Chaos threatens boom on the railways

These are both the best of times and the worst of times for the railways. They are enjoying an unprecedented boom with record passenger numbers and an investment programme that even the most diehard trainspotter could not have expected from a Tory dominated government mired in the language of austerity.  Hundreds of millions are being spent on creating amazing new stations like Reading and Birmingham New Street, new trains for intercity routes, and two major schemes to help London commuters, Crossrail and Thameslink are due for completion around 2018, when work on Britain’s biggest ever engineering scheme, High Speed Two is also set to start.

Yet, not all is well in the railway garden, as illustrated so dramatically by the collapse of the franchise process for the West Coast main line that had to be pulled by the new transport secretary, Patrick McLoughlin. That has thrown the franchise process into disarray with delays to the letting of new deals and consequently a hold up in investment plans. This episode, stimulated by the desire of the Department for Transport to make operators pay as much as possible for the right to run services, is part of a wider malaise that boils down to one major issue: the railways are costing both taxpayers and farepayers too much.

The McNulty report published last year highlighted that costs were too high compared with the UK’s European counterparts but failed to address the key problem, the fragmentation of the industry, a result of privatisation. Tim O’Toole, FirstGroup’s chief executive, is heading a committee that emerged from the McNulty report, the Rail Delivery Group, with a membership of all the top railway bosses, which has been charged with driving through changes that will cut costs. The key idea is the creation of alliances between operators and Network Rail which will involve the creation of joint management teams on particular routes who will work together to try to reduce costs.

The risk for the railways is that the cost reductions will not be achieved, putting in doubt the future investment programme which is necessary for the industry to keep pace with the unprecedented rise in demand which, remarkably, has continued during the economic downturn with only a short blip in 2008/ 9.

The other area of uncertainty for the railways is the future of the HS2 project. Although this has, for the moment, support of all three major political parties, the opposition is gathering strength and indeed may well have its day in court if an application in December for a judicial review into the process is successful. While opposition on the route, particularly in the Chilterns and North London is to be expected, there are doubts within the industry on whether the project, with a £32bn price tag for the whole line from London through to Leeds and Manchester, is sustainable.

Nevertheless, the underlying prospect for the railway is excellent. At last, after decades in the widerness and nearly being axed to oblivion in the Beeching era, there is widespread acceptance that the railways are a vital part of Britain’s infrastructure and the investment plans are an expression of confidence in the industry.


This was written as an introduction to the George Bradshaw lecture by Tim O’Toole on 31st October 2012

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