Rail 485: Orwell’s spectre stalks railway as history is rewritten

It’s more like 1984 than 2004 as senior railway figures criticise a structure that only months ago they were defending. CHRISTIAN WOLMAR wonders what’s changed.

Sometimes events unfold so thick and fast in the rail industry that it is impossible to draw together the threads in a single fortnightly column.

Over the past two weeks we have had: further developments on the rail review, with much contradictory speculation about vertical integration; the Central Railway freight line project falling after the government refused to back the private initiative; the publication of Network Rail’s business plan which sets out spending of £6.77 bn for next year; and the launch of the new Anglia franchise with the laughable name of ‘one’. There has also been a rumbustious and intemperate Transport Select Committee report on the future of the railways.

The committee started its deliberations back in the autumn when we were in a different world.That was the planet on which the structure of the railways was set in stone, and the Strategic Rail Authority issued a statement welcomingNetwork Rail’s decision to do its maintenance in-house with the risible response that it was “the last piece in the privatised jigsaw.”

Gwyneth Dunwoody, the formidable chairman of the transport committee who is clearly in the ‘bring back British Rail’ camp, delights in pointing out how the government’s position changed during the course of the inquiry. In paragraph one of the conclusions, the report points out that Alistair Darling and Richard Bowker “both assured us that the structure of the industry was not gong to be changed.” Then, seven paragraphs later, mischievously, it says: “We are delighted that the Secretary of State has changed his mind since he gave evidence to us and has decided to review the structure of the railway.”

Richard Bowker, too, has clearly seen the light.When I interviewed him last autumn for RAIL, he told me that in terms of structure “we were broadly where we need to be.” He added: “The reason why the costs have gone up is for multiple reasons, inefficiency, waste, naïvety, lack of experience, confrontation and other issues. You can think of loads of reasons why the money’s gone up. I do not believe the structure of privatisation is the cause of the cost rises.”

Yet, in March, he told a conference on the rail review held at the Department for Transport that the current structure was ‘confusing’, that there was a phenomenal amount of process that was expensive and timewasting, and that the biggest difficulty “is the splitting of the specification role between the SRA and ORR [the Regulator]” which needed to be fundamentally reviewed. Presumably by giving all the power to Bowker!

It is not only Mrs Dunwoody who is enjoying this enlightenment. For a couple of years, I was perpetually like the man in the HM Bateman cartoon who asked the wrong question.Whenever I raised the issue of the structure of the industry in this column or elsewhere, I would get quiet ‘tut tuts’ from senior industry figures suggesting I was barking up the wrong tree. (There were exceptions – a couple encouraged me to continue complaining.)

Now there is almost an Orwellian atmosphere in parts of the industry. In 1984, Winston’s Eurasia swings arbitrarily between war and peace with the two other blocs, Oceania and Eastasia. Overnight, history books are rewritten to show that there was everlasting friendship with the new ally and permanent hostility towards the old one. It is a bit like that today in the rail industry with people who defended the current structure of the industry to the hilt now accepting that it was always dysfunctional and stressing they always knew change was needed.

Within that context, Alistair Darling deserves praise. At his first public appearance as transport secretary, I asked him about the structure of the industry and he basically gave a “we are where we are” answer.Now, he says, by last summer he had realised that the structure was flawed and went to ‘his boss’ who accepted the need for the review.

But he must, by now, be realising that he will have to show Teflon qualities as well developed as those of said boss if he is to emerge from the process unscathed. (Actually, there is much talk inWhitehall circles of a big reshuffle in July which may well get him off the hook, as his successor would have to implement whatever solution emerged. Moreover, since the DfT has reportedly obtained parliamentary time for new legislation, this process may well take a long time, by which time Darling’s tenure at Transport will have been forgotten.)

While on the subject of the review, the difficulties of tinkering about with the structure – and hence the conflicting leaks about the government’s intentions – are becoming more apparent daily. Take vertical integration, which has now become respectable and no longer, as was implied previously, considered to be ruled out at the outset by European legislation. At the DfT meeting mentioned above, Graham Eccles of Stagecoach put the case for joint ventures betweenNetwork Rail and train operators to run integrated railways. Kim Howells, the junior Transport Minister, even suggested that, indeed, the SouthWest Trains area might be the subject of such an experiment.

Some senior NR managers, however, are not so sure. One outlined the difficulties to me: for instance, it would be difficult for such a joint venture to raise capital as cheaply as NR; moreover, what about the use of equipment which was needed in other parts of the network – who would be in charge of allocating it?What would be the budget for infrastructure in that region, and who would determine it? And so on.

OK, so then vertical integration becomes virtual integration, the eight integrated control centres suggested by Network Rail. But here, too, there are problems. John Armitt, ofNetwork Rail, at the same meeting, made it clear that his managers would be in charge.That’s not the way the operators see it. They feel they should be in control except in an emergency when they would abide with NR’s decision, but what, in that case, would happen to the performance regime? Clearly, the SRA cannot fine train operators for not running trains when they were ordered to cancel them by another company.

Take another issue. Darling wants a single point of accountability for the railways. But that would involve massive upheaval and treading on a lot of toes. The most sensible measure would be to merge the SRA and NR, but that has been ruled out because the debt would then fall directly on the government.

In fact, the more you look at the detail, the clearer it becomes that the only realistic solution is the one that Dunwoody’s committee has come up with: the creation of a single rail agency in charge of the industry. But that smacks far toomuch of recreating British Rail to be politically acceptable.

While Darling deserves congratulating for his about-turn on the structure of the industry, the decision not to give Government support to a bill to create theCentral Railway – the plan to have a freight-only line from Manchester to the Channel Tunnel – is a shameful episode, exposing the failure to think ‘out of the box’ by our policy-makers. Admittedly, it was not really Darling’s decision but that of the Treasury but the reasons given should send a tremor of fear down the backs of anyone seeking to obtain support for any of themajor rail projects currently on the stocks, such as the East London Line, Crossrail or Thameslink 2000, which will all require private sector involvement. Indeed, the same flawed thinking led to the rejection of Virgin’s plans a few years ago to build a parallel line on part of the East Coast Main Line for a very reasonable £3bn.

The statement said that whileCentral Railway claimed it would require no subsidy to create its railway, once ministers had agreed to promote the scheme “the government could not escape pressure to intervene” if the finance was not forthcoming. Ministers seem to be saying that ultimately it is the backer of all such privately funded projects and, if that is the case, it is unclear why the government goes to all the trouble of involving private sources of capital?

This is strange reasoning which, taken to its logical conclusion, would suggest that any private backing of such infrastructure requires implicit government backing. Does Gordon Brown really want that? The project would have taken some five million lorry journeys off the road annually, an extremely popular measure both for rail supporters andmotorists who would be freed of having to fight their way through queues of juggernauts.

As for the other developments, comment will have to wait for another day. But let me end with a prediction. Network Rail’s spending is at its height in this new financial year at a staggering £6.77bn for running the existing railway with barely an enhancement apart from theWest Coast Main Line. Its business plan suggests this will tail off dramatically over the ensuing four years. Unless Darling or his successors get the structure right, those cuts will never be achieved andNR will continue to be a fantastic burden on the British economy. As for ‘one’, let’s hope it soon has as added to the front.

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