When will the privatised railway ever learn from its mistakes? In the wake of the Special Purpose Vehicles concept, the SRA’s latest cumbersome buzz phrase is ‘Enhancement Facilitation Agreements’. An exasperated CHRISTIAN WOLMAR asks: Why do things have to be so complicated?
Sorry, sorry, sorry. This is going to be a rant. I apologise in advance but sometimes the madness of the whole situation on the railways gets to me. There have been several things that have tipped me over the edge towards having to be taken away by the men in white coats and I think the one that finally did it was the notion of EFAs.
Now the really clever people among you – or is it the really stupid ones? – will know that EFA stands for ‘Enhancement Facilitation Agreements’. These sexy beauties, first mentioned by the Strategic Rail Authority in June when announcing the scheme for Network Rail to take over Railtrack, are, apparently, the key to future investment projects. According to a speech to last month’s rail finance conference by James Stewart, chief executive of Partnerships UK – the organisation which promotes Private Finance Initiative deals -EFAs will set out the arrangement between Network Rail and the companies designing and constructing them.
Mr Stewart explained that the idea would be that the companies – or rather the Special Purpose Vehicles – would only be involved through these EFAs for ‘two, three or four years’ which would only involve risk in the design and build phase. Crucially, he said, to an audience which included many of the companies likely to invest in these ideas: “You can expect a higher rate of return.”
The daftness of this idea beggars belief and shows that the lessons of the failure of Railtrack have still not been learnt. It is nearly three years since the concept of Special Purpose Vehicles for the railway was first mooted and so far nothing has happened. The only one which was created, to refurbish the Brighton line, proved unworkable and collapsed along with Railtrack. The problem is that having a whole lot of companies involved in a scheme to enhance a bit of the railway adds so much complexity and so many new interfaces that the projects have, so far, been impossible to bring to fruition.
Secondly, the only reason this scheme has been devised is that if Network Rail were to contract out the work directly, there is a risk that the expenditure would count as Government spending. Moreover, today’s default mode is complexity rather than simplicity. In reality, the work will be done by the same people. NR would not do it directly, but contract it out in the way that BR used to let out big schemes.
Notionally, the SPV will be in the private sector and the SRA and ministers will be able to say: “Lo, the work is being carried out by wonderful private contractors under this whizzo scheme, isn’t it clever?” But this ignores the fact that in practice NR will have to play a key role because it is the infrastructure owner and will have to oversee the work, ensure access and so on.
Sir Alastair Morton’s notion that you could improve a section of the railway without any involvement from the infrastructure owner until its completion, when it would be handed over and paid for through increased track access charges, proved to be a non-runner. Yet the SRA seems intent on taking us down the same dead-end.
But, say all those clever fools drawing up these schemes, the really important point is that the risk is transferred to the private sector. We could shout at each other “oh no it isn’t, oh yes it is!” like in a pantomime until we are all hoarse, but let’s not bother.
The truth of the matter is that any SPV drawn up by the sort of lawyers who created the Railtrack West Coast deal – Tom Winsor, by the way, will become available midway through 2004 – will not take on much, if any, risk. If the cost overruns start to go out of control, the SPV will simply threaten to throw in the towel, and NR/SRA will have to cough up more money just as has happened in the past to both train operators and Railtrack. The prospect of having halfbuilt new bits of railway lying around the country will ensure that money is made available. When the concept of NR was first announced, a Treasury bod told me that the risk was back with the state. So why pretend otherwise, especially given that laying off this risk will cost so much?
That is the other daft side of the idea. These SPVs will be given a higher rate of return – in other words the cost will be greatly increased – for the sake of putting in money for three or four years which is especially silly when we all know, as Steve Norris, the ex-Tory transport minister put it to me the other day, “what the public sector is good at is borrowing money” as it can raise cash much more cheaply than private companies.
This sort of thing has led me to the conclusion that there are two sorts of money. Real cash which is spent directly by the Government, and pretend stuff that doesn’t seem to really count because it is paid to consultants, advisers and the like to draw up these complex schemes. This was brought home to me by an answer from Paul Godier, managing director of London Underground, in a Radio 5 programme I did in conjunction with my new book, Down the Tube which is the other thing that sent me into rant mode. When I asked him whether it was reasonable that it had cost £400m to draw up the PPP for the Tube, he gave an answer that deserves to be put up on posters at every Underground station: “It’s still frankly a drop in the ocean in relation to the prize that we are seeking to gain.”
Well, as I said on radio, “some drop, some ocean.” Such a sum would buy a couple of new hospitals or, indeed, a new train fleet for the Northern Line together with 20 years of maintenance.
EFAs and SPVs and any number of acronyms are, it seems, the only language in which the people who now run the railway seem able to speak. The world has to be complicated: partnerships, contracts, consortia and PFI are the future, they tell us. It is all about risk transfer, transparency (oh yeah, when commercial confidentiality even stops us knowing how many people are using a specific line on the railway) and private sector efficiency. In reality, it is about an ideological imperative which says that private is best.
With both enhancement on the national railway and the Underground, a much simpler and cheaper idea would be to allow the public sector organisation to specify the work – with the help of private expertise – and simply contract it out. Sure, this has not always worked perfectly in the past, but it is a tried and tested method with a much lower initial cost which can be improved over time. Evolution rather than revolution!
It is all too easy to portray people like me who question the very structure of railway as diehard dinosaurs trying to bring back British Rail. Richard Bowker sighs audibly when I pipe up at briefings to question an aspect of the structure. But the force of the argument against the retention of the split between operations and infrastructure is gaining strength and support. In my next column, I will set out why it is those who want to retain fragmentation who are the true conservatives and dinosaurs. Rant (nearly) over.
Security: a recipe for bureaucracy
In a task which combines my twin obsessions with trains and cycles, I sit on the board of the National Cycling Strategy with the aim of trying to improve the lot of cycling rail passengers. One of the constant barriers to progress is the nebulous concept of security which has reared its head in a particularly ridiculous way recently.
Bicycles, for some reason, are considered to be potential bombs, more so than cars. For example, it is impossible to park a bike around Westminster or Whitehall, though oddly there are no signs to this effect. Bikes, apparently, pose a risk because their frames can be stuffed with Semtex or their panniers filled with all manners of explosives. In fact, such incidents have been very rare and since the frames are pretty solid, any explosions tend to be pretty harmless, merely blowing off the saddle. A cycle researcher has investigated the situation and found that there have been a handful of incidents in the past 50 years, but mostly involving panniers as, not surprisingly, bombers are a bit reluctant to ride to their destination with a loaded bomb between their legs.
No matter. Bikes are considered a big risk. According to Robert Shepherdson, Doncaster Council’s rural transport officer, a set of cycle lockers in the car park at Doncaster station has been taken out of commission. The lockers were being used by a rural resident of Doncaster who used his bike instead of a car to get to the station but now found he could no longer do so. The reason given to Mr Shepherdson, after writing to his MP who got referred to the Junior Transport Minister, David Jamieson, is that the transport security committee, Transec, says the lockers are a security risk. But, according to Mr Shepherdson, “the really odd thing about this is that the cycle lockers are at the far end of the car park about as far as possible away from the railway station buildings. Yet no restrictions have been made on vehicles parked in the car park which are much nearer to the station and obviously have much greater potential for harm than a bicycle.” As he concludes, “presumably restricting car parking spaces would be too contentious even for Transec”.
Transec’s policy has, apparently, also affected lockers at Wolverhampton and Aberdeen. The trouble with this sort of nonsense is that it is impossible to argue against, because the authorities will always say they cannot reveal the criteria on which decisions are based because of ‘security considerations’.
The other apparent big risk involving stations is, of course, litter bins. Here the situation is, if anything, even dafter. Reader John Bourn has also been in contact with Transec, pointing out the rather glaring inconsistencies in policy. There are, for example, bins at Belfast Central, but not Glasgow Central. There’s none on the main concourse of Newcastle Central station but there are at the Metro station underneath. Transec’s response was that there are no litter bins ‘for security reasons’ at Newcastle but “litter bins are permitted on metro stations and at bus stations because Transec is not currently responsible for establishing security requirements, and ensuring that such requirements are complied with at these sites”. Did I hear the words ‘joined-up government’ being mentioned?
There is a wider point here. Litter bins are an important part of making stations into friendlier and more accessible places. Cycle lockers, too, have a role. This is the sort of issue which ATOC ought to be taking up very strongly with ministers and, if necessary, campaign about. But, as ever, there is silence.