Rail 680: Hammond’s rich man’s toy revealed his true feelings

It’s amazing how much goodwill one can lose with just one quote but Philip Hammond’s remark about the railway being a ‘rich man’s toy’ will make the rail industry for ever suspicious of the Transport Secretary. Hammond must be feeling a bit like Gerald Ratner who destroyed his jewellery business with a bit of careless talk when he suggested a sherry decanter and glasses his shops sold for a fiver were ‘total crap’.  It cost Ratner’s shareholders £500m that day and the business later had to be sold for a fraction of what it had been worth.

Hammond’s remark is not quite in that league and he will, of course, personally remain a multi millionaire, because he is not financially involved in the business he was disparaging. Politically, though, the remark will not be forgotten and it will raise doubts about his commitment to rail within the rail industry. I lost count of the number of people at the National Rail Awards who mentioned the matter with me and all of them expressed deeply negative views about him.

Looking at the recording of Hammond’s remark which was made during evidence he was giving to the Commons Transport Committee enquiry into HS2, what is amazing is that it was not a slip of the tongue or a joke (not that Hammond is a man one would ever be mistaken for being the life and soul of the party). The Labour MP Julie Hilling asked a long question in the middle of which she mentioned the notion that HS2 might risk being a ‘rich person’s toy’. Hammond then, completely unnecessarily took the argument a step further, agreeing and saying: ‘Uncomfortable fact number one, the railway is already relatively a rich man’s toy, the whole railway, people who use the railway have, on average, significantly higher incomes than the population as a whole, simple fact.’

This is the mask dropping. Hammond is a hardnosed, competent and unsentimental businessman. He is interested only in economics and all the rest of the guff about environment and sustainability is an overlay for public consumption. He is no real fan of the railways but has been convinced about their value to the economy and recognises that a well-functioning railway is a necessity for a modern economy. However, he is still at root a petrolhead as betrayed by his speech to last year’s Tory conference in which he expressly said that rail was in receipt of ‘subsidy’ while ‘the road investment programme’ was the most important part of the Department’s programme.

Overall he gave a rather hesitant performance to the Transport Committee, failing to answer criticisms such as those recently in The Economist which suggested that Britain’s geography meant that a high speed line was unnecessary. He merely replied that his department had formulated a letter in response. Nor did he seem to have much grasp of the detail. He was, in truth, going through the motions, not trying to disguise the fact that whatever the committee and the consultation came up with, the government  will press ahead with plans for HS2.  But even within the context of a rather poor performance, this was a remark that let slip an underlying hostility to the railways and, incidentally, unnecessary sexism too, as Ms Hilling’s ‘person’ was changed into ‘man’. And toy? Surely, not.

Of course he is right, superficially, in arguing that the railway is used more by more affluent people than poorer ones. But the National Travel Survey which covers all modes uncovers a wider truth – the richer people are, the more they travel. There are good reasons for this. Much rail travel is commuting in and out of London – 70 per cent of journeys begin or end in the Big Smoke – and incomes are, necessarily, higher there because so are household expenses. So, yes, the number of miles travelled by rail by the top 20 per cent earners in the 2009 survey was 1,230 compared with around 300 for the bottom 40 per cent.

That does not, though, tell the whole story. These London fat cats and their provincial counterparts cent also travel far more by car. The top 20 per cent travelled 8,336 miles compared with 2,598, a factor of 3.2 compared with a factor of 4 for rail, not a great difference. But I doubt if the car will ever be defined as a rich man’s toy by Hammond or any other Tory politician.

This, of course, is a well known correlation. Growth in incomes has long gone hand in hand with rises in the amount of travel. Therefore it is hardly unexpected that richer people make more use of the trains but that is largely because, well, they are richer! Yet, Hammond, by highlighting the fact that rail is used by more affluent people, without any balancing remarks about other modes, has done the industry a great disservice. It is noticeable, too, that the one mode that is definitely used more by poorer people, buses, is suffering from the worst cuts in subsidy from the Coalition government.

Of course, the most mystifying aspect of this remark is that it undermines the case for HS2, the very project Hammond was supporting in his evidence to the select committee. Since, as the National Travel Study shows, poor people do not travel far anyway, they are very unlikely to be using HS2 even if premium fares are not charged – which is highly unlikely.

Greengauge 21, the pro-HS2 group has argued that a typical HS2 single fare would be £40-45  between London and Birmingham, on the basis that these are the assumptions made in the HS2 Ltd report on the line and by consultants analysing demand. This is pure speculation, however. It is very difficult to imagine that there would not be a premium fare on HS2, and we already have the example of HS1 where at the Treasury insistence a premium had to be charged – and incidentally the added burden of a  RPI + 3 per cent regime on fares rises suffered by all users of Southeastern trains for the past three years.

Therefore if the railways generally are, according to Hammond, a rich man’s toy, HS2 must be that in spades. Yet he is prepared to spend tens of billions on it.  Watch this space for anti-HS2 campaigners trotting out Hammond’s ‘rich man’s toy’ remark at every opportunity. This will be exceedingly damaging to the railways since it will increase public scepticism about their worth at a time when they will be under enormous financial pressure, given the McNulty report findings. Hammond’s remark will undo much of the good his administration has done for the railways.

25 years is a long time

The Chartered Institute for Logistics and Transport has produced an interesting document, Vision 2035 attempting to predict what the transport picture will look like in 2035. It is not an easy task. The most entertaining part of the document is the look back a quarter of a century to 1986.

Gosh, it was a different world then, and yet it seems so recent. Just to cite a few examples. There were no low cost airlines; public transport operators had not introduced smart ticketing like Oyster cards; road building was at the heart of transport policy (Mrs Thatcher’s famous Roads to Prosperity white paper)  and they were still building the M25; no one had heard of travel plans or legislation on disabled access; and, best of all, ‘the rail industry was perceived as a no growth or low growth set of businesses’. Well in fact, the rail industry of course was mainly one business, British Rail.

While some of those developments may have been predictable, others were not. Who would have guessed that an airline with the unprepossessing name of Ryanair and an even less prepossessing chief executive would carry more passengers than British Airways. Or indeed, the amazing growth in rail travel.

The CILT attempted to look at the future by assessing the impact of various forces such as demography, transport demand, technology and economics. However, in many respects, any analysis of the future is dependent more on policy decisions by government rather than any technological changes. For example, the authors assume that road pricing will be introduced, despite the fact that the current government has ruled it out, and that HS2 will be built, despite the growing opposition to it.  These are big assumptions which may not necessarily be borne out and that would change the whole picture.

It is on predicting transport demand that the authors seem to have had most difficulty. Interestingly, as I have mentioned before, car usage has hardly increased in the past decade, going up by only 2 per cent between 2002 and 2009, and then falling as a result of the recession. HGV traffic is predicted to rise by only 9 per cent by 2020, hardly necessitating large amounts of extra road infrastructure. Rail journeys, in contrast, have risen by two thirds since privatisation which has greatly influenced the current government’s transport investment programme. That is why the government is pressing ahead with HS2, but assessing future demand is a mugs game and yet billions of pounds will be spent as a result of these predictions. . These exercises in futurology are fascinating but, I suspect, most of what is in the document will be wrong, but the CILT deserves brownie points for trying.

Scroll to Top