Branch line economics pretty ropey

I love branch lines. Never does human technology blend in better with the natural environment than on a forgotten bit of railway where the embankment is overgrown and the trains merge almost imperceptibly into the scenery. But when the hard headed economist in me takes over from the romantic enthusiast for rail, I wonder if the money they cost is well invested.

And there is no doubt that they are expensive. While the structure of the rail industry does not allow for that level of transparency, train services on branch lines are subsidised by at least 50p for every pound in revenue, and mostly much more. One of the strange by-products of privatisation, which was supposed to create a dynamic, responsive railway, is that we have one that is preserved in aspic. Dr Beeching’s axe is safely locked away in the cupboard, today, because it is virtually impossible to close a railway. For a start, no government minister would dare to propose such a calumny because, unlike in the days of nationalisation, there is no organisation to act as a cut-out between the politicians and the proposal and therefore the blame would rest squarely on the politicians. Any such plan, therefore, would immediately put the minister in the firing line and, even then, the legislative hoops created in the Railways Act 1993, would lead to a huge public fuss, especially given that environmental sustainability is today’s watchword.

The surviving branch lines are a random bunch which happened to survive Beeching, either through the good fortune of happening to serve the needs of freight as well as passengers, or as the result of a local political campaign. Others may have had heavy use by schoolchildren or simply survived because Beeching just failed to spot them.

Now, in order to stimulate use of these lines, over the past decade a number of community rail partnerships have been formed, which involve bringing together various local organisations to promote the line and, in most cases, a manager is appointed with the task of boosting increasing passenger numbers. The Department for Transport produced a Community Rail Strategy last year with the aims of increasing ridership, reducing costs and improving the involvement of the local community. A fourth aim, regeneration, was added almost as an afterthought.

In response, the Association of Community Rail Partnerships was keen to demonstrate the value of its work by trying to evaluate the benefits of having a local partnership which typically cost around £30-40,000 per year were good value. The research – available on its website – suggests that there is a very positive benefit cost ratio, approaching 5 – 1, thanks to the increased ridership generated by the involvement of the various participants (I am deliberately avoiding the ghastly word ‘stakeholder’).

This may do much to convince the Department, since it is obsessed with these kinds of quasi-scientific model, but, in reality, this sort of exercise has very little real intellectual underpinning. The model used to make these calculations is based on the fact that the partnerships boost train usage and consequently get people out of their cars and has ascribed these savings a monetary value. These are calculated using a Treasury model which estimates the external costs of car use and much of those savings come from reducing congestion. However, since the branch lines operate largely in remote areas where congestion is unlikely to be a problem, then this is an inappropriate use of the model. Moreover, this type of benefit cost analysis is just about acceptable to use when comparing different models, but it is misconceived to use it to calculate the supposed ‘value’ of a partnership to boost community rail use. It might satisfy the Department’s obsession with trying to put a value on everything, but fails the common sense test, not least because it has not examined the amount of subsidy currently going into these lines.

There is, too, another problem in trying to value increased use of branch lines. The extra revenue goes to the train operator, not the line and while some of these partnership are partly funded by operators, most of the rest of the money comes from public sector sources. So public money is being used to help private companies boost their profits.

As I said, I love branch lines and have no desire to see them closed. But using dubious economic models to justify their promotion through partnership is fatuous nonsense. What is needed is a realistic attempt to analyse their true costs and to examine on a case by case basis whether they are worthwhile taking into account a wide range of factors, such as the income profile of people using them and the transport alternatives. This might be more qualitative than quantitative

If the case for them to remain part of the rail network is justified, then there should be investment to improve services and make them fit for the 21st century. That would best be done if they were locally managed and run as individual lines, rather than as part of a bigger franchise in which the economics are lost. My instinct is that very little money would be saved closing any lines, and that money would hardly be noticed in the huge rail budget anyway. But I would like a few hard facts to underpin that line based on more than an exercise designed to satisfy the Department for Transport’s bean counters.

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