Rail 791: Network Rail smoke and mirrors – and predictions for 2016

I sent out a tweet the other day when it was revealed that the Scottish government’s debt was at risk of reaching £50bn by 2020. My tweet reminded my followers that this was an oddly familiar number since it also represented Network Rail’s projected debt at around the same time.

I am sorry to hark on about this figure, but it does highlight the completely insane situation of the railways in this country. £50bn represents more than £800 per person in the UK. Or as reader Barry Vaughan put it in a letter in response to my mention of the figure in Rail 788, it could ‘pretty well relay the entire network of railways as existed before 1960 from scratch’ He asks, quite rightly where on earth has all that money gone.  It is the same cloud cuckoo as football. The owners – businessmen from Tata and Air Asia – of my football team, QPR, recently wrote off £180m of accumulated debts run up through their effort to try to get the team to stay in the Premier League. Imagine if that money had been spent usefully on, say, providing a medium size town in Africa with a clean water supply.

Well, I feel somewhat the same about Network Rail. It has become a money pit, and was a bottomless one until, fortunately, it was reclassified as a government company and can no longer use its ‘credit card’ to run up endless debt that will never be paid back. While the railway bosses I talk to complain about the limitations that this has imposed,  personally as a taxpayer I feel a sense of relief and as a commentator on the railways I feel that this may stave off the industry from a future disaster.  It is hardly surprising that the recent report by Colette Bowe concluded, in her rather stilted language, that the change ‘has imported a new financial discipline on Network Rail. Well about bloody time, too.

It would, therefore, have been comforting if either of the two reviews into the industry published late last year had addressed the fundamental unsustainability of the present structure. As I wrote in Rail 788, the Hendy review used smoke and mirrors to keep much of the enhancement programme on track through extra borrowing and some sales of assets, though details were scanty.

The other report, by Colette Bowe, one of those serial quango committee members, was supposed to assess whether there were any flaws in Network Rail’s procedures that led to the debacle. She certainly found some. In her summary, she wrote:  ‘The definition of organisational responsibilities between the Department, Network Rail and the ORR…. were unclear, lacking the relentless focus and clarity required for the design and execution of a major infrastructure programme’. That is pretty basic stuff. Investing in the railways is Network Rail’s day job, its core task and it seems remarkable that it had not worked out its relationship with these other ‘stakeholders’.

What is odd, though, is that she then lashes out at the Office of Rail and Road, rather than at Network Rail, suggesting its role in enhancements should be reviewed. That, it seems to me, is shooting the gamekeeper rather than the poacher.

What is astonishing, however, is the fact that Bowe was not given the opportunity to look more widely at the structure of the railways. Her terms of specifically excluded both ‘the statutory framework for the rail investment process’ and the selection process of schemes, which clearly meant she was operating with one hand tied behind her back.

The lack of coordination between the investment process and the needs of operators was, of course, highlighted a decade ago when new trains ordered for Southern and SouthEastern could not be put into service because there was not enough power to operate them. Thankfully, at the time, there was the Strategic Rail Authority to sort out the fiasco by ensuring that the power was provided quickly. Now, though, we have a much bigger fiasco caused by the delay in electrification which means that the InterCity Express Programme being built by Hitachi trains may well have to sit around for years before they can be put into service. The contract was written in such a way as to ensure that Hitachi was obliged to provide the right amount of train paths every day. The corollary, though, was the company would get paid even if the trains were not needed. So not only will the trains be sitting idly and possibly rotting in a depot somewhere, but the operators – and consequently the Department and consequently us, the taxpayers – will be paying Hitachi for their use.

Bowe, herself, gives another example of waste caused by the fragmentation of the railway. She cites the plans to improve the TransPennine routes through electrification and which seemed – and that is the correct word as there was doubt about it – to include plans to boost capacity into Leeds and Manchester. However, the ORR appeared to only consider the electrification and not the increased capacity, because there was ‘a lack of clarity of scope and communication’ which led to ‘unclear outcomes’. If there had been a single guiding mind, and preferably one organisation involved in this decision making process, such silly situations would not arise.

The best such recent example, which presumably was also outsider Bowe’s remit, is the situation around the station at the Ricoh Arena, Coventry’s football ground which is also used by Wasps rugby club. This £10m new station was part of a £23m upgrade of the railway between Coventry and Nuneaton and was completed in the middle of last year. However, not a single train has yet stopped there and according to National Rail Enquiries, no such station exists.  According to London Midland, there is no rolling stock available to operate a shuttle service between Coventry station and the Ricoh Arena apart from a single 153 DMU with a capacity of at best around 100. Not much use for a football crowd. The station was built on the initiative of Coventry and Warwickshire councils, with a third of the cost coming from Europe, but they cannot specify a train service. Clearly not enough discussion took place beforehand and while perhaps eventually trains between Coventry and Nuneaton will stop there, it is unlikely that people coming to the stadium for matches will ever be accommodated. It is just like the situation at Drayton Park, next to Arsenal’s Emirates stadium, which is always shut when there are matches because the local trains would not be able cope with the demand and specials are not allowed to go there.  Yet the Emirates is only a decade old and its construction should clearly have included a plan to improve the station. Another example of disjointed thinking.

So yet again, just as with the West Coast franchise scandal, another series of reviews into the rail industry go through without any proper consideration of the fundamental issues.  No real solution about the £50bn debt is being discussed. Moreover, everyone knows that a fragmented railway is a sub-optimal one, to use business speak, but no one dares ask the right questions. Watch out for the next crisis in this long series, which actually is one of Mystic Wolmar’s predictions for 2016.

 

 

Mystic tries again

 

Fresh from yet another humiliation, Mystic has purchased a new Crystal Ball (from trendy retailer Oliver Bonas) and is hopeful that he can improve on his record of just 20 per cent success in 2015.

So here goes:

  1. As mentioned in the main part of this column, a financial crisis in the industry is inevitable. It may not happen in 2016, though I feel it will, but will certainly occur before the end of Control Period 5 (2014/9). The figures simply do not add up as relatively generous franchise deals, with lots of goodies for passengers are signed up, while savings are expected of the industry. So watch for real cutbacks in maintenance and renewals, leading to more temporary speed restrictions, and a squeeze on later franchise deals.
  2. Wonderful as they are, the Underground trains refurbished by Vivarail will not find a market in the UK simply because recycled carriages from London will be deemed politically unacceptable in the North.
  3. There will be a desperate scrabbling around to find depot space for the completed IEP trains which will sit idle for months if not years.
  4. My political prediction is that Sadiq Khan will be elected mayor at the May London Mayoral election.
  5. In terms of personnel, Mark Carne the CEO of Network Rail will survive despite criticism as will Richard Price the boss of the Office of Road and Rail. The one whose future, I reckon, is bleak is the affable Patrick McLoughlin, the Secretary of State for Transport who will be put out to grass not so much for the various debacles in the industry but to allow some whippersnapper to take his place.
  6. And finally, permit me a football prediction: QPR will lose out in the play-offs after a late run and sadly Arsenal will pip Leicester for the Premiership title.

There’s a round ten predictions there, so will be easy to score next year. Hope you enjoy the columns this year as I will be celebrating 21 years of writing them!

 

 

  • Paul Holt

    CW’s columns (and subsequent debate) have shaped and honed my own opinions, and probably many others’ opinions.

    A more general question to that considered above is What Is Taxation For? Answer: Defence of the Realm and public services. The problem is that the link between taxation and the provision of services has been broken such that taxation is now seen as an end in itself, with constant searching for the next cash cow, while the bucket of taxpayers’ money is seen as bottomless and can be squandered in any and every direction. This is a theme CW could develop.

  • Peter

    Sadly your analysis is all too true.

    This plethora of reviews all miss the essential point: that the structure of the industry is fundamentally flawed – far too many interfaces and far too little coordination. As a matter of fact, it is almost a miracle that the service it provides is as good as it is.

    As for Network Rail itself, the normal operating mode for this sorry organisation is organised chaos. I have never personally known it to bring in a project that: 1) Delivered what operators needed 2) Was on budget and 3) Was on time.

    No surprise really when you look at its top-heavy and out of touch management, of whom +very+ few these days know anything about running a railway.

    No wonder it has run up enough debt to sink a small country, with no idea how to pay it off!

    As for the future of the industry I am not hopeful. At some point in the no too distant future there will be another recession, and when this happens the government will be scrabbling for money to run the NHS etc.

    When this happens, rail subsidies “for city bankers to get to work” will suddenly look very unattractive politically and I would not be surprised it some big cuts are on the menu.

    For historical parallels, think about what happened in the aftermath of the Modernisation Plan – another period in which vast sums of money were spent to minimal effect. By 1961 we had a certain Dr Beeching at the head of the British Railways Board…

  • Christian Schmidt

    1. “squeeze on later franchise deals” – like the Wales & Borders franchise. This is an ideal candidate for a squeeze because it can be blamed on the hapless Welsh Government, and the locals should be used to it anyway because that is exactly what happened last time.

    2. “recycled carriages from London will be deemed politically unacceptable in the North” – I agree.
    “Underground trains refurbished by Vivarail will not find a market in the UK” – I disagree, they will go to the Valleys.
    (There is a CILT presentation in Cardiff by Vivarail on 25 Feb.)

  • Paul Holt

    Coming into April, MW prediction 6 is looking a bit sick.

  • LondonCalling

    I’m really hoping Leicester do it.

    As for NR – well only when coordinated planning and operational control for nationally vital infrastructure come back into fashion reaching across both capital and revenue investment will we get joined up thinking and avoid farces like the Coventry football stadium. This is a big political issue that isn’t really addressed and means ditching a lot of neo-liberal dogma. It isn’t communism but common sense.

  • Paul Holt

    Coming into May, MW prediction 6 looks even sicker.

  • Paul Holt

    But big tick for MW prediction 4.

  • chantelleussery

    my company was searching for a form earlier this week and used a web service that hosts 6,000,000 forms . If you want it too , here’s a https://goo.gl/k6IfII.

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