Presentation on theme: "What next for the railways? Presentation to the Public Transport Group Northern Home Counties Region By Roger Ford AIRSE MCILT Industry & Technology Editor."— Presentation transcript:
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
What the DfT remembers
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.
Where the money goes
Expenditure by category
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.
But then the trend reversed.
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’
Diseconomies of scale 1989/ million journeys Subsidy £985 million £1.21 per passenger journey 2003/04 1 billion journeys Subsidy £ 3.8 billion £3.80 per passenger journey
The long term underinvestment myth
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
Network Rail’s future budget
Network Rail funding 2004/5-2008/9
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 levels2006 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 £ tens of millions June £500 million January 2003 – Roundly a billion January £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
Signalling – Hidden costs
Project cancelled (1)
Project cancelled (2)
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
Record investment levels
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
Inflated franchise costs
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