Rail 606: Tories must choose between cuts and expansion

Although the Tories’ lead in the opinion polls is faltering, it is still worth examining their transport policies since it is highly likely they will have role in government after the next election, even if they do not win it outright (my prediction actually).

 They have promised to issue a policy on railways over the next few weeks, although don’t hold your breath. Chris Grayling, Theresa Villiers’ predecessor as shadow transport spokesman initiated a whole rail review with vertical integration at its heart which never saw the light of day because he could not get it past his boss David Cameron.

 More recently, however, it has become clear that the commitment to vertical integration has been dropped. The Tories are keen to avoid the sort of upheaval to the railways that they caused last time they were in government and have retreated from that position, arguing instead they would like the rail companies to work more closely together, without specifying how this could be brought about.

 The one big idea that has emerged from Tory thinking, announced at the Party Conference in September, was, of course, the promise to scrap any plans for a third runway at Heathrow and, instead, build a high speed line between London and the North. This is a remarkable turnaround for the Conservatives and on the face of it quite brave. Actually the announcement conflates two very important policies – one a cut, the other a commitment – and it will be far easier to deliver the first rather than the second.

 Certainly the policy of abandoning a third runway at Heathrow will not be too difficult to follow through. It is a proposal that is unpopular with vast swathes of Londoners, and only a section of the business lobby supports it. The Labour notion that expanding airport capacity in London is essential to keep air fares down, and therefore enabling the poor to fly, is quite simply ludicrous. It is highly dubious whether London needs any extra airport capacity if the cost of flying increases which, despite the current low oil prices, is highly likely with the imposition of environmental taxes and the inevitable return to high oil prices. The argument that the number of passengers flying in and out of the UK is bound to keep on rising because it has done so at a constant rate of around 3 per cent annually since the war is an arithmetical, not an economic one.

 Therefore not many people would shed tears over scrapping the scheme, although there is one interesting rail-related side issue. How much of the case for Crossrail, which the Tories support, is dependent on continued growth at Heathrow? Even more pertinently, there must be serious doubts over whether BAA still be willing to lob in a quarter of a billion pounds towards the cost of Crossrail if the third runway does not get built.

 While the third runway will, I am convinced, never happen, nor will the Tories’ promise to build a high speed line ever be fulfilled in the way set out by Ms Villiers. Read the small print and you will find that there is no commitment in the Tory plan for any new finance for the high speed line. Rather, she has promised that for a dozen years starting in 2015 she will take £1.3bn out of existing rail funding, about a quarter of Network Rail’s budget, in order to finance the line. The remaining £4.4bn of the £20bn cost would have to come from the private sector

 £20bn would only pay for the first bit of a line which, bizarrely, Ms Villiers wants to route through Birmingham and Manchester to Leeds, which may give a useful service in the North but is hardly likely to rival the East Coast between London and Leeds.

 Actually such details are irrelevant. Frankly, at this distance all this is as likely as a hippopotamus being sent to Mars. The costings are mere vague guesses, the route is completely unknown, the relative costs of different travel modes are in a state of flux and there would have to be a huge planning enquiry. It is easy for politicians to promise things which will happen after two elections, since they certainly will not be around in their present posts to see them through. Ministers and shadow ministers have a low life expectancy. And so many events could get in the way. However, that said, it was brilliant politics on the part of the Tories and certainly put Labour on the back foot – so expect a response from Lord Adonis which will trump the Tory plan before the next election.

 It is possible to glean a few further thoughts from Tory thinking. They have clearly said that they want less interference from the Department for Transport and have also mused that franchise lengths might be lengthened. Again, though, the details will be important. There is a problem about lengthening franchises without some way of disciplining poorly performing train operators which would amount to further interference. While no one would support maintaining the existing system, there is also a question mark, too, over whether train operators would take on the added risk of trying to guess revenue levels in, say,  15 years time, without charging a premium for taking it on.

 Nevertheless,  it is welcome that the Tories do seem to be about to come out with a strategy for the railways, something that has been absent since they went into opposition over a decade ago (remember John Redwood and rubber tyred trains, surely the nadir of Tory thinking). However, in one part of the Britain, a Tory transport policy is being enacted and there are few signs of anything positive. 

 That area, of course, is London where Boris Johnson has now had six months in which to impose himself as mayor after eight years of Ken Livingstone’s administration. It is only over the past month that anything concrete has emerged and the signs are bad. First Mr Johnson scrapped a whole lot of proposed transport schemes including several rail ones such as the Cross river tram linking Peckham with Camden Town, the extension of the Croydon Tramlink to Crystal Palace and the Docklands Light Railway extension to Dagenham Dock. Mayor Johnson’s argument was that these schemes were unfunded and therefore there was no point spending money on working them up but these schemes represented a hope that things would get better. Moreover, the DLR has been shown to be excellent value for money, with a series of previous extensions all coming up on time and on (very modest) budget.

 Then Mr Johnson, announcing the funding available to the boroughs from the mayoral budget, cut back on the cycling budget in favour of money to rephase traffic lights. Various schemes to improve junctions in favour of pedestrians have also gone out of the window. Most important, he appears to have ditched the accepted hierarchy of road users, which is to favour pedestrians, then cyclists, then public transport users and finally motorists. All modes should be treated equally, he argues, which is to accept inherently the present position that favours car users. This bodes ill for the view that he is serious about continuing Livingstone’s strategy of trying to shift Londoners onto public transport, both rail and bus.

 Rather than a clever cull, this looks like old Tory thinking. Kulveer Ranger, Mr Johnson’s transport adviser, rather gave the game away when, in a recent speech, he said that the administration was only going ahead with schemes to which it had been committed by the previous regime. That does suggest a total absence of strategy or vision.

 Mr Johnson has shown remarkably little backbone and an ignorance of strategy because having a series of unfunded schemes on the stocks is a vital part of negotiating for funds from central government. Without them, there is no hope of any major improvement for decades ahead because if money suddenly becomes available, as it might in the downturn, then the cupboard is bare. That was bad politics, as well as being a pointer to true Tory thinking. Theresa Villiers, or her successor, will need to be very much stronger once the Tories are in power to resist similar pressure or else there will be rocky times for the railways.

 Boris Johnson has real power and has made a series of executive decisions that reflect his policy. Ms Villiers is still in opposition and her words are just that. She has given some impressive speeches recently and seems to have a real commitment to her brief that was not apparent in her early days in the job. She is doing what transport politicians need to do, which is to articulate big ideas rather than, as Boris has done, retrench.

 However, transport is an area which could be ripe for Tory cuts, in the same way that Boris has wielded the axe. There may be a gaping hole in rail finances by 2010 if the recession and the swingeing rail fare increases bite deep into passenger numbers. Train operators may be screaming for more money or throwing in the towel, which will blow a hole in Network Rail finances. Railways need more subsidy, not less, in a recession.

 Given that the Tories have now said that they are abandoning the promise to stick to Labour’s spending plans, the key question is this: if they win the next election, will they adopt the Theresa Villiers or the Boris Johnson approach to transport infrastructure and investment on rail?


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