Sunday, 1 July 2007

Notwork Snail

A few months ago, rumours abounded that Network Rail wanted to play a greater role in the running of the rail network. Suggestions were made, and subsequently denied, that the company would like to take control of non-London stations, possibly act as a rolling stock company and even take over the jobs of train operating companies.

In the words of Margaret Thatcher: no, no, no!

If Network Rail were allowed to extend its powers in this way the result would be re-nationalisation by the back door. It would mean the nation’s rail services were put into the hands of what is essentially a government organisation that is neither particularly efficient nor particularly responsive to customer needs. Network Rail’s own record testifies to both these facts.

Private train operating companies have, over time, reduced the amount of subsidy they need to run their operations; indeed, many now pay money back to the government. First Great Western is a good case in point: back in 1996/7, Greater Western as a whole received a subsidy of over £190m to run trains, over the next ten years First Group will pay the government over £1bn. Such a transformation has only been possible by making the operation significantly more efficient and by growing revenues. Contrast this to Network Rail which receives an annual subsidy of more than £5bn, over three times what its predecessor – the equally ineffective Railtrack – received, and has its £18bn of debts guaranteed by the taxpayer.

The results of this lucrative position have not been particularly stunning. Last year the overall amount of delays attributed to train operation companies fell sharply; those attributed to Network Rail increased. Indeed, the train operators are now so frustrated with what they see as Network Rail’s poor performance that the Association of Train Operating Companies (ATOC) has tabled a resolution at Network Rail’s AGM later this month to the effect that operators “are concerned that in the fundamental matter of punctuality the delays for which the company is responsible are substantially higher than in 1999/2000”.

While Network Rail is clearly unable to discharge its present responsibilities either efficiently or effectively the idea that it should be given control of extra areas of the rail network is little more than ludicrous.

There is a great deal of truth in the argument that the separation of track and train, brought about under the Conservative’s ‘privatisation’ programme, was a fundamental policy error. It is obvious that without track and other fixed infrastructure trains cannot run, and without trains there is no need for any infrastructure. The point is that the two are an integrated whole; they go hand in glove. As such, a successful railway operation relies on the two being closely integrated and aligned. Separation hampers this.

The way to remedy this is not by giving more power to Network Rail – one of the more inefficient parts of the complex rail system. The proper way to solve the problem of a lack of vertical integration is to give train operating companies (TOCs) far more control over their essential infrastructure. A TOC could own the infrastructure outright; it could lease it as part of the franchise agreement; or, it could neither own nor lease it but exert a much tighter degree of control over the operation. All of this said, the integration of track and train has to be a longer term objective. It should not be the first, or the overriding objective of future rail policy. Indeed, its successful implementation relies on other changes being made to the structure of the rail system: for example, it would be imprudent to give TOCs control over infrastructure without first lengthening the terms of their franchises.

The bottom line, however, is clear. You do not make the railway network better by giving control to that part of it which is the least customer responsive, the least financially efficient and the most subject to political interference. That’s not a plan for a better future, it’s a recipe for disaster.

1 comment:

Anonymous said...

Your comment about FGW being better than NR because it pays a premium to the government whereas NR takes a huge subsidy is far far far too simplistic.

You forget that both NR and FGW are heavily regulated by HMG. FGW has its income regulated thru ticket price controls and NR's income is entirely regulated (if you ignore the relatively small amount it makes from being landlord to WHSmith and for allowing Harry Potter to be filmed at Kings Cross) because it is made up of Government grant and regaulated track access charges from TOCs and FOCs.

One could easily imagine a situation where NR had its subsidy abolished and where allowed to greatly raise their track access charges. FGW would then need to receive a subsidy to help them pay the hiked charges and a simplistic analysis would reveal that FGW was now a huge drain on the tax payer and NR was a great profitable company. But nothing would have actually changed - the same trains would run (or not run) and the ticket buyer and tax payer would still be coughing up.

Your main objection to the current botch-up that is the privatised rail system is that constrains the market and knobbles private companies who would be doing much better if only they were set free.

My main objection is that it is impossible for any one to know how much a particlar service really costs. Are FGW's ticket prices too high realtive to what it actually costs to run the trains? How much subsidy does the Gunnislake branch line consume? Are we getting better or worse value for money than under BR or better or worse than SNCF or DB achives? Is it cheaper for UK PLC to transport coal to power stations by train or truck? NOONE can honestly say that they have the answers to any of those questions or a solution to the current problems that is based on facts rather than idiology until questions like that can be answered!