It sounded like good news when Network Rail announced that it had made an operating profit of £460m for 2003/4, compared with a loss of £601m the previous year. In most boardrooms that managed such a stunning turnaround, there would be a deserved popping of champagne corks. Network Rail’s directors certainly thought so: they paid themselves their full bonuses – about £1 million last year.
But this is the crazy world of railway economics, where such numbers have to be taken with bucketfuls of salt. And it is just the latest sign of the mess that rail privatisation has made of our railways. As travellers prepare to fume in bank holiday rail delays, the simple truth is that the system isn’t working. Yet the Government continues to get a free ride: the issue hardly came up in the election campaign at all.
The latest twist in Network Rail’s fortunes is easily explained. Yesterday’s increase in “profits” – itself a strange term since there are no shareholders and most of its income comes from taxpayers – is nothing to do with what happens in a normal company, where higher sales or lower costs are the only ways of boosting the bottom line. Network Rail cannot increase sales because there is a set amount of capacity on the network. And its figures show that the annual cost of operating and maintaining the network has remained the virtually same at £3.4bn.
In fact, all Network Rail has done is to get £1.5bn more in a grant from taxpayers, via the Strategic Rail Authority – and that, not surprisingly, has made its figures look a lot better.
To be fair, there are some good signs. The decision to bring maintenance work back in house is starting to deliver benefits. The number of “delay minutes” has gone down to 11.4 million from 13.7 million. But then the number of delays should be going down, given the amount of money that Network Rail is spending. It is now costing almost £7bn per year – more than twice what it did in the days of Railtrack, which went out of business in October 2001, and nearly three times what British Rail used to spend.
And the figures are not that impressive anyway. There are still more delays than before the Hatfield train accident in October 2000. The average passenger in the UK arrives 3.5 minutes late, and Network Rail is responsible for about half of that – the rest is the operators’ fault.
The delays this weekend to train services from stations including Liverpool Street, Waterloo and Marylebone, because of engineering works, are just one example of how badly the system works. The trend these days is to “blockade” – that is, shut – lines when work is being carried out, rather than trying to do it at night, because it is cheaper and quicker.
When there was an integrated British Rail, alternative routes were often found for train services into different London stations. This is now a rarity because of the complex performance regime, which means that any operator who disrupts another’s service has to pay hugely complicated compensation. At the end of the day it is often hardly worth the bother. Moreover, train travellers at weekends can rarely now take advantage of cheap fare deals. Network Rail is supposed to give 12 weeks’ notice of any engineering works, to give operators time to advertise the right timetable, but it doesn’t. That means people have to pay full fare, often for a disrupted service.
It is all part of the lackadaisical approach that the railway has to its customers. The railway, far from being seen as an essential service, is now perceived as a nice way to travel if there happens to be trains. Otherwise, it is best to take the car.
Yet the source of all these problems is well known. The disastrous way the railway was broken up at privatisation, into dozens of different companies, stops it from being run as an effective, integrated system. Network Rail has recognised this and is creating a series of Integrated Control Centres where its staff will be able to take charge and even cancel operators trains if necessary. But there will still be disputes between operators and Network Rail over delays – indeed hundreds of people are employed to count and allocate “delay minutes” between companies.
The only sensible way forward is for Network Rail to merge with the operators, recreating the unified railway that virtually all rail managers know is the only efficient way to run a railway.
Of course, doing that would mean a company that was effectively owned by the state. So we would end up with a re-nationalised railway – although to save ministers’ blushes, they could pretend that it was still really private.
Indeed, the pretence of keeping Network Rail as an ostensibly private company already costs taxpayers money every week. Network Rail pays 0.24 per cent more on its borrowing than it would if it were a government company. That may not sound much, but on £15.6bn, means an extra £37.4m annually – enough to make a few stations a lot prettier.
Reintegrating the railways would save money in other ways too. Many of the franchises, such as Stagecoach’s South West Trains, are highly profitable, rewarding the companies for little more than making a good guess on future rail patronage. The rolling stock companies, too, make handsome profits, again for little risk other than the politicians changing their minds on services. A recent report by the think tank Catalyst suggested that re-nationalisation would save taxpayers an annual £500m on the staggering sum of £6.5bn they are shelling out for the railways just this year.
So forget Network Rail’s “profits”. The escalation in the cost of the railways is a modern scandal, largely hidden from public view. The Government hiding behind the fig leaf that this is a private industry simply allows this terrible waste of money to continue. When will ministers have the courage to admit that the system just doesn’t work – and give us back a single, national rail service?