The future’s electric

Jimmy Savile was wrong. This is the age of the train, rather than the late   Seventies/early Eighties when he was the face of British Rail advertising   and immortalised that slogan.

The huge prominence given to yesterday’s announcement of the investment   programme for the railways shows how far we have come from the dog days of   the Beeching cuts and the decades that followed, years in which British   Rail’s finances were permanently squeezed by a series of unsympathetic   governments. When the beleaguered Prime Minister and Deputy Prime Minister   use an announcement about the railways to show how they are going to   kick-start the economy – and incidentally to tell us that they are still   good friends – it is clear that ministers see the revitalised rail industry   as a key part of Britain’s infrastructure for the 21st century.

Contrast this with the consultation paper on aviation, slipped out almost   apologetically last week, which left the key issue, the need for more   capacity in the South East, unaddressed. Rail development smacks of   motherhood and apple pie by comparison.

Of course, scrutiny of the details reveals the usual flim-flam and hype   associated with government announcements. This is not the “biggest railway   investment since Victorian times” – most of the schemes have previously been   announced and there is little real new money. The widely touted £9.4 billion   figure is for improvements over a five-year period, which works out at under   £2 billion per year; that is pretty much in line with spending sanctioned by   the previous government (the comparable figure was £7.4 billion, equivalent   to just under £9 billion in today’s money) and much less than the £1.24   billion (roughly £25 billion in today’s money) modernisation plan   implemented by Winston Churchill’s government in the mid 1950s.

The “network grant”, which represents the main subsidy to the industry, is   expected to be £18.3 billion for the 2014-19 period represented by this   announcement, slightly more than the allocation of £17.6 billion during the   current five-year period and less if inflation is taken into account. David   Cameron’s statement that investment in the railways is being “accelerated”   may, therefore, be just about statistically correct, but the pace is more   2CV than Ferrari. Certainly, yesterday’s announcement does not represent the   step change in investment implied by the spin but is rather a continuation –   indeed very welcome – of support for the railways.

There is no mention of the private sector footing any of the bill. This   reflects the reality of the quasi-privatised railway but it is an irony   given that the railways were privatised in the 1990s precisely on the basis   that governments would no longer have to foot the bill. Railway insiders   always knew this would be a nonsense, since networks across the world have   only very rarely been able to pay for themselves, but this latest   announcement merely highlights that the industry will always need a helping   hand from taxpayers.

Apart from stacking yet more on to Network Rail’s burgeoning debt, currently   £27 billion, the money for the investment has to come from either taxes or   fares. This Government has followed its predecessor in trying to increase   the farepayers’ proportion of overall expenditure from around a half to two   thirds. The justification is that fare rises help pay for the investment but   in reality they merely allow the Government to keep subsidies down.

However, this year Justine Greening, the Transport Secretary, managed to   persuade the Treasury at the last moment to impose a fare increase of 1 per   cent above inflation, rather than the 3 per cent proposed. In her press   briefing yesterday, she made clear that she was trying hard to limit the   rise for January 2013. Indeed, it is politically difficult for the   Government to allow fares to rise well above inflation when it holds down   proposed fuel tax increases, given that doing this costs the Treasury much   more than a freeze on fares.

Despite these caveats, there is much good news in the plan, with the emphasis   on electrification, improvements for freight and, in a way most important,   the long-term commitment to railways that is being displayed. The growth in   rail use of the past two decades has been phenomenal, with numbers using the   network almost doubling. Despite the recession and austerity measures,   passenger numbers are still going up, by around 6 per cent this year. The   political emphasis on rail, therefore, can be seen partly as a response to   demand. Ms Greening mentioned how “twentysomethings” were increasingly   sticking to rail rather than using cars as soon as they were able to drive.   This does seem to represent a social trend because, as one young woman put   it to me: “Why would we want to drive when we can use our iPhones and iPads   on the train?” Facebook and Twitter, in other words, have become the   railways’ new best friend and many companies have installed Wi-Fi in their   carriages.

All of this planned investment is directed at the existing network, with the   cost of HS2, the proposed new north-south high speed line, accounted for   separately by the Department for Transport. Opponents of the new line   suggest that this focus on the current network may point to the commitment   to HS2 wavering; this was denied by government sources but it would   certainly make it easier to postpone the £32 billion HS2 project.

Politics is never far from railway schemes and this announcement is no   exception. Rail investment has been criticised as very London-centric, given   that two huge schemes, Crossrail and Thameslink, are under way. Now, in an   effort to improve the electoral prospects of Tories in the North, the   emphasis has shifted away from the capital.

In particular, the electrification of the Welsh valley lines has long been   sought by the Assembly in Wales, where Tory fortunes revived slightly at the   2010 election, as has the extension of wires to Swansea, rather than the   previous end point of Cardiff, on the Great Western line. The Coalition   clearly hopes, too, that the proposed electrification of the Midland main   line between Bedford and Sheffield will not go unnoticed in Nick Clegg’s   constituency of Sheffield Hallam.

As a consequence, given the limited amount of new money available, other   widely supported schemes, such as electrifying the Barking to Gospel Oak   line, a key freight route linking east and north London, and the reopening   of the Uckfield to Lewes line closed by Beeching, which would relieve   pressure on the overcrowded Brighton main line, have not been included.   Despite the confidence expressed in railways by the Government, the industry   still faces problems resulting from the privatisation of the mid 1990s,   which all parties now accept was botched. It has left the industry   fragmented and with a high cost structure that was highlighted by Sir Roy   McNulty’s report on the industry last year.

The Government wants the industry to cut costs by 30 per cent, as recommended   by McNulty, by the end of the decade, arguing that costs are much higher   than those of equivalent railways on the Continent. However, those networks   are not burdened with a franchising structure that results in excessive   costs and duplication; nor, even though they are state-owned, with the level   of micromanagement employed by the Department for Transport (widely referred   to as Daft across the industry).

The Government has stressed that unless these savings can be found, investment   will be cut and fares will have to rise. Yesterday’s announcement is, in   fact, the start of a complex process which involves the Office of Rail   Regulation assessing whether these plans are realistic given the amount of   money available.

It is impossible to say yet, but if the Government has set out these projects   on the basis that the reductions can be carried out and the ORR decides it   has been over-optimistic, then some may be shelved. Before rail supporters   can rejoice, they must await the ORR’s verdict, which will not be delivered   until next year. Then, perhaps, they will try to resurrect poor old Jimmy   Savile.

  • Philip Wylie

    So glad to see this investment, but what a pity Uckfeld/Lewes not included as an electrified diversionary route to the BML is a real urgency given passenger growth. Also, no mention of electrifying Ashford/Hastings. 

  • Philip Wylie

    Forgot to mention that, as I type, 45 minute delays are occurring south of Three Bridges due to a track circuit fault…..

  • Idly thinking of that time in the 1950s when British Rail heavily invested in steam when other countries were going electric.  Better late than never…

  • Chris

    The flaws of BML2 have been pointed out time and time again –  its not an alternative to a lack of capacity on the BML, and its attempts to solve the real issue (capacity into London) have appeared desperate and ill thought out. Im all for reopening Uckfield-Lewes, but on its own merits.

  • Vtiman

    I believe that br actually wanted to bypass diesel and go straight to electrics  but we eneded up with the diesel dominated 1955 modernisation plan

  • Paul Holt
  • Fledermaus

    Youi mention GOBLIN – yet that short route would give the highest cost-benefit of any known scheme, and would eliminate a lot of wasteful diesel freight haulage under the wires.
    Loopy.
    However, it can be done, as the very recent Glasgow – Paisley Canal scheme has shown

  • Sean Baggaley

    Dear Christian:

    HS2 is, in part, a victim of terrible marketing: it’s always been about capacity. Its other problem is political micromanagement and misleading hogwash from its opponents: a big chunk of the £17 bn. cost for Phase 1 includes the cost of the Euston station redevelopment. But Euston was *already* earmarked for redevelopment, so it’s dishonest in the extreme for that cost to be transferred entirely into HS2’s budget, as if that work would not have had to be done without HS2 anyway.

    Also, as you’ve pointed out yourself in the same post, the media and politicians love to talk about the “total” budget for major projects, but it’s much more honest to look at these figures in terms of *annual* expenditures. You point out yourself that the £9 bn. or so “announced” by the government works out at about the same £2 bn. / year as we’ve always had. 

    But you then you go and spout the usual “£32 bn.” cost for HS2’s *complete* network, including both ‘Y’ branches—yet only Phase 1 is anywhere near close to happening. This gives the usual implication that someone just hands over a £32 bn. cheque to a builder up-front and we then just sit back and wait for the magic construction fairies to do their jobs. By the time the entire HS2 network is completed, that £32 bn. turns out to be roughly £1.5 bn. / year. In other words, it’ll cost less _per year_ to build HS2’s entire network over the next 20 years or so than it is currently costing to build a relatively short bit of RER beneath London.

    On top of all this, the cost of building *any* major project in the UK is eye-wateringly expensive compared to the rest of the planet. Even Naples is managing to build major new infrastructure projects without spending the kind of sums we hear about over here for even relatively easy projects. HS2 is, fundamentally, a piffling 100-mile railway through mostly very easy terrain. There really is no excuse for its first phase alone costing nearly *double* that of the Gotthard Base Tunnel project.

    This construction cost inflation is a malaise that has afflicted the UK for nearly a generation now. It is by far the biggest elephant in the entire nation, let alone in the room. Until this is addressed, _NO_ major construction project will genuinely be “value for money”. Not rail, not road, not air, not anything. The UK is a member of the G8: it really shouldn’t be having to deal with constant “either / or” choices. We should be able to build *all* of it. And then some. 

    Instead, Crossrail is arriving 30 years late, while “Thameslink 2000” is likely to open 18 years late. There’s a hell of a lot of catching-up to do. And not just in the south-east either.

    *

    GOBLIN has been kicked about like a football because nobody can agree on who should pay for its upgrades. TfL says the DfT should be paying towards it as any improvements would be of major benefit to rail freight, which TfL would much rather buggered off somewhere else. The DfT instead kicks the ball back to TfL, saying it’s a regional problem, not a national one. Rinse. Repeat. Ad nauseam. Everyone knows it has a massive BCR in its favour, but nobody wants to stump up the cash to do it. This is a purely political problem.

    As always, the UK’s politicians have only one consistent mantra: “remove lightness and add complexity.”

  • Sean Baggaley

    There’s no point re-opening Uckfield-Lewes, or electrifying Ashford – Hastings, until the major capacity issues closer to London have been resolved. 

    I’m also not sure if Ashford-Hastings can be electrified using third-rail: as I understand it, any “new” electrification project is requires to use OHLE, which could require major surgery to some of the tunnels.

    BML2 might happen. Or it might not. Either way, it’s not going to be cheap, and it’s clearly not appearing in the next HLOS, so, for the next seven years or so at least, it ain’t happening.

  • Mike

    All very true. The lack of projects like Lewes – Uckfield shows that this is indeed a much more modest programme than it pretends to be. Had this line not be needlessly closed in 1969, it would today be a busy electrified route serving London and the South Coast.

  • padav

    Jimmy Savile was wrong. This is the age of the train, rather than the late Seventies/early Eighties when he was the face of British Rail advertising and immortalised that slogan.

    Yup, and Christian Wolmar was also plain wrong when he asserted (several times), in these very columns, that HS2’s headline construction budget would starve the Classic Line network of vital investment funding – don’t suppose there’s any chance of a grovelling retraction Mr. Wolmar?

    Sean Baggaley’s erudite comments below sum up much of the hype surrounding HS2 and the furore over its alleged “cost” to the Nation?

    Currently there seems to be a rash of commentary surrounding the fabled BCR figures for HS2 but this is really a red herring – either you support the notion of a properly funded railway system or you don’t – Railways cannot by their very nature operate in the conventional commercial world and make sense – the timescales and budgets involved are simply too large.

    So, if your parameters for sound investment are limited to projects with minimised risk exposure and shortish (less than 5 years) payback horizons, rail will never offer an enticing prospect – this, essentially political, disposition dictates that those opposed to investment in rail infrastructure will always be able to demonstrate seemingly more attractive options for investment in the transport sector – a private toll funded eight lane motorway will, for example by its very nature, provide an inherently less onerous burden on the public
    purse using standardised conventional commercial criteria – whether or not it represents a good long term investment for UK PLC is another matter entirely.

    HS2’s relatively poor BCR is therefore driven by two principal factors;
    1. Its relatively massive headline budget
    2. The intangible and therefore indefinable and largely unmeasured values attached to its beneficial long-term properties

    There is nothing we can do about the latter aspect because these are effectively politicised interpretations and depend on your individual viewpoint (see above)

    There is of course a great deal we can about the former but the lasting legacy of the anit-HS2 brigade’s antics (which Mr.Wolmar has done much to encourage) is the manner in which they have succeeded in distracting public scrutiny from the former – this is where it gets interesting of course because those in the
    naysayers camp have nothing to gain from bigging up discussion of the relatively large costs of HS2 compared with other projects on the other side of La Manche – that’s why you hear not a murmur of debate from anti-HS2 activists about the detailed prospects of programmes such as the LGV Sud-Est Atlantique, a 302km extension of the existing LGV network. A deal to finance this new line was signed up last year, total agreed cost for this project is 7.8bn€ or well under £7bn at today’s rate of exchange.
    http://www.railwaygazette.com/nc/news/single-view/view/tours-bordeaux-concession-signed.html

    We know that agricultural land in Britain costs approx 4 times its equivalent French counterpart and the tagging on of Euston’s complete rebuild as HS2 London terminus has inflated overall costs courtesy of expensive tunnelling under city centre London but despit these factors the £32bn (includes Treasury optimism bias) estimated costs of HS2’s complete Y network should still be coming in closer to £20bn – not well north of £30bn!!!

    If we could just stop arguing about the principle of High Speed Rail for a moment and focus our attention on the flawed nature of large infrastructure project procurement processes, this might serve to do all of us (as in UK taxpayers) a collective big favour.

    Mr. Wolmar knows this better than most and having cosied up to the antis, located almost exclusively in a narrow corridor in close proximity to the approved Route3 pathway, he is better placed than most to expose the
    self-interested agenda they are peddling – is it mere coincidence that the leading lights in the anti campaign bandwagon all share an inescapable feature – Penny Gaines (STOPHS2) lives in Quainton, Hilary Wharf (HS2AA) resides in Great Missenden and Jerry Marshall (Chair of AGHAST) can be found in Burton Green – all locations bang next door to the aforesaid ROUTE3 pathway – funny that, or not as the case may be?

    This week we glimpsed a view of the UK’s transport future and it is one in which railways will play an increasingly significant role as younger generations eschew the pleasures of life behind the wheel (stuck in a rolling car park) and the business community exchanges a seat on a short haul air aircraft for its high speed rail rival – if rail currently only accounts for 8% of travel journeys, just think how much investment will be required over the next few decades to prevent total gridlock if that figure becomes more like 20% – HS2 (and hopefully HS3, 4 & 5 thereafter) is integral to that long term strategy – it’s high time all of us (including Mr. Wolmar) were on board!

  • Paul Holt

    Clarification: GOBLIN is Gospel Oak to Barking Line (http://en.wikipedia.org/wiki/Gospel_Oak_to_Barking_Line)

  • RapidAssistant

    This announcement is not implying (as some are suggesting below) that the investment in the classic network has not been undermined by HS2…a pure fallacy of an argument given that what has been spent on HS2 already is chicken feed compared to what it will actually cost to build.   They haven’t even scratched the surface in the current cost estimates, by the time the inevitable project delays, cost overruns, and “bits they overlooked” are taken into account – given our lousy reputation in this country for delivering public infrastructure on time and on budget.

    To those who argue that “HS2 is all about capacity”…..well try and run that past the commuters stuck in traffic jams on the M60, or the M8; for whom this railway will do nothing, nada to make their lives easier.  Or indeed, those who used to live near a railway line that’s been cost cut and cheese pared to the lowest common denominator, or succumbed to Beeching’s axe 50 years ago.

    It’s a waste of money, and I might remind people that when a government says “we are committed to X…” doesn’t mean its going to happen.  We’ve been listening to this meaningless drivel for decades, which is why so few people vote these days.

  • Andy Philip Taylor

    The Uckfield-Lewes line was not actually closed by Beeching, it was closed much later by a car by-pass scheme in Lewes and lack of investment in the line.

  • montmorency

    Quote: “£27 billion, the money for the investment has to come from either taxes or fares” – Unquote.

    Actually, it doesn’t. The government could, with a little co-operation from the Bank of England, create this money out of nothing. See http://www.positivemoney.org/

    But until the monetary system is reformed, which might take a while, the government should look at an interesting idea suggested by Professor Richard Werner, in various places, but most recently in a letter to the FT

    :http://www.ft.com/cms/s/0/f0e325c2-84fd-11e2-88bb-00144feabdc0.html#axzz2PPGf0Q7t

    alternative link:

    http://www.ft.com/cms/s/0/f0e325c2-84fd-11e2-88bb-00144feabdc0.html#ixzz2PcqregUx

    Extract:

    “While we have this peculiar monetary system, it is high time for leaders to realise that they need to kick-start the bank credit money supply, and can do so immediately by stopping the issuance of government bonds and instead funding the public sector borrowing requirement by having the Treasury enter into loan contracts with the money creators – the banks. That would constitute true quantitative easing of the kind I called for in Japan in the 1990s, and it would create a full-blown recovery within six months.”

    Basically, with public money in a country with a sovereign currency, there need never be a shortage. The fiscal deficit is real, but the debt is completely artificial.

    Austerity is a con, dreamed up by the neo-classical economists (or those influenced by them) for ideological reasons.

  • Paul Holt

    Which is an example of the Beeching Legacy, or run-it-down-and-shut-it-down, a process only stopped in 1989 when Transport Minster Michael Portillo blocked the Settle-Carlisle Line closure.

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