There’s always been a problem with rolling stock and the privatised railway. The basic difficulty is simple. Franchises are let for far shorter times than the lifetime of the trains. Moreover, the contract date may well start when trains are in midlife, which leaves a difficult period towards the end when an integrated railway would be thinking of acquiring new stock but a short term franchise cannot do that.
The rolling stock companies were created to avoid this problem but they only partly solve the issue because they do not make the decision to invest in rolling stock since they must have certainty that it will be used. There has been the odd speculative order but that has been very much the exception.
Moreover, the Roscos have fallen out of favour with government because they are seen as unnecessary middle men in the process. This is somewhat unfair because they have, unlike train operators, invested considerable sums in the industry and they were actually created precisely to be middle men.
Inevitably, , government has remained involved because the railway needs subsidy and strategy, particularly as far as rolling stock is concerned.
Even after nearly two decades of a privatised industry, the tensions of this complex situation have never been resolved. This is patently obvious from the fraught nature of the various recent major procurement exercises, all of which are being run in different ways . The two biggies for London and commuterland have been organised in very different ways. Thameslink which created a great kerfuffle as the order went to Siemens rather than home-based (but now owned) Bombardier is a complex Private Finance Initiative deal which means that the government – through the train operator – is paying a leasing charge on the stock and the risk of train failure etc is supposed to be taken by the manufacturer (queue raucous laughter in the cheap seats).
Crossrail which consequently had to go to Bombardier (though no one will admit that) is a conventional purchase with a maintenance contract but no PFI type risk being transferred to the manufacturer. The existing roscos, however, were not involved in either of these deals.
The biggest of them all is of course the InterCity Express Project, IEP, which is the plan to replace the 125s on the various old InterCity routes. This has been, to say the least, a difficult gestation and we have ended up with a very expensive procurement and the wrong sort of trains. The procurement process has been under the spotlight with the report, just before Xmas, of the Commons Public Accounts Committee that highlighted various several failings in the process. Actually, as is often the case with these Commons scrutiny committees, I think they focussed on the wrong issue.
The PAC chairwoman, Margaret Hodge, criticised the way that the taxpayer bore all the risk of the project if things go wrong. But that is always, ultimately, the case. The daft aspect is the fact that the Department has created this ridiculously complicated deal, with too many types of trains and a groundbreaking – but unnecessary and very expensive – bimodal system without, as the Foster review back in 2010 found, a proper assessment of alternatives to IEP – such a failure is, incidentally, precisely what has happened with HS2 but that is another story. Few in the industry, let alone the Department, believe that IEP is a sensible scheme.
Then, after all these foul-ups, we have the chaotic situation with Pacers in the north. Here there is an appalling muddle created by politicians not being firm about what they want. On the one hand, they recognise that rail services in the North are suffering from time-expired unpopular rolling stock and they need to do something in order to shore up what remaining vote the Tories have there. On the other, the replacement cost will run into several billion and they are struggling to find the money.
So we get a farcical situation of first David Cameron and then George Osborne, in his Autumn Statement, announcing that the Pacers would be replaced, but actually no certainty that they will be. Bidders for the new Northern franchise are to be ‘encouraged’ – not mandated – to put forward proposals to replace the hated ‘buses on bogies’. Therefore confusion reigns. At the PAC hearings, the three Rosco bosses gave evidence on the future of the Pacers and provided rather conflicting answers with Angel Trains boss Malcolm Brown suggesting they would be retired – due to non compliance with disability legislation at the end of 2019 – while Paul Francis of Porterbrook revealed that his company has developed a prototype of how they could be made compliant (eliciting groans in the North, I suspect).
The key issue, of course, will be money. However, since London and its hinterland are getting two sets of brand new trains between now and the end of the decade, and Intercity services are being boosted by IEP, leaving the Pacers in place in the North seems politically untenable – especially, in fact, if Labour which dominates the region politically is involved in the next government.
All this highlights the fact that there is no way that the government can keep out of the rolling stock procurement. I’m afraid I have to disagree with Insider who wrote in the last issue that the DfT should not intervene in procurement. In fact, it is impossible for the DfT not to intervene. It is not DfT intervention that is the problem but rather the fact that the DfT does not intervene enough and with sufficient confidence to effect change. Ministers keep on suggesting that the train operators can determine rolling stock requirements but they know this is nonsensical because of the short term nature of franchising and, in any case, they are not footing the bill. We see the results of giving them too much power in the terrible Pendolino trains with their smelly toilets, unaligned windows and cramped feel.
Of course, in an ideal world, it would not be the civil servants of the DfT dealing with these matters but, rather, a separate rail organisation headed and staffed by experienced railway professionals. The PAC indeed found that ‘The Department has a shortage of suitably qualified and experienced staff and is still reliant on contractors and interims’. I have long argued that it should be an independent – arms length – rail agency that should manage the railways, not civil servants who come and go like football managers. However, the key point is that it cannot be the ‘market’ which will determine these decisions, but, rather, an overall controlling mind with the purse strings to hand – in other words the government or, better, its agency.
In the past, I have pointed out that much of the attempt to privatise parts of the railway are ‘pretend capitalism’ because the risk is not properly transferred. The various recent rolling stock fiascos is another example of this process which inevitably ends up costing taxpayers more than if things had been kept simple. As Insider himself pointed out, the Public Accounts Committee found that the finance costs of the IEP contracts for both were higher than had they been simple public sector arrangements. As I keep on saying, complexity is cost, and yet the rail industry never seems to learn that lesson. So why not replace the Pacers with a bunch of nice cheap and cheerful trains from China bought outright?
It’s all Chinese
Travelling on a couple of high speed trains in China over Xmas was a new and fascinating experience. The trains seemed to be well used – though on one there was a completely empty coach next to our full one, which suggests the railway company uses the same computer programme as Eurostar – and have far more intermediate stops than I had expected.
This is presumably because China has so many substantial cities that it makes sense for the trains to stop at them but it does slow down the overall journey speed. Moreover, the trains did linger at many of these stations which means there is clearly lots of extra time built into the schedule.
Another surprise was the number and frequency of the announcements preceding and following these stops. Many were repeated in English which meant that there was almost a constant cacophony, adding to the wheezes and coughs of the passengers – China until recently placed no controls on smoking, but it has started to do so. The Chinese are meticulous about detail, and formality, so some of these announcements were faintly ridiculous such as this is train number 3 (pause) 0 (pause) 5 (pause) 4 (pause), information that was hardly necessary. Nor was the ‘special announcement’ to ‘mind the gap between the train and the platform’. Since few stations are on curves – indeed the tracks are mostly very straight) for the most part the gap was tiny, barely enough to drop a pencil through. Yet, at every station this ‘special announcement’ was repeated. I can sense the need for another campaign though I doubt it will get very far given China’s political situation.
I also travelled on the Maglev between Shanghai and the airport, but my thoughts about that are for the next issue.