OK – it was poorly executed and the end result (Network Rail) may be deeply flawed, but at least someone saw the taxpayer being fleeced for not very much return and did something about it.

    Currently, our new ministers have merely criticised the situation with NR’s directors – unless there is some secret goings on behind the scenes to do something about it (one can hope….)

    Will anyone ever stand up to these legalised thieves????

  • David

    Is it coincidence, or is a “cunning plan” emerging?

    Are we being drip-fed information prior to some “big announcement”?

    ‘The Independent’ on 17th June contained an interview with Colin Walton, Bombardier’s UK boss. In it, reference is made to there being a question mark over the IEP project, the McNulty review, the general credit crunch, etc; and electrification.

    He then specifically mentions the Midland Main Line. But, he suggests, instead of electrifying it in one go, it would be possible to use what are described in the article as “intermediate cars that would allow a train to use an overhead power supply where available and then revert to diesel once out of range”; it then explains how such a move would help to cut pollution in London as both Euston and St Pancras would be diesel-free, and how it would allow incremental electrification as funds become available.

    Nice plug for Bombardier, I thought, when I first read the article. But then on Tuesday, we have George Osborne’s reference in his budget speech to improvements to the rail line to Sheffield going ahead . Then yesterday, I bought July’s ’Modern Railways’ and comprised within the ’News Front’ section is a report which suggests that electrification of the Midland Main Line could take precedence over the GW one as it would be cheaper and new rolling stock wouldn’t be necessary; all that would be needed would be the purchase of (by my calculations) 31 new intermediate cars to convert ’Meridians’ into electro-diesel trains.

    I guess there would be some modifications needed to ’Meridians’ to incorporate the new intermediate cars and make them into electro-diesels, but the total project costs should be less than £75m; then, if you roll-out this programme to the ‘Voyager’ fleet as well, only another 85 cars are needed .

    I understand Iain Coucher mentioned the slowing down of electrification schemes approved by the last government as a way of making economies. So by putting all of this information together, it’s possible to make 5 by adding 2 + 2, but it could also be 4.

    Its possible to see how this would seem to be good politics in the present climate. Hammond could scrap the IEP programme, slow down GW electrification so that its implementation would dove-tail in with replacement of HSTs (which have still got quite a lot of life in them), and go for the conversion of ’Meridans’ and ’Voyagers’ into electro-diesels; he could then claim to be matching rolling stock replacement programmes to what the country can afford, he could claim to be working towards a “greener” railway by gradually rolling out electrification, and as Bombardier are more or less guaranteed to get some of the work, he could claim to be supporting UK manufacturing (provided, of course, that the work was carried out at Derby!).

    A few years down the line, new all-electric rolling stock could be ordered for the Midland Main Line, and if this was amalgamated with a requirement for new trains to replace ‘Voyagers’ on the Birmingham-Scotland services (completely under the wires), quite a large fleet of electro-diesels could be moved-over to the GW main line; these would replace HSTs on that route, making use of the 25kv AC supply as this gradually moved westwards.

    The above paragraph outlines just one possible scenario; ‘Meridans’ could also be useful on the ECML, replacing HSTs on Anglo-Scottish trains going north of Edinburgh and on open-access services to Hull, Sunderland, etc. This would then make Kings Cross diesel-free as well.

    As I said at the beginning, is it coincidence or are we being drip-fed information? I think we need a good investigative journalist to do a bit of digging!

    How about it, Mr Wolmar? Or do you already know what’s going on and just haven‘t told us – yet!

  • Oh, no, I know nothing. That’s all far too clever for me but very plausible scenario. Would have made a great rail column if I had worked that all out. It would, though, be odd that having gone to the trouble of keeping the EMT diesels out of the main part of St P, they then electrify the service!
    I did bump into Mr Walton last week and he did seem in a particularly good mood. Perhaps he knew something we didn’t. The rumour I hear, too, is that Andrew Foster’s report into the IEP has been sent back four times by the DfT because they don’t like the way it has been express with, presumably, a few words of criticism of them.

  • RapidAssistant

    David – if that’s true what you say about the Voyagers….then I hope there is a few quid in the coffers to replace the toilet modules as well!!!!!!!

  • Dan

    David – that all well and good – and a very sensible plan – so we can absolutly certain it has no prosepcts. What we will get is some more very expensive upgrades that don’t deliver on the promise – and this is then used to justify pulling the plug on whole stretches of railway. Bear in mind Christiab’s most recent column menas that signalling will now need to be altered near every level crossing so trains can give way to cars – and that in Ministerial instruction…

    Mind you – if you electrify MML I’m sure decision makers will thin up the far better rolling stock plan of running class 319 Thameslink trains on north of Bedford and through to the Eastr Midlands cities – after all why not? I was thinking this yesterday as I rode one from Brithton to St Pancras – even for that length of journey the cramped NSE hard 3+2 seating, and no window alignment is inadequate even for London to Brighton, so surely DfT would agree that they would be good enough to run on to Sheffield?

    I will say 2 things about the 319s though – as it sped up the Brighton Line at top speed on a beutiful summer evening – with every window open there is no disturbance from banal announcements (you can’t hear them), nor otyher people’s ipods or mobiles (all drowned) plus the natural smell of the susex countryside on a summer evening drafting in through these windows was quite beguiling (unlike Southern’s Electro starswhere the a/c seems to persistently recycle a smell of stale body odour – at all times of year – so it’s not just toilet modules Rapid!)

  • Dan

    U turn for Theresa V then – assuming she accepts this report by her more senior predecessor who has worked out Adonis was right all along re heathrow link.
    http://www.guardian.co.uk/world/2010/jul/21/heathrow-link-london-scotland-railway

    Mind you – only a matter of time before Tories discover need for a 3rd runway after all – but this will be after the Mayoral elections next year since they won’t want to risk Boris

  • RapidAssistant

    Dan – hilarious that it is Brian Mahwhinney of all people that is preaching some railway common sense in this review…….given he was one of the original gang of perpetrators behind the privatisation of British Rail and the sale of Railtrack……..

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