Rail 636: Tory and Labour policies converging

Theresa Villiers, the shadow transport secretary, has done her homework and come up with a well-informed speech about the Tories plans for the railways. Given to a political thinktank, Politeia, earlier this month, the speech contained nothing startlingly new but fleshed out details of Tory intentions if they are elected.

  The centrepiece was, of course, support for a north-south high speed line, about which more below, but there was also some elaboration of their ideas for the rest of the network. Broadly, they can be summed up as longer franchises, a lighter management touch from the Department and stronger control over Network Rail‘, all of which are about ‘putting passengers at the heart of the way that the railways are run’. That last bit is, of course, meaningless political guff especially as the speech did not mention the aspect of rail travel that passengers care about most, fares.

 There does, moreover, seem to be an overall intellectual incoherence about these proposals because the Tories are saying they want more regulation of Network Rail but less of the private train operators. Passengers on, say First Capital Connect, the current nightmare franchise – an accolade which in the couple of years has been passed around FirstGroup franchises with the occasional intervention from Govia’s London Midland and National Express’s East Anglia – would not exactly welcome the prospect of another 15 years of the same management. That point was not missed by the audience at her speech. She was asked that if she wants a lighter management touch, how can she be sure that the franchises are performing well and make sure that they are?

 She responded by saying that there would be some kind of break clause, but it is difficult to see how this could be reconciled with the notion of longer franchises. Either you can sack the franchisee or you can’t – and if you can, then there is not the stability that she is seeking. The London Underground Public Private Partnership is an interesting case in point. That has a 7.5 year review point built in which was supposed to be a mere financial reassessment but, in fact, may well spell the end of the whole scheme.

  Ms Villiers wants to give the power to ‘monitor key aspects’ of the operation of franchises to the Office of Rail Regulation. That seems sensible – and indeed, why not go the whole way and take the Department out of the equation altogether and hand over all aspects of franchise control to the ORR? However, this suggestion seems to contradict the idea of allowing the private sector freedom to operate with less regulation. And if franchisees have the power to set their timetables, as she suggested, that reduces the ability of passengers to lobby their MPs to try to retain levels of service. For example, if there were a similar downturn to the current one, train operators might well seek to thin the train service, something passengers are unlikely to support.

  While seeking to lighten the regulatory load on train operators, Ms Villiers is looking to tighten control of Network Rail. No one outside the new Black Tower would disagree with that, but the problem is how to deliver it. While she is right to say that Labour has left Network Rail virtually unaccountable, remedying the situation is extremely difficult.

 Ms Villiers suggested that she could give ORR powers to prevent bonuses being paid to directors, but I somewhat suspect that this is a legal minefield and their contracts would have to be rewritten. Her other ideas are to try to force Network Rail to consider other bidders for small schemes – but why not big ones too – and of having a smaller but more powerful supervisory board rather than more than 100 rather toothless members. Both these seem reasonable but a bit timid. Moreover, the way that ORR is run these days suggests that it is very unlikely to make more stringent demands of Network Rail which suggests Ms Villiers is putting too much hope in an institution which itself is dysfunctional. Perhaps, the only true solution would be to come clean and make an honest company out of Network Rail by nationalising it and then ensuring that the politicians have a right of veto over these various decisions. But that would hardly find favour in Cameronland.

 The plea for longer franchises coincided with the announcement by Chiltern Railways that it was investing £250m in creating a new service to Oxford and cutting journey times between London and the Midlands, reducing the Birmingham time to just 100 minutes, only 20 more than the Virgin service. This showed, Ms Villiers trumpeted, the advantage of longer franchises. However, interestingly, when I questioned her about this at the post speech dinner, her reaction was surprisingly muted and she appeared rather hesitant about suggesting that other franchisees might invest in a similar way.

 The reason was that Paul Plummer, Network Rail’s Director of Planning and Development, was also at the dinner and had just made clear that he was none too pleased at the idea of the train operators investing in the network. Network Rail, after all, wants to keep control of investment itself and Ms Villiers’ reaction was, therefore, to say that the reason she sought longer franchises was to generate stability in the industry rather than investment from the TOCs.

 Actually that makes sense. Train operators will never be significant investors since they have no assets. The Chiltern Railways scheme is undoubtedly good news and I am not about to trash it but as Adrian Shooter, Chiltern’s boss explained at the press conference, the money comes from Network Rail, which is borrowing the cash, putting it on its Regulated Asset Base and then being paid back in the form of extra track access payments by Chiltern  – in other words effectively by the passengers. It is  the long franchise deal with relatively gentle decline in payments (or now increase in premiums) which Chiltern received enables it to plan these investments. Would the Tories be that generous with 20 year franchises?

 As an aside, the Chiltern raises a question that is rather uncomfortable for supporters of high speed rail which is: If the need for a high speed line to Birmingham is about capacity rather than reducing journey times, would it not be better to, say, electrify the Chiltern line and enable it to run longer trains, thereby releasing capacity for other services on the West Coast?

 I will leave that hanging in the air, as I have little space to address the meat of Ms Villiers’ speech, the reiteration of the support for high speed line. With everyone else having jumped on the bandwagon, she tried to distinguish her plans from those of the other parties by stressing that the Tories were the only ones to have a fully costed and timetabled option; that their modelling is based on a careful study of the market and the likely fares; and that Labour has not matched its commitment to build a line to the North.

 Well I’m afraid much of that, too, is bunkum. There is no way at this stage that anyone knows the full costs of a high speed line, especially the bizarre upside down L shaped proposed by the Tories that will go to both Manchester and Leeds. The authority for this is a senior source who told me that the cost range in the HS2 report far exceeds previous estimates. Secondly, any assessment of the market is pure guesswork and no one has the foggiest about what fares might be; and thirdly, the HS2 report will present options north of Birmingham.

Just as Labour followed the Tories into supporting High Speed Rail, now, as I was just about to despatch this column,  Lord Adonis has announced that franchises are to be at least ten years, and possibly up to 22, stealing the thunder off the Tories yet again. This is dirty but clever politics and suggests there will be little clear blue water between Labour and Tory policies on rail in the forthcoming election especially as Labour has already hinted at being dissatisfied with Network Rail Regulation – or rather the lack of it – and we can probably now expect an announcement in that respect soon. Now, will both parties commit themselves to guaranteeing the investment programme already set out by the ORR for the current Control Period?  That would be much more useful for the rail industry and its passengers than tinkering around with franchise length and regulation.



Eurostar has to go back to basics



As a frequent traveller  on Eurostar, I receive their bulletins which recently have comprised lengthy apologies from Richard Brown, Eurostar’s boss. The latest one features nine measures which the company says it is introducing and highlights the extent to which Eurostar seems to have failed to learn the basics of train operation until this emergency came along. I can’t all list them all for space reasons, but they include, with my thoughts in italics:

  • Strengthening communication processes ‘to ensure we provide better real-time information and advice as soon as disruption occurs via the website, email and twitter’ – well this is the 21st century
  • ‘Significantly increased our stock levels of provisions on board every train’ –euh ,a no brainer that you should have enough non perishable food to deal with emergencies
  • ‘We have implemented a new call-out system so we have enough staff on hand to help out in stations when services are disrupted’ well did you really not have that before?
  •  ‘We have developed a “special timetable” which we operate in extreme weather conditions and publish in advance’ ditto
  • And there is to be a better compensation system About time too


These all seem so obvious for a 15 year old train operation that the only question one should be why hasn’t the company done this before. One for Chris Garnett and his investigation team…

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