Rail 701: Consensus rules the rails

There were numerous complaints on my Twitter feed – which has become my instant sounding box – about the political nature of the rail announcement on investment plans for 2014/9. It was, indeed, a highly political event given the presence of David Cameron. When he was prime minister, Tony Blair confined himself to big events such as the introduction of the Pendolinos and the opening of the first section of HS2 but otherwise he rarely expressed any interest in the railways and certainly would not have made such a fuss about what, in effect, is a legally-required statement of intentions.

Now things are different. Railways are cool, a buzzword in fact. The event was, in fact, a huge PR exercise. Ministers were despatched around the country to give interviews on damp and windy platforms to show the government’s commitment to infrastructure investment and, in particular, the railways. Just to emphasise the importance of the occasion, Cameron was accompanied by the Deputy Prime Minister as the event in what would have been called a train shed in the old days was used to show that they still loved each other really despite the kerfuffle over the House of Lords.

To dismiss this as too political is to miss the point. Railway economics are always about the politics and although much of this investment programme was geared towards particular political ends with, as we shall see, some odd omissions, the announcement is to be welcomed. The very fact that there was so much hype shows just how far the railways have gone up the political agenda and the contrast with the equivalent 2007 statement which was quietly slipped out by an unenthusiastic novice minister, Ruth Kelly, and contained less growth, could not be greater.

While the announcement is definitely good news, there are inevitably caveats. First, the hype. This was not, of course, the ‘biggest rail investment programme since the Victorian era’. This bit of nonsense – ‘since Brunel’ is mentioned sometimes, too – is a hardy perennial, trotted out at any big railway investment announcement. There are several instances of bigger investments. Herbert Walker’s rolling programme that created the Southern Railways’ third rail system in the 1930s was certainly on a par with today’s investment levels and the Modernisation Plan, put in place by a Tory government in the mid fifties was worth between £25bn and £30bn in today’s money. Even the successive West Coast and East Coast Main Line electrification programmes could be considered as being on the same scale.

If Cameron was referring to the £9.4bn for enhancements over the five year Control Period 5 covered by the announcement, that is not much more, if inflation is taken into account, than the equivalent figure of £7.4bn in the current five year period. More than half the money is already allocated anyway, much of it for the continuation of the Crossrail and Thameslink schemes which suggests there is not such a strong emphasis on regional development away from the South East as ministers would like to think. Moreover, a detailed look at the figures, which is made harder by the fact that the statement did not contain comparable statistics for previous years, suggests that the overall amount of money  – the Network Grant – for 2014/19, a total just over £18bn over the five years, is actually less than during the current period if inflation is taken into account.

The statement is rather interesting in terms of what it does not include. There is, for example, very little mention of any money coming from the private sector. This is a tacit recognition that the railways have never really been properly privatised, but I will not dwell on this since it is territory well covered in previous columns. Nor was there much mention of the McNulty reforms. While Network Rail is promising to cut costs by 20 per cent, the source of the rest of the savings is a mystery. The plan envisages that overall the franchises will be paying premiums every year, but since many major contracts have yet to be signed, any projections are mere guesswork. As the Rail Delivery Group, which is supposed to be delivering these savings, put it rather bluntly: ‘Achieving fundamental improvements in efficiency whilst delivering the major investment programme outlined in the High Level Output Specification is a significant task for the industry.’

A second issue is the muddle of how this programme will be implemented. A Network Rail source, for example, was very dubious about the ability of the Great Western line to cope with trains going in and out of Heathrow from the junction near Slough that will be created to give a connection with the airport from the West as announced in the plan – and the £500m cost seems rather cheap. This shows how decisions are being made by the Department which have to be delivered by the various rail companies through the complex maze of contracts which bedevil the industry.

There are similar issues with the Midland Main Line. While electrification is undoubtedly good news, it will only deliver major benefits of time reduction if it is carried out in tandem with resignalling, improving junctions and, probably, reducing turn-outs. So far there is very little sign that the Department for Transport understands this or realises that someone – and not its civil servants – has to coordinate the various aspects of investment. Who pays and how are the franchises involved is open to question

Here’s another difficult issue: the idea of the electric spine designed for freight coming up from the south coast is great, but who will ensure that the freight companies actually buy electric locomotives rather than running diesel under the wires? Who will drive through the co-ordination?

Indeed, the introduction of rolling stock is a thorny issue. Leaving it to the civil servants will result in scandals like the Intercity Express Project which, according to my industry sources, is probably the most expensive way to buy rolling stock ever conceived. Moreover, the IEP order will now have to change given the decision to electrify up to Swansea, making the decision to insist on a bi-modal version even less comprehensible. Ensuring that the franchisees obtain electric rolling stock at the right time will be a complex business and a massive industry wide cascade is needed. Lord Adonis has the brains and knowledge to organise one, but it is unlikely that anyone else in the Department would be up to the task today. This highlights a major gap in the structure of our railways, the absence of an independent railway body able to make strategic decisions over the future provision of services which are then blended in with investment plans. The Railway Delivery Group is certainly not up to the task.

Finally, there are some strange omissions. I did several interviews for regional TV and radio on the day, and it was interesting how the presenters emphasised local schemes that did not get funding. Obviously there is not enough money or capacity to do everything but it seemed surprising that Norman Baker’s pet BML2 project, widely supported in the area, for the reopening of the Lewes – Uckfield line that would create a relief line for the Brighton Main Line was not included, even merely as a scoping study. Given he is a transport minister and as MP for Lewes has long campaigned for the reopening, it was very odd that not only did poor Norman not get his pet scheme, but, as the BML2 campaign noted rather sarcastically, ‘he was sent up to Yorkshire to announce the £560m for the ‘Northern Hub’ – bringing benefits and growth where the Conservatives defend marginal seats and need to keep Nick Clegg on side’. Another lacuna is the electrification of Barking – Gospel Oak line, which is a major freight artery, made all the more important by the construction of a major new container terminal in the Thames Estuary.

But this is all to cavil at what is a hugely welcome announcement.  OK so this was no bonanza, there are issues over the detail and it does not represent a massive new commitment. Nevertheless, it must be stressed: this was a fabulous day for the railways, one that may be etched in history.  It marks a key turning point. The railways are recognised as a growth industry, one that will play a central part in the infrastructure of this nation.

Justine Greening noted that ‘twentysomethings’ were particularly attracted to rail because they can use their iphones and iplayers which they can’t while driving. Even in America, where train travel is rare, this phenomenon has been observed. If these young people are using the railways, the future of the industry is assured and perhaps one explanation for the rather mysterious fulsome support for rail by this government is that it is responding to demand.

In the 1950s, the two major parties used to argue at election time about who would build the most council houses. Harold Macmillan, the future prime minister, indeed made his name as housing and local government minister spearheading the building programme. Meanwhile British Railways were quietly being left to rot (though the Modernisation Plan was a last desperate attempt to save the railways). How times change – now all parties support rail investment and Labour and Conservatives are competing to outdo each other on how much they want to spend on the railways even at a time of austerity. It is, therefore, a moment for rejoicing before getting down to the nitty gritty of how to ensure that the dysfunctional structure and the McNulty strictures do not ruin the party.

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