The fascinating discussion at last night’s Institute of Railway Operators meeting focussed largely on the McNulty review and what is likely to come out of it. There is no doubt that the resulting changes in the rail industry will be radical, given that there is widespread anger within the government at the soaring costs.
It is also clear that there is a widespread feeling the HS2 is a given – ie that it will definitely go ahead. That’s because of the sharp and continuing increase of people travelling on the railway. Richard Eccles, Network Rail’s planning director, went as far to say that the inflation plus 3 per cent will not have an impact on many routes as demand is pretty inelastic and people want to use the railway. The recent figures from the Office of Rail Regulation showing that there was a nine per cent rise in passenger numbers in the third quarter of the year compared with last year are truly remarkable. And as Eccles pointed out, of the six types of product sold by railways – long distance, commuter, etc – four continued growing throughout the recession: ‘what other industrycould say that?’ he asked rhetorically.
Tim Shoveller, the boss of East Midlands, suggested to me that one reason for the growth is the continued rise in petrol prices, which is boosting demand for regional rather than long distance services. The constraint, ultimately, he said, was simply the fact that there are no extra coaches available and that these trains were becoming overcrowded. Indeed, Eccles pointed out that in previous recessions, coaches have been mothballed, while this has not been the case – though that is partly the result of the rigidity of the franchising system.
There was, too, much talk of vertical integration, though a sizeable number were in favour, overall a majority were against it. Everyone there realised, however, that these were fascinating times for the rail industry, with no one quite knowing what shape it will be taking in a couple of year’s time.