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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? 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 • 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
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
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
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.
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.
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’
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
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
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
Time to retrench • What you people have got to realise is that the future is about service cuts and fares increases Senior DfT Official
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
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
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?
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
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’.
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
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
Meanwhile……. Sundry minor issues to be taken forward • Thameslink • CrossRail • CTRL Domestic Services • Franchise replacement • International Freight charges • HST replacement
Not to mention……. • Virgin West Coast renegotiation • Conventional Interoperability • ERTMS • RAIB • Plus achieving major cost reductions across the railway
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
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
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
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
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
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
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