Railways are back on the government’s books

 

 

 

The news, slipped out just before Xmas, that Network Rail’s debt will simply be lumped in with the government’s in September 2014, is an occasion for a bit of gloating as well as of concern. This received surprisingly little attention even though my sources say that the Department for Transport was taken aback and is extremely discomfited by the decision.

The arrangement by which the debt – now £30bn, soon to be £50bn – was kept off the government’s books was always one of those ridiculous artifices that plague the way that politics is conducted and make the functioning of the state so obscure and incomprehensible for the ordinary public. These games are costly, too, as witnessed by the continuous revivals and reinventions of the PFI/PPP schemes that will leave a terribly expensive legacy for our children and grandchildren. The debt has mounted so rapidly because it reduces the notional amount of subsidy going into the industry each year, and is therefore another part of the whole artifice.

Network Rail should, of course, have simply been renationalised, a far simpler and more accountable alternative to the complex arrangement of creating it as a ‘company limited by guarantee’ with no shareholders and a debt guaranteed by government. However, Gordon Brown vetoed the idea which was favoured by the then transport secretary, Stephen Byers.

For the most part, I think this is a sensible rationalisation but there are concerns. Lumping a couple of percent onto the deficit looks bad politically and the Coalition is already well behind in its efforts to reduce the debt. So this may definitely result in greater scrutiny of the rail investment plans. They may well make an easy target for quick cuts.

However, on the other hand, the very complex mechanism by which rail investment levels are determined with the Office of Rail Regulation acting as a kind of arbiter and the government producing detailed figures for the Statement of Funds Available offers a level of protection against attempts to rein back spending quickly. Moreover, rail investment can be presented as infrastructure spending, which is seen in government circles as a Good Thing and that makes it less likely it will be a target for cuts.

The wider irony, of course, is that now, 20 years after privatisation, the government is so intricately involved in virtually all aspects of the railway  – fares, investment, timetable, rolling stock etc. But I have spent much of the last couple of decades pointing out that an industry dependent on subsidy can never be free of government involvement.

 

 

 

 

 

 

 

Shares