Rail 770: it’s all words at election time

Don’t ya just love politics? It is especially fun at election time, as a couple of examples I will outline in this column show. Indeed, sometimes the self-interest of the politicians is so naked that it is a wonder they don’t appear starkers on TV. Take the announcement that, at last, there is a firm commitment to replace the much hated Pacers. Well, not announcement really but the information in the Invitation to Tender for the renewal of the Northern franchise says that by 2020 the 102 Pacers will be replaced by 120 new ‘non-electric’ (whatever that means!) new units.

Now, as regular readers will know, there has been all sorts of shenanigans over this issue. The Tory bigwigs, David Cameron and his Mr Bean lookalike Chancellor George Osborne grandly announcing that the Pacers would go without explaining precisely how and when in the sort of off the cuff announcement that politicians love but which make their civil servants splutter into their breakfast coffee. And this one certainly had them choking on their croissants, too, because, like the note famously left by a Labour politician when he left office for the 2010 election, there is no money.

Well certainly that is what Philip Rutnam the permanent secretary at the Department of Transport feels. The permsec, as they are known, have a key role as ‘accounting officers’ which means that, according to the law, they are the ‘civil servants whom Parliament holds directly to account for the stewardship of resources within his department’s control’. So, if they feel that ministers are behaving irresponsibly by making commitments that are not properly funded, then they have a duty to write to the Secretary of State warning him or her of the fact.

Now tucked away in a bundle of papers issued at the same time as the Invitation to Tender, there is a fascinating exchange of formal letters between Mr Rutnam and the soon to be departed Patrick McLoughlin, the secretary of state. Rutnam clearly thinks replacing the Pacers is a bad idea. In his letter, he points out that it is his duty to ensure value for money and by the standards of the weirdly name WebTAG procedure for assessing projects, the idea ranks well below the threshold in terms of its benefit cost ratio.

I have written many times about what a ridiculous procedure this is, but rules are rules. To get Department approval, normally a score of 2 to 1 is considered necessary but in this case, according to Rutnam, the new trains would only score 0.35 if considered over a 30 year view and just 0.12 if only the life of the franchise is considered (though that would be pretty daft thing to do since the trains would expect to last 30 years, four times the length of the franchise). Nevertheless, 0.35 is nowhere near enough (just as, incidentally, HS2 fails this test without all sorts of fiddling.

Rutnam explains that part of the reason for the lousy benefit to cost ratio is the cost of bringing forward the introduction of the new trains to 2020. He recognises that this is made necessary because disability requirements come into force but argues, instead, that there are cheaper alternatives, such as revamping the Pacers. His second objection is that ministers are by-passing the market to impose their solution to the rolling stock issue, rather than letting bidders come up with innovative solutions to the needs of the North

On the issue of letting the market determine what rolling stock is needed, this is typical neo-liberal nonsense. If the market really determined what was needed, then the private sector would be able to buy and pay for the trains when, in fact, this is impossible because the railways in the north are heavily subsidised. Therefore, of necessity, the paymaster – the government – will want to determine what is being bought and this idea of franchisees, who are only temporary operators, determining rolling stock choice is simply impractical – that’s why we ended up with the ghastly Pendolinos.

I’ve met Rutnam a few times and he is fiercely bright, extremely knowledgeable and the sort of permsec that illustrates all that is best about the British civil service. However, in this case, I think he has got it badly wrong, not understanding the realpolitik behind this which is that whatever the cost, whatever the practicality, people in the North need to be shown that they are being loved just us much as us Londoners. It is all very well counting beans but the hopeless WebTAG procedure is just a mechanistic calculation using a system of dodgy formulae that should not be used as the basis for policy formulation. Technically, Rutnam may have been forced to write this letter, but it might have been sensible for him not to bother as McLoughlin could not have been pleased.

At the end of the day, non of Rutnam’s objections mattered. McLoughlin simply batted away his letter, replying that the negative connotations of the Pacers outweigh any argument that they should be retained: ‘I do not consider that the continued use of these uncomfortable and low quality vehicles is compatible with our vision for economic growth and prosperity in the North’. Indeed, well spoken sir.

As for the market argument, McLoughlin says that the franchising process should lead to savings. It is a source of enjoyment, to someone like me who has less faith in the magic of the market than most of our politicians, to see a Tory simply rejecting a fundamental part of his own ideology.

In one sense, all this was a formality. The permsec was covering his back in case the there was a hoo-ha about the Pacer replacement programme at a later stage. However, it does neatly encapsulate the location of the boundary between politicians and the civil service, and, more important, shows that ministers ultimately can push through what they want – as it should be given they are elected. It is, in a way, too, an acceptance that the whole convoluted WebTAG process is a waste of time – and a costly one at that since expensive consultants spend hundreds of person hours determining these meaningless benefit cost ratios.

Nevertheless, it is a rare occasion for a permsec to go to the lengths of writing a letter such as this – the first time it had happened for more than a decade in the Department for Transport, and five years since any permsec had done it – and shows just how determined the Tories (the coalition having all but dissolved) are to ‘do something for the North’ – watch for more HS3 announcements in the coming weeks.

On the Labour side, there has been Gun and Fames (as those of you who remember Frank Dickens’ Bristow cartoon strip will know was his employer) with Michael Dugher’s announcement that the franchise system is broken and must go, infuriating my esteemed editor. Dugher said: ‘privatisation was a disaster for the railways. I am adamant about putting the whole franchising system, as it stands, in the bin’. He stressed he did not want a return to the BR days of the 70s and 80s, but ‘we’ve got to make the starting point that privatisation was a mess, it was botched’.

This goes far further than existing Labour policy which suggested only that a public sector train operator would be allowed to bid for each franchise and that there would be some kind of franchise review, if the party won the election. Rather amusingly, Dugher’s remarks were quickly played down by Labour’s own press team which rapidly rang round the Fleet Street stables because they were worried that the horses had been frightened.

Actually, I think Dugher probably would like to get his teeth into rail franchising rather more deeply than his predecessor but clearly for the most part he was playing to the gallery. Rail renationalisation frequently comes up as the second most popular potential policy in surveys of Labour party members after NHS reform. It is popular, too, among the general public and is, I reckon, one reason for the recent Green surge. So this too, like the Pacers decision, is politicking at its most naked but the key point is that what is said and done in the run up to elections is very likely to have an impact afterwards. That’s why the next few weeks are absolutely vital and so despite all the blather and bluster keep your ears open

 

 

 

 

Another dodgy sell-off

 

Ideology rules again. The sale of the 40 per cent of Eurostar owned by the government was carried out at precisely the wrong moment. Eurostar is experiencing its most dramatic change in its near 20 year existence, with the advent of new trains and the introduction of new destinations. Yet, these have not yet come to fruition and there is still great uncertainty about what destinations the company will be serving. So no sensible minister would have agreed to its sale, except, of course for the short term aim of obtaining a capital receipt (which represents less than one per cent of the national debt) and for the ideological reason of disliking any business being state owned (though of course the French government which owns 55 per cent of the company through SNCF has no such scruples).

The £750m represents about a fifth of what Eurostar has cost taxpayers over the years, including of course the donation to the company of the trains as part of the original deal to build the Channel Tunnel Rail Link that collapsed in 1998 and led to a completely different contract not dependent on Eurostar revenues. In other words, Eurostar has now been virtually given away just at the time when, with a bit of patience, it might have become far more valuable. Let’s hope the National Audit Office is inspired to give this deal a thorough investigation after the election.

 

 

  • Eurostar latest profit was £50m and the Govt’s stake was 40%(?). If it was all paid out as a dividend. £20m annual return on a £750m investment is pretty mediocre.

  • John P Hughes

    With the Tories in office by themselves, albeit with a narrow majority that by-elections will eat into, currently only the Conservative manifesto ‘promises’ are relevant, as regards railways in England. And there doesn’t seem to be anything striking in their programme. McLaughlin is back as are most of the junior Ministers at DfT. The one Conservative rail ‘promise’ that the public will remember is the decision already announced to scrap the Pacers…. but it appears, only in the North of England. The Pacers in service in the Welsh Valleys and some Devon and Cornwall lines will carry on – or will they?

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