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What next for the railways?

What next for the railways?. Presentation to the Public Transport Group Northern Home Counties Region By Roger Ford AIRSE MCILT Industry & Technology Editor Modern Railways Founding Editor Rail Business Intelligence. Another four years.

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What next for the railways?

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  1. What next for the railways? Presentation to the Public Transport Group Northern Home Counties Region By Roger Ford AIRSE MCILT Industry & Technology Editor Modern Railways Founding Editor Rail Business Intelligence

  2. Another four years • Transport never became an issue in the election campaign • Railways even less so • Transport Secretary Alistair Darling did a good job! • And he is staying on

  3. Unfinished business • Labour’s first term assumed that privatisation would deliver 10 Year Transport Plan • Labour’s second term revealed the failure to deliver ‘The future of rail’ White Paper Railways Act 2005

  4. Confusing signals • Since privatisation the cost of the railway to the taxpayer has increased by a factor of five. • Costs of railway projects has increased by a multiple of pi • Yet the railway supply industry is undergoing another order hiatus

  5. What the DfT remembers

  6. Record Government support • In 2005/06 subsidies and grants will reach £6.5 billion (excluding CTRL) • This is: • Triple British Rail’s subsidy in its worst ever years – 1982 and 1983 • More than six times what BR received in its best ever year 1989/90.

  7. Where the money goes

  8. Expenditure by category

  9. Cost to the taxpayer increasing • Proportion of railway’s income from the customer a key indicator • Historically has gone up and down with the economic cycle. • As the economy recovered after the recession at the start of the 90s the proportion increased.

  10. But then the trend reversed.

  11. Growth not an issue • A common excuse is that the railway is carrying record number of passengers. • But ridership grew as fast in the 1980s • Infrastructure maintenance costs not an issue • Nor are the ‘decades of underinvestment’

  12. 1989/90 812 million journeys Subsidy £985 million £1.21 per passenger journey 2003/04 1 billion journeys Subsidy £ 3.8 billion £3.80 per passenger journey Diseconomies of scale

  13. The long term underinvestment myth

  14. What decades of underinvestment? • Consistent spend by BR on maintenance and renewal • Health warning – some double counting on renewals still to be reviewed • But maintenance in line with current Network Rail forecasts

  15. Darling’s conundrum • Record ridership • Continuing growth • But • new projects to provide extra capacity unaffordable • Route modernisation programme abandoned. • And subsidy fixed until next Periodic Review

  16. Network Rail’s future budget

  17. Network Rail funding2004/5-2008/9

  18. Time to retrench • What you people have got to realise is that the future is about service cuts and fares increases Senior DfT Official

  19. Getting costs under control • Regulator determined Network Rail’s income for five years in the Interim Review. • Next Control period starts on 1 April 2009 • Railways Act means no repeat of Ministerial ‘radio silence’ during the Interim Review

  20. Ministers must decide • Under the Railways Act Ministers have to specify how much railway they want and what they are prepared to pay for it. • ORR and Network Rail work out the present cost of the railway the Government specifies. • If there is a gap - iteration

  21. Ministers must decide • If the gap between Government budget and cost of the railway can’t be closed, ORR decides on how much railway the available funding will buy. • From unelected Regulator deciding how much money the railway needs to unelected ORR deciding service and quality cuts?

  22. Ministers really must decide • A knotty issue. ORR interprets Act as meaning that it will seek guidance from Government on any cut backs. We shall see

  23. What will the minister specify? • Typical objectives and standards of what the railways are to achieve • Capacity (types and number of trains) of networks • Frequency of passenger services • Journey times • Reliability • Measures to prevent or mitigate overcrowding • Fares levels and ticket types • Quality of passenger information • Accessibility for the disabled • Implementation of major projects ‘to improve railway services’. • ‘Protection of persons from dangers arising from the operation of railways’.

  24. What happens next? Periodic Review Timetable • Informal process to determine funding and service levels 2006 • Formal statement by DfT – early 2007 • ORR publishes draft conclusions Early 2008 • ORR publishes final determination Mid 2008

  25. No time to lose • DfT Rail has to start developing specification this year given the detail • Still recruiting people for the new Rail Directorate under Mike Mitchell • Hopes to be fully operational in October

  26. Meanwhile……. Sundry minor issues to be taken forward • Thameslink • CrossRail • CTRL Domestic Services • Franchise replacement • International Freight charges • HST replacement

  27. Not to mention……. • Virgin West Coast renegotiation • Conventional Interoperability • ERTMS • RAIB • Plus achieving major cost reductions across the railway

  28. WCRM - Money no object • By BR standards the 125 mile/h upgrade was generously funded • Black diamond review could be accepted as reflecting the many inefficiencies introduced by privatisation and Health & Safety • But £12.4 million/mile for a 15mile/h upgrade is ridiculous

  29. Project costs 1966-2003

  30. Southern Region power • Southern Region power supply • December 2001 - £ tens of millions • June 2002 - £500 million • January 2003 – Roundly a billion • January 2004 - £780 million • BUT

  31. Southern Region Power • BUT • Heavily despecified • No increase in power per train • 50% of minor overloads to be monitored and upgraded if necessary • No provision for growth

  32. Power - a mini case history • Ashford-Hastings and Uckfield lines • 1993 Ashford- Hastings £19-25 million • 1998 Both schemes £30.5 million • 2002 Both schemes £154 million • 2003 New diesel multiple units ordered

  33. Signalling – Hidden costs

  34. Project cancelled (1)

  35. Project cancelled (2)

  36. Poor little rich railway • The railway has run out of money • Between the Strategic Rail Authority’s 2002 and 2003 strategic plans investment in enhancement over the next 10 years has fallen from £25 billion to £16 billion. • Massive expenditure on renewals

  37. Record investment levels

  38. But money is buying less • Ford Factor now pi • But that is modest inflation compared with some cases already mentioned • SRA and Network Rail in denial over comparisons with BR

  39. Inflated franchise costs

  40. So there Personally I couldn't care less what it cost BR. All that matters is what it costs now and what we have to do to get it under control. Richard Bowker 11 September 2002

  41. Funding & investment 1991-2011

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