UK Rail Investment: The Cash Flow Crisis

17 April 2008 (Last Updated April 17th, 2008 18:30)

The UK railway network is seizing up because it is being overworked, but the investment simply isn't coming through.

UK Rail Investment: The Cash Flow Crisis
"Passenger business is increasing an unprecedented 8% a year, despite official government surveys suggesting that this will slow down"

The threat of an economic recession is making headlines across the world, and it now seems that the great opportunity to find a solution to one of the UK's greatest problems – the inability of the rail network to take the strain from gridlocked roads and airports – has been squandered.

Although it has been in power since 1997, the current Labour government has become renowned for sitting on the fence, leaving it so long that there many not now be the money available to find a workable solution.

Transport Secretary Ruth Kelly had few answers when she faced an industry audience in London in March 2008, when she insisted that the issues had to be fully understood so that the right decision could be made.

Meanwhile, passenger business is increasing by an unprecedented 8% a year, despite official government surveys suggesting that this will slow down. Fare rises are often being cynically implemented to keep demand down.

INVESTMENT IS SLIPPING BADLY

The desperately needed intercity high-speed train replacement programme continues to slip behind schedule. There are no plans for any more high-speed lines to match those being built in procession across mainland Europe, and well-planned urban light rail schemes founder through lack of capital commitment.

Ruth Kelly's view is that while extra capacity can be found on the network to soak up the extra growth, there is no need for massive investment. However, she wants more surveys to be undertaken before any commitment is made.

How long does Mrs Kelly need, and is she indeed simply a front for a Treasury determined to rein in on public spending and reduce the current £5bn annual subsidy by any means possible?

Even if a decision is taken now to provide more trains and track, the long lead times demanded for the supply of new equipment mean that it could be perhaps 2015 at the earliest, most likely 2020 before anything new is running, by which time a litre of motor fuel might be unaffordable by all but the exceedingly wealthy.

While talk of reducing carbon emissions is a great craze at the moment, few can argue that we would do better by using trains, passenger and freight, replacing road traffic by making them competitive.

TWO CENTURIES OF INTERFERENCE

Like income tax and the price of alcohol, rail transport is one part of life that has been interfered with ever since the Liverpool-Manchester Railway opened for business in 1825, and the UK network was justifiably pruned back in the 1960s when the motor car gained supremacy.

"The long lead times demanded for the supply of new equipment mean that it could be 2015 at the earliest before anything new is running."

The pendulum has swung back over the last decade, so why are responsible people being stifled from turning sensibly back to trains because they cannot afford the price of a ticket?

The current government is caught in a deadly cash trap because it must arrest a multi-billion-pound backlog of maintenance at the same time as increasing capacity by adding additional tracks and longer trains. The last ten years have seen extraordinary sums spent to support political statements and buck-passing.

On reflection, very little was achieved by the creation of the Strategic Rail Authority, a expensive and cumbersome government-inspired watchdog that was launched in 2001, and unceremoniously dismantled four years later.

Its powers have been taken over by the centralised Department for Transport, which has assumed a virtual stranglehold on all policymaking.

OPERATORS IN A STRAIGHTJACKET

While operations remain firmly in private hands, passenger train companies are denied freedom to take anything but minor decisions on how to run their franchise. They are simply fare collectors, there to deliver a return to the taxpayer at virtually any cost, and also provide a surplus for their own business.

The taxpayer will benefit greatly if they succeed because subsidies will theoretically be reduced, but lose out badly if the bar has been raised too far and contracts have to be terminated or bailed out with big cheques.

First Great Western, one of the largest 'super franchises' with trains out of London Paddington to the western suburbs, intercity services to Bristol and the West of England and several rural outposts, has become a public whipping boy for simultaneously failing to reach its reliability targets, cutting services, jamming more seats into its ageing coaches, and raising fares far beyond inflation. However, its aggrieved customers must not apportion all the blame on FGW, but look further to the government which sanctioned the whole franchise deal in the first place.

The government's dictatorial attitude reached a new high point at the start of 2008 when the DfT announced plans for 1,300 new passenger coaches to cope with increasing demand, but also specified in great detail precisely who is to receive them.

Network Rail, the national infrastructure owner, is being kept under a tight rein by a fiercely determined Office of Rail Regulation. In February the regulator imposed a record £14m fine on NR for seriously overrunning its engineering possessions at three locations over the previous Christmas and New Year period.

GOOD NEWS FOR THE FUTURE

"Passenger train companies are denied freedom to take anything but minor decisions on how to run their franchise."

There is thankfully some good news. Transport for London, which manages all public transport in the Capital, has gained a reputation for moving rail travel up the agenda, launching the London Overground, Crossrail, extensions to the East London line and further investment in the Docklands Light Railway as the backbone for travel to and from the Olympic Games village in 2012.

Freed from much of the UK's centralised government policymaking since the act of devolvement, the Scottish Parliament has seized the chance to move forward with prestige schemes such reinstatement of old routes such as Stirling-Alloa, Milngavie-Larkhall (Glasgow), Airdrie-Bathgate and Edinburgh-Galashiels. It has also supported an airport link for Glasgow, and the Edinburgh Tram.

It seems certain that the railways are heading for a stormy patch as passengers rebel against high fare rises that are not matched by a similar increase in quality. Meanwhile, freight operators remain at the back of the queue for investment in new depots and widening of bridges and tunnels to take European standard containers.

But would a different government in power change things? Perhaps not.