Rail 692: Command paper as bland as MacDonalds

I had expected better. Justine Greening, the transport secretary, is clearly a sharp cookie and has picked up her brief assiduously and rapidly. However, in publishing the long-awaited Command Paper, Putting the customer first, she has clearly allowed the civil servants free rein to produce a document as anodyne as a MacDonald’s hamburger without relish. Any hard decisions have been postponed until later in the year when we hear what amounts of money will be available for the railways in the 2014-19 Network Rail Control Period (CP5).

It was rather foolish of Ms Greening to try to pretend that the issue fares could be neutralised by putting a headline on the covering press release which said: ‘Ending inflation-busting rail fare rises’. The cynical national newspaper correspondents sitting next to me at the press conference were starting to write the ‘fares could rise’ story before she had even left the room to appear in Parliament.

The nonsensical nature of this promise was quickly exposed by her failure to answer the question by Peter Woodman, the veteran Press Association transport correspondent, about when the fares rises would end. She was vague and merely suggested it might be after the results of the consultation process on fares and ticketing launched at the same time, or might even not happen until after the £3.5bn ‘savings’ which the industry needs to make by the end of the decade.

Indeed, the government is in some difficulty on fares which are now seen as just as unpopular as fuel tax rises. Clearly, the government did not want to be saying that fares will rise even faster than before and therefore any change to the system is supposed to be revenue neutral. The idea, though, is to follow the McNulty report’s suggestion that there should be higher fares for those travelling at peak times. Most of those people, however, are season ticket holders, and hitting them in the pocket is not electorally sensible to the Tories – look how Boris Johnson is now struggling in the mayoral election because of his above inflation fares rises. Therefore the idea was honed down to raising fares for those travelling at the peak peak, as it were.  This might make sense to someone like Sir Roy McNulty who has not understood the operational considerations of running a railway, but the practical difficulties of such as scheme would be immense.

Ms Greening also mentioned the idea of having season tickets which were tailored to part time workers who only used the trains two or three times per week. All these ideas lead to the notion of ‘smart ticketing’ one of the other suggestions highlighted in the Command Paper. Clearly smart ticketing would enable such flexible arrangements, and Ms Greening highlighted the need for extending ‘Oyster-style smartcard payment options’ even if the contradictions over extending Oyster, mentioned in my last column, mean that there are likely to be delays while the government sorts out its own scheme. There were, too, some rather daft suggestions, like selling tickets in libraries (if there are any left, one might jest), given that the complexity of the ticketing arrangements make even the Dewey classification system seem simple.

This brings us to the wider contradiction at the core of the whole initiative which was originally stimulated by the desire to move away from the ‘micromanagement’ of the railways by Marsham Street. These suggestions pouring out of government are precisely the type of initiative that in a conventional business would be generated by the companies themselves rather than government. Decisions over closing ticket offices or even selling them in libraries, would in any other business be made by the retailers – the train operators – rather than government.  That demonstrates, yet again, the special nature of the railways which are a public service, something that is often misunderstood.

The intractable nature of the rail industry is why, too, the franchise reform got lost in the Command Paper. Remember this was a major initiative announced soon after the Coalition took office and involved an extensive consultation exercise with franchisees and other stakeholders. Remember,  there was to be a new way of letting franchises, according to Theresa Villiers, the No2 in the Department, at the time of the launch: ‘We want to see a stronger focus on the quality of outcomes for passengers, giving more flexibility to the professionals who run our railways to apply innovation and enterprise in working out the best way to deliver those outcomes.’

All this has now come to naught. When I asked the civil servants about franchise reform, they said that the idea had been dropped and rather than a blueprint, any changes would be reflected in the Invitations to Tender for franchises. In other words, it will be horses for courses. Effectively, that suggests a failure to answer the Wolmar question on the purpose of the whole franchising process which drives up costs for little benefit. Clearly, ministers were unable to come up with a coherent answer to the question, so saved themselves the embarrassment of publishing a franchising document.

The core of the Paper – there were two other papers on fares and decentralisation which will, I hope, be considered in future columns if there is space – is the aim to cut £3.5bn out of the rail industry’s total spending of around £11bn by the end of the decade. Already, just over half of that is earmarked to come from Network Rail, and there may be suggestions, coming out soon, from the Office of Rail Regulation, that even more could be squeezed from that source. Assuming that it can’t, the rest would have to come from operations, rolling stock leasing, staff and other bits and bobs. Let’s spell this out categorically: it can’t be done. Far too much of the excess spending is entrenched in the industry – wages are high because of fears of strikes and the result of competition for drivers, restrictive practices such as guards on the SWT network have not been challenged, Network Rail spends around £1bn on debt servicing annually, costly procedures in developing schemes are difficult to change, the fragmentation of the industry leads to compensation payments, widespread use of consultants is expensive and so on. Nowhere in the McNulty report is there any clear detailed roadmap of how to make savings; nor is there in the Command Paper. The big options such as cutting services, closing stations or allowing track conditions to deteriorate are simply ruled out because they would be too unpopular. The spectre of Beeching hangs over the railway and any politician daft enough to posit the notion of cutbacks

When I suggested that it was unclear where the savings were coming from, I was roundly slapped down by La Greening.  We were allowed one question each in the press briefing on the Command Paper and I had asked her where the £3.5 bn annual savings would come from in the rail industry as it seemed an incredibly high proportion of the overall costs and I had not found any details in the McNulty report on the industry’s finances published last year. ‘Well’ she said, staring hard at me, ‘I’m glad you didn’t write the paper as it is clear that these saving can be made’. In fact, the paper clearly does not set these out. It is still of vague commitments and a strong emphasis on the Rail Delivery Group (which I wrote about in Rail 689).  Here again, there is a clear contradiction. Savings are dependent on the operators cutting costs. But none of them will bid on the basis, say, of cutting wages or making unrealistic assumptions and in any case, these savings can only be made on future franchises.

There is an irony in all this. The coalition government has actually been very supportive of the railways, continuing the massive investment programme under Labour. You only have to see the number of completely revamped stations in London along with Reading and Birmingham, as well as the commitment to HS2 and the Intercity Express Programme (the new trains), to see that the railways have had a good deal under the Coalition. Sure, the rolling stock programme has stalled and there are concerns about fares, but the investment programme is impressive, even if I doubt the claim that is the biggest since Victorian times can be substantiated, given the massive modernisation programme of the 1950s (launched, interestingly, by a Tory government). The risk, however, is that in the crazy and undoubtedly impossible search for these massive savings, support for a successful industry is lost.



Keep it simple, save money


While on the theme of money saving, Here’s a neat idea from a reader, Gerard Eastick, who lives alongside the East Coast main line and says ‘I see trains in blue, trains in silver and trains that look as if they have borrowed the Tesco Value corporate identity.’ He asks, quite pertinently, ‘is there any chance that someone somewhere might start a campaign to standardise rail livery across the UK?’

Not only would that save money but it would improve the look of the railways. We have been here before. There was a period in the more extreme deregulating period of the 1980s when the Tories allowed London buses to be any colour. We got ghastly blue liveries and even a bus company called Grey-Green, until Steve Norris, the junior transport minister, put a stop to it by mandating that all buses should be red, one of London’s emblematic characteristics.  Already, London Overground trains have a livery that does not publicise their operator (originally MTR Laing) and is the better for it. Think how much money would be saved in not having to relivery trains with temporary brands. And we would be saved garish colour schemes – remember One? Or conversely, think how much it will cost if, as many expect, Virgin loses its West Coast franchise. So here’s one idea not in the McNulty report that could definitely save money. As Mr Eastick says, ‘The essence of rail travel is going from A to B. Nobody cares who is running it.’



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