Rail 870: My letter to Keith Williams on what Rail Review should examine

Dear Keith,

 

I wish you lots of luck in your endeavour to sort out Britain’s railways. There will be many obstacles placed in your way, not least by government, so you will have to be courageous enough to plough your own furrow. I will try to help by setting out a few principles and thoughts learnt over the past quarter of a century on writing about railways that may be useful

Let me start off, though, by picking up on a point you made in your recent interview in RailReview which I think, to put it bluntly, is fundamentally mistaken. You said: ‘Ultimately it is the taxpayer that is subsidising the railway and not all taxpayers use the railway’. This is the type of narrow thinking which has guided the economic system known as ‘neoliberalism’ which has resulted in the terrible political situation that the country faces today. I hope this was just a slip of the tongue rather than a real reflection of your understanding of the role of the railway in society.

First, you have used the word ‘subsidy’. Yet, would you use that in the context of roads or indeed the education system? It is an old canard that the railways are subsidised when other social provision is considered as investment. Please don’t repeat that error.

Worse, though, you have gone on to say that ‘not all taxpayers use the railway’. Well, they may not sit as passengers on it, but they certainly benefit from it and therefore in a wider sense have used it. I have never driven on the M9 but I may well have benefitted from it as the whisky in my drinks cabinet or the shortbread biscuits I devour probably travelled along it. Similarly, the 1,000 freight trains per day on the railway probably mean that everyone benefits in some way or another from the cheaper and more environmentally sustainable transport that the railway provides. And the 20,000 passenger trains mean that millions of extra cars are not cramming onto the road network.

Those irate motorist berating the railways investment programme as a waste of money on shock jock shows simply fail to understand the basic economic notion of ‘externalities’. So if you are serious about producing a report that is supportive to the railways, do not start from the position that it is a subsidised industry that benefits only a small proportion of the population, or you may be mistaken for that ghastly crowd from the Institute of Economic Affairs.

Rant over, so here are ten helpful suggestions for ways to define your review. First, don’t think franchise system is the immutable. I have been posing the question of ‘what is franchising for?’ since the first days of privatisation and I have failed to get a coherent answer. Is it a way of offsetting risk? Of getting the best out of the private sector? Of saving taxpayers’ money? Of making the railways more efficient? Of attracting private investment? Of improving the passenger experience? You will struggle to answer any of those in a positive way. Remember, too, that profit making companies are guided by their need to make profits and any advice they provide you must be viewed in that context. The hostility shown by Stagecoach and a few others to the public sector is matched by the RMT’s hostility to the ‘privateers’ and should be viewed in that context.

Secondly, reduce the number of interfaces. I am sure that many of the people you have already spoken to on the railway will have complained about the bureaucratic processes that were introduced as a result of privatisation and which are a major cause the high costs of running the network. While trying to monetise and contractualise every relationship on the railways may seem like making sense in business terms, it has, in fact, only served to make the system far less efficient and to add costs at every stage. Outsourcing should not be the default position.

Third, don’t be blinded by technical solutions. Sure, in some respects the railway has been slow to adopt new technology but there are good reasons for that. There is a lot of sunk investment in the railway and change is therefore expensive. The recently departed chief executive of Network Rail, Mark Carne, rather got distracted by the lure of the digital railway.

Fourthly, ownership is a bit of a distraction. Don’t get me wrong. I think the railway would function best as an arms length organisation owned by the state. I see no benefits to the ideologically driven total privatisation created by the Major government a quarter of a century ago where nothing was allowed to remain in the hands of the state (except that, ironically, the Department for Transport has ended up running the railways). However, nor is public ownership a panacea. The key is to test any private sector involvement along the lines of: 1) Does it offer genuine new money or particular expertise? ; 2) Is the added complexity worthwhile?; and crucially, 3) is the reward commensurate with the risk?

Which brings us neatly onto the fifth principle: The Department for Transport must not run the railway. Getting the strategic decision making and the day to day operation of the railway away from Marsham Street is an absolutely necessity. The logic, therefore, is to establish a fat controller. That could be a relatively small organisation with a limited but crucial role, or it could be part of a wider remit of a new railway organisation that may incorporate elements of lots of existing ones – Network Rail, the Railway Standards and Safety Board, the Rail Delivery Group, the Office of Road and Rail, the train operators etc. Just from the extent of this list, it is all too obvious there are too many cooks in this particular broth.

My seventh would be to establish freight’s role on a more stable basis. Freight is in decline but there is a huge public appetite for seeing greater use of freight on rail. Yet, as I have written numerous times, there is no coherent freight strategy and the needs of the industry have long been neglected.

Then there is the thorny question of devolution. There is a rather seductive argument that devolution per se is a good thing and that anyone arguing against it is some kind of Stalinist. Do not be taken in by that argument. Of course, there should be greater autonomy for regional government in running our railway and Network Rail routes should be empowered. But we live in a very centralised country and regional structures are weak or non existent. Trying to get all the local authorities in the North in one room, let alone making any decisions is like herding cats. Devolution is not the answer to every problem and sometimes can create new ones. Adhering to strict standards that are the same across the board and allowing national bodies to make decisions for the whole network may mean that devolved decision making has to be constrained.

On fares, be brave. Ignore the requirements to be revenue neutral or whatever, and instead try to set some guiding principles. There is no point tinkering about with the system as it needs radical reform. It is, though, a whole agenda in itself and perhaps you may just want to leave it alone.

Finally to return to my initial rant, Remember there is so much more to the role of the railways than merely carrying 1.5bn passengers per year. It is a fundamental part of our infrastructure, part of our social fabric and must be viewed as such.  As I said, I wish you all the best.

 

Mystic Wolmar lives on

 

Our calamitous Cassandra has received a few suggestions for prospects for 2019. And he has even developed a few ideas of his own. So here we go, but I’m afraid that national politics inevitably has intruded:

 

  1. Chris Grayling will not be in his current job
  2. The Williams report will be radical but will be quietly shelved
  3. Passenger numbers will flat line
  4. The pressure on fares rises will bear fruit and the rises for 2020 will be below inlfation
  5. Brexit will be postponed
  6. There will be no general election but there will a new incumbent in Number 10

And my usual football prediction:

 

  1. QPR will reach the play offs but lose in the final

 

 

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