Is the Future Brightening for Britain's Railways?

I’m not a fan of privatisation, never have been, never will be. The idea of it for any vital service, for example hospitals, schools, or social services, having private business involved actually makes my skin crawl. Once there is profit involved, many companies try to minimise costs and maximise profit by stripping bare their services, to the detriment of the quality of service.

Indeed, this was what happened in 1997 when Railtrack took over the maintenance of the infrastructure of Britain’s railways. They stripped back the service, lost many of the knowledgeable staff they inherited from British Rail and sold off large parts of its assets to maintenance and renewal companies. As such, this resulted in an shortfall of engineering knowledge within the organisation, and as a result people sadly died. Thus, Railtrack was doomed after the Hatfield accident in 2000, in which there were 4 fatalities, as it couldn't tell anyone out exactly how many more accidents were waiting to happen. Subsequently, the state-owned, not-for-profit and largely unaccountable Network Rail took over the maintenance of Britain's railway infrastructure.

However, the private system remained in place above the tracks. This wasn’t a totally terrible situation, as the privatised railway companies cannot act as other industries do because of the nature of the industry. If you were to buy a car, companies would compete to produce the best products and use marketing to entice you to buy their model. Yet, ultimately, you’d be the one choosing which car to buy. Yet, the railway industry cannot really work in that way. For example, I’m live near Hampton Court station, thus, I am forced to use South West Trains and have no option about who I travel with as they are the franchise holder. Thus, because of this situation, the Department for Transport has to ensure that the services are put on by SWT to suit the needs of the passengers, so that they don’t just run the profitable peak-time services. Thus, private companies cannot act as they do elsewhere as they correctly forced by government to provide a certain level of service, which means I am guaranteed the ability to travel.

However, under the system that emerged after 2002 unnecessary things happened to both Network Rail (NR) and the Train Operating Companies (TOC). Firstly, Network Rail’s costs have skyrocketed because of bad management, institutionalised mind-sets and a lack of accountability to anyone. The best estimate is that currently NR is 30 to 50% more expensive per mile than the best European operators. This is because NR, in light of the accidents its predecessor caused, became overly focussed on safety as being its primary role. Indeed, money is spent on works whatever, even if the risk of a failure of a piece of railway infrastructure is less than 5%.

This sounds like I am advocating lax safety, I’m not, and there some elements of railway infrastructure that should receive these levels of investment. But think about it; if you attempted to make every workplace in the world 100% risk free it would be impractical, costly and time consuming. Further, on the roads there are 100s of deaths a year. But if we spent money on fitting them out with every device imaginable to stop accidents, the costs would be horrendous. Yet, on the railways that is what is done and it is simply unsustainable.

In addition, the added cost of this absolute focus on safety, is that NR has forgotten that part of its remit is to cooperate with the TOCs to deliver the best service to customers. Of course, many of the problems of cooperation between the organisations is the result of the Conservative government of 1992 separating the maintenance of the track from the operation of trains when privatising the industry. Some of the arrangements are pure lunacy. For example, if NR closes a line to make improvements that will benefit the TOC who operates it, it still has to pay compensation to the TOC. In addition there are a myriad of contracts between NR and the TOCs that foster contractual, rather than operational working relationships. Lastly, where in the days of British Rail the train drivers and station staff would know the the signalmen and track crews, now they do not cooperate. Thus, NR, while working in the same industry as the TOCs, very rarely acts like it has an interest in providing the best service to customers because their organisational mind-sets have separated.

The second thing that happened was that the DfT has increasingly micromanaged the Train Operating Companies to the point where literally nothing that they do is of their own making. The DfT’s control over the franchises, which was originally in place to ensure that passengers would receive a good service, has gone over the top. The effect has been that the innovation that private companies can bring to the table, and which is sometimes lacking in nationalised companies, has withered and almost died. Therefore, instead of the DfT specifying how many trains a company should run per hour, it now specifies how many there should be and when they should run. It also tells the TOCs how long their trains should be and what types of rolling stock they should use, diminishing their incentive to buy new carriages themselves. Thus, the DfT have effectively stifled any innovation that the private companies had.

Thus, because of these and other problems, that I simply do not have the space and time to go into, organisations that should have been dynamic and innovative simply stagnated. The result was that costs soared, and whereas in the early 1990s Britain’s taxpayers contributed around 40% to the running of the railways, currently the contribution is around 50%. As such, in February 2010 the former Secretary of State for Transport, Andrew Adonis, appointed Roy McNulty to head a review of the structure and costs of Britain’s railways. Yesterday, McNulty published his interim findings. Firstly, they explained the current problems with the industry. However, they also spelled out proposals that might actually make the railways more cost-effective, innovative and provide better services to customers.

Firstly, and this is something that I have banged on about before, he suggested that there should be a more focussed definition of what the railways are actually for, with ‘greater clarity and better alignment of objectives.’ The long-term goals should be to facilitate the efficient movement of goods and passengers, while ensuring the industry’s long term value for money for both the taxpayer and the passenger. While naturally people will scream and shout about fares, and I will shout with them too, reducing the cost of NR is absolutely necessary and in the long-term may actually help to bring fare prices down. But, crucially, it will also bring the contribution of the taxpayer down.

Secondly, he wants the ‘Government [to be] involved in less detail, and the rail industry accepting greater responsibility for delivering the broad objectives set by Government.’ The report also recommends longer franchises of 15 years or upwards. These are excellent recommendations. Of course, the DfT has to ensure that passengers have a minimum level of service, but if the TOCs have more freedom to innovate, buy their own rolling stock and have longer franchises, they may invest in a better service to tempt you away from other forms of transport, as this will increase their long-term revenue generation.

Third, he suggests more cooperation, coordination and goal-alignment between NR and the TOCs that will focus both on both cost reduction and the provision of good services. Indeed, while he recognised that some technical functions have to be managed nationally and can only be done by a single organisation, he argued that regional alliances should be formed and closer working initiated between local NR mangers and the TOCs. This will allow both the organisations to operate more harmoniously, plan future operations better, have improved leadership and focus on the needs of the service in a local area. Ultimately, with such an approach, costs can be driven down. This will be accompanied by a reorganisation of NR, which is sorely needed and better overall leadership of the industry from the DfT.

I will always support renationalisation, but I accept that this reality won’t come soon. As such, my philosophy is that we should try and make the private system work as well as it can. There will always be issues, and I feel that the imminent fare hikes are a mistake. Yet, this said, I am very pleased with the initial findings of the McNulty report as he has echoed what many in the railway press and industry have been saying for years. Hopefully his recommendations, the implementation of which will be overseen by a high level group chaired by the Secretary of State for Transport, Philip Hammond (a man I am begrudgingly starting to not dislike), will usher in an era when the private system finally starts to work as efficiently as it can. We still have a government which I dislike intensely and I will always remain cautious about any proposals that emanate from it, but I always try and remain positive, and as such I think that the future is brightening for Britain’s railways.

Eight Billion Pounds and Politics, Some Thoughts on Yesterday's Announcement

Yesterday the government announced that it would invest £8 billion in Britain’s railways. To the naked eye it looks like a cornucopia of spending designed to enhance Britain’s desperately strained railway network. We will get 2000 new carriages, completion of the upgrade to Thameslink, which links Bedford and Brighton through London, and the electrification of Great Western lines to Newbury and Oxford, as well as the Liverpool, Manchester, Preston and Blackpool lines. While undoubtedly good news, in reality I have a few worries about the investments.

Firstly, the figure of around 2000 new carriages certainly seems impressive at first glance. But as everyone has been quick to point out, only 650 will be allocated to augment capacity on existing services. Indeed, the rest will go to Crossrail, which as a completely new line will need new trains, and also the Thameslink fleet will be replaced. Further, while the 650 new carriages will apparently be in service by 2014, the Crossrail and Thameslink carriages will not be operational until 2020 when both these projects will be completed. Thus, for many commuters there will be a lot of waiting around for their nice new trains.

Further, there has been no announcement about where the 650 extra carriages not earmarked to Crossrail or Thameslink will be allocated. Anyone who listened to Radio 4’s ‘file on 4’ programme last week will realise that overcrowding on northern commuter routes is far worse than it is on London’s. Indeed, I have been on rush-hour trains that passed through Leeds, Huddersfield, Liverpool and Manchester, and I can vouch for feeling like a sardine. Conversely, I have been a commuter for many years in London, and can say that while the capacity problems are bad, they have never been anywhere near as stifling as my northern experience. Thus, there is a far more desperate need for the new rolling stock to be allocated to the north of England.

Subsequently, where the new carriages will be going is a crucial question. However, I worry that the process of allocation may be open to abuse for political reasons. Will the ‘not-so-Tory’ north get the carriages, or will they be placed on the London commuter routes to ‘blue’ places like Surrey and Berkshire? Given the high level of control that the Department of Transport currently has over rolling stock procurement and allocation, in that they call all the shots, this abuse may be a possibility. Indeed, the reason for the severe overcrowding in the north can historically be put down to the region consistently getting a raw deal in rolling stock allocation. History may, therefore, repeat itself.

Of course, the DfT stated that as well as the new carriages being introduced the 600 new Thameslink ones will release all the stock that is currently used for northern routes. This particularly includes the ‘to-be-electrified’ Manchester, Liverpool, Preston and Blackpool lines, a project which will be completed in 2016. Yet, given that Thameslink will be completed at the end of the decade, it means that these routes will be electrified without a suitable compliment of rolling stock being available until 4 years after the work is been completed. Further, there is no expectation that nationwide passenger growth will slow. As such, it is highly possible that when those trains arrive in the north they will not solve the capacity problem as it will have worsened. Thus, once again, the north will be getting a raw deal in rolling stock terms. But, there is another political issue that concerns me.

I may just be being cynical, but in 2012 the West Coast Main Line franchise is up for renewal and I it is possible that this factored into the DfT announcing the electrification of the Manchester, Liverpool, Preston and Blackpool lines here and now. A major factor in my theory is that two open access train operators, Alliance Rail and Grand Central, have both applied in the last two weeks to run services to Blackpool as there is no direct link from London to that place.

Could it be possible that the Department for Transport saw these new operators as a threat to the value of West Coast franchise which they are about to start the re-tendering process for? Firstly, both Alliance Rail and Grand Central will run trains out of Euston up the West Coast Main Line, which will potentially remove some of the future franchisees’ traffic along the length of the route. Secondly, the current stock that is run on the West Coast Main Line is the Alstom Pendilino, which is electric and cannot currently reach Blackpool. Yet, both Alliance Rail and Grand Central have plans to service that place using diesel traction.

Therefore, is it possible that the DfT announced the electrification to Blackpool so that they could add this route to the new West Coast franchise in the future, in an attempt to see off regional competitors and raise the value of the franchise? If this is the case, it would mean that in the tendering process they wouldn’t have to consider lower the cost of running the franchise for any future operating company, a move which would subsequently affect the DfT's own income, because of the competition diminishing its revenue-generating potential. Admittedly, this is mere speculation, but there it is a possibility.

Overall, while I support the £8 billion of investment, it isn’t without losers and the political aspect of it must always be scrutinised. At the end of the day, if politics is involved in rail investment there is the potential for it to become highly misguided.

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End Note: Isn’t it interesting that Philip Hammond spent yesterday talking about the delivery of new carriages that would ease overcrowding, yet has recently said that the new Pendilino trains, due to arrive soon, cannot be used by Virgin Trains to ease overcrowding on the West coast Main Line and will be stored. Simply madness.

Is the Department For Transport Trying to Price us off the Railways?

I often get asked by many people why, if railways are a better way to travel, does the government allow the train operating companies to continually put up fares? Indeed, in the last few weeks, as part of the Comprehensive Spending Review (CSR), we have seen the burden of paying for the privatised railway network shift towards the passenger. For three years from 2012 the price of unregulated fares will increase per year by a factor of RPI (a measure of inflation) plus 3%. This is after many years in which the formula was set at RPI+1%.

There are a number of reasons for this fare rise that I am confident that play a role in this decision. Obviously, the first is to reduce the government’s funding of the railway. If fares go up, the Train Operating Companies will earn more money, reducing the government’s need to subsidise their profits. In addition, if more money was coming into the Train Operating Companies’ coffers, Network Rail, also funded by the government, could put up the rail access charges. Thus, they in turn would earn more money, also reducing the financial burden on the public purse. Therefore, the cockamamie way that our railway industry is structured, in that the government essentially pays the private companies to run the trains, but also funds the infrastructure, is a factor in the price rise.

The second reason for the price rises is Philip Hammond, the Secretary of State for Transport, who is universally known for being pro-car, and who I suspect simply sees rail investment as a waste of money. Indeed, while in opposition he stated that road transport was the only thing that could ‘kick-start’ economic growth regionally, and, more damningly, that the railway was soaking “up ever-larger volumes of taxpayer's money” and was a “bottomless pit for public finance.” (See my earlier post on Hammond's pre-election Pro-car, anti-rail parliamentary activities HERE.) After all, through Network Rail, the railways cost the Government a lot of money through renewing rolling stock and investments in infrastructure. Therefore, on entering his post as Secretary of State for Transport, Hammond already had a view that roads were a preferable means of travel, and that railways cost too much. As such, I feel it is unlikely that his attitude has not played a role in trying to reduce the financial burden of the railways on the Department for Transport (DfT).

Considering these factors, I believe that there is a third reason for the fair rise that cannot be divulged to the public. In short, Hammond and the Government don’t want you to use the railways. Rail usage has risen considerably over the last decade, and is still predicted to increase further over the next. However, to accommodate this more investment will be required in infrastructure and rolling stock. But, with the new economic environment, and the attitudes of the Secretary of State for Transport, they’d rather not have to do this.

Thus, I suspect that the DfT may have a secret policy of effectively pricing people off the railways which would reduce the need for further expenditure in the long-term. Indeed, many commentators have commented that the RPI+3% will actually mean fewer people will use the railways. Travellers would be forced onto the roads, where, while congestion is still a problem, modification and maintenance of the infrastructure would be far cheaper for the DfT. Indeed, it is not surprising that in the CSR road projects received much more support numerically that rail ones.

Of course, it is quite possible that within the Department for Transport this is not a stated policy. All I am intimating is that if the fare rises are seen through a prism of the future infrastructure investment that will be required, Hammond’s view of rail transport and given the structure of the industry, it is possible that the DfT is secretly trying engineer how we travel through price rises to reduce their long-term costs.

No Plan and lots of Groping - Rail Policy so far under the Coalition

So, at the moment the Department for Transport (DfT) isn’t really sure what it is doing with regard to investing in important rail projects. Well, that is my impression. On Tuesday, the Secretary of State for Transport, Philip Hammond, stood up in the House of Commons and outlined a many of the department’s plans regarding transport. The railways did not, sadly, receive top-billing. Indeed, the majority of the projects that were announced were concerning investment in the road network.

In four categories, Hammond outlined the level of commitment the government had to various projects. Firstly, those investments that were cast in stone were upgrades to sections of the M1, M60, M6 and M25, as well as 12 other road projects. Yet, languishing in the second tier of projects, which are subject to ‘a best and final submission,’ were the extension to Midland Metro and a new southern entrance to Leeds station. These were guaranteed provisionally, but not with certainty. In a third tier of works, were the Leeds Rail Growth Project, the Rochdale Interchange and new vehicles for Sheffield Supertram. These will have to fight out with other road projects for a share of a £600 million pot of money. Lastly, there were another group of projects that are in a ‘pre-evaluation’ group, such as the Croxly Rail Link (linking the Metropolitan line to Watford Junction). These will be subject to further review.

And everyone went “hmm,” stroked their chins and exclaimed “hang on a minute.” Many planned large railway projects, which did not get a mention in last week’s Comprehensive Spending Review (CSR), were also absent from Hammond’s announcement. The CSR did vaguely outline some funding of big projects, such as Crossrail, the second High Speed Line and Network Rail’s Station Improvement program. However, in the CSR and Hammond’s announcement we did not hear a peep regarding the Intercity Express Programme (IEP), which was to deliver replacements for aging high speed rolling stock; nor was there a croak about the electrification of the Great Western and Midland Main Lines; neither was there any announcement regarding new rolling stock for Thameslink. This was like Hammond saying that everything was fine, when all the while everyone is looking at the house behind him that was on fire. We all could see as plain as day what he was leaving out. Indeed, all he did say about the IEP, in response to a question, was that it was under review.

What this all amounts to, is that investment in Britain’s railways under the coalition is still very uncertain. Firstly, while many projects were confirmed in the CSR, there is no way to know whether they will be developed in line with their planned formats as the announcement was vague. Additionally, this status can also be applied to Hammond’s second tier of project’s that are ‘subject to a best and final submission.’ Further, other large projects that were planned are nowhere to be seen. Lastly, there is no certainty regarding many smaller projects that will have to vie for money.

I would suggest this is because the DfT doesn’t know where they want to go with regard to railway infrastructure projects and investment. Take for example the IEP. This major investment has been mulled over since Sir Andrew Foster’s report on it in July. But, there is another factor that is in play. The progression of the IEP would be heavily dependent on the electrification of the Great Western and Midland Main Lines, and vice versa. This is because the new trains will have to run under the newly electrified lines. Therefore, to cancel one project would imperil the other because they are interlinked. As such, the DfT have to consider the two projects together; but this means that it will take longer to decide on whether they go ahead as planned or in an altered format. Additionally, consider the number of rail projects that are not confirmed, but are still in the ‘provisional’ categories listed above. This evidences a lack of conviction regarding rail investment within the Department, as they are still open to review. HS2 is also not a certainty, as technically we are still in the planning phase and the actual work on the line would not start until after the next election. Thus, as it stands, after 6 months the coalition still has no firm commitments to rail investment.

Overall, it strikes me that the DfT has very little direction regarding investment in major projects on the railways. But this is a severe problem. Railways are different from roads, in that they require vast amounts of planning to make investments because of the high capital costs and the technology involved. Thus, Hammond and the DfT quickly need to develop a plan for major capital projects on Britain’s railway network, that moves them beyond such vague terms as ‘growth’ and ‘efficiency.’ It needs to be long-term and must encompass the wants and desires of all those that demand a modern rail network. Without a plan, they will be groping their way forward for the next 5 years, making one ad hoc decision after the other. This has the potential to lead to erroneous investment, poor management decisions and ultimately higher costs for the taxpayer and the travelling public. This has been a problem for the railways in the past, and it can’t happen again.

The Evasive Philip Hammond

I think I should keep returning to criticism of our new Secretary of State for Transport because at the moment I see little sign that he has anything pro-rail to say. Now of course this is because I am pro-rail and want him to do positive things for the rail industry. Truth be told, I can’t drive, so my view is naturally going to be skewed by my self-interest and I can’t expect every Secretary of State to naturally take the position that I want. This said, Philip Hammond has repeatedly shown himself to be ignorant of rail issues. Christian Wolmar, Britain’s most noted Railway commentator, recently did an interview with Hammond for RAIL magazine and came out with the conclusion that he was a man that saw everything through a car-shaped prism (RAIL 647 pp.44). Indeed, my own Blog entry of the 11th June showed that Hammond has a history of being a pro-car voice in parliament. Therefore, while I do suffer from an obvious bias in my perspective, I think that it is vitally important that railway commentators, journalists and anyone else with an outlet, criticises him and his policies so that he understands that the railways of Britain are not just an expense which has parts that can be cut, chopped and disposed of willy-nilly.

A few days ago I came across comments he gave to the Transport Select Committee on the 26th of July. His appearance in front of the committee was a good thing as it showed us how competent he was with his new responsibilities two and a half month in. I started to read the comments with an open mind, and I suppose I can’t be too harsh when critiquing his development. Before new government was formed he had never held a shadow transport brief and therefore his learning curve was naturally going to be steeper than other individuals who could have taken the job. This said, he does have the full resources of the Department for Transport, and serving under him are the former Liberal Democrat and Conservative shadow transport secretaries. So, it isn’t like he didn’t have any help, and he should, by now, be up to speed on the major and important issues facing the railway industry. I have to be honest; the man just came off as vague and evasive. This was shown particularly in reference to the questions he received regarding the rail industry.

Early in committee the chair asked Hammond ‘One of the commitments [in the coalition agreement] is, "We are committed to fair pricing for rail travel." It is a bit vague, is it not?’ Hammond replied that the government was facing a huge public deficit (yes we know that) and that ‘it is clear that we have to be prepared to look at all possible options in addressing the challenges of tackling fiscal deficit and also sustaining investment in our railways because it is clear that there are important investments in the railway, including investments that are directed at improving passenger comfort and passenger convenience, that it would be very unfortunate if we were to lose...’

So basically Hammond answered the question by not answering the question. So the questioner had another crack at him. ‘Q7 Chair: ....You are committed to fair pricing. Fair to whom?’ Again Philip Hammond did his best to avoid answering the question directly. ‘I think there are two aspects on this. First of all, there is the question of overall fairness policy on the railway and ensuring that any increases in fares can be justified in terms of improvements in the service that passengers receive. [....] It is not just about fares; it is about value for money for passengers. [...] It is about making sure that [passengers] are given proper information about the most advantageous fare available to them, that the information that is published is clear so that passengers can get the best deal that is possible within any given framework of any given fare structure.’ This is ridiculous. He is not only did not answer the question again, but he is also confusing quality of service with fairness.

Indeed, in the context of his recent RAIL magazine conference keynote speech, I think that he was avoiding the question because he has little intention of making rail prices ‘fair.’ He said that “we will face some stark choices, and it would be irresponsible at this point to rule out even considering an increased contribution from the fare payer as part of the solution to protecting investment in the railways.” If we consider that at the moment a large section of the population are priced out of using rail transportation because of the cost, and that the prices currently can in no way be considered ‘fair,’ then it seems that prices can only become more unfair. In the mind of the Hammond, putting fares up is all that can be done with them. Indeed, I think that the concept of ‘fair’ in the conventional sense does not seem to register with him. This was essentially because it was part of the Liberal Democrat manifesto to introduce ‘fair’ rail pricing, and hence why it made into the coalition agreement. For him, a dyed in the wool Conservative, fairness is not the underlying principal, the bottom line is. As such, Hammond avoided the committee’s question as he knows that it is a commitment that it is untenable to maintain. If only he’d have come out and said “yes, sorry, that one was the Lib Dems sticking their awe in…forget it,” then I might have had a bit of respect for him.

He was then asked about the cuts that would inevitably come, ‘The Department of Business, Innovation and Skills said last week that the UK needs to spend £42 billion per annum on infrastructure investment, including transport. How is that going to be achieved in current circumstances?’ Philip Hammond again didn’t answer the question effectively. He stated that there would be no reduction in any capital expenditure that had been pencilled in by the Labour Government. Yet, I think the word ‘pencilled’ is very telling. Combine this with the lack of specifics and there is a case for saying that he did not answer the question in full, again, because he knows that he cannot actually commit to cancelling projects that this point. This is another case where I’d really just appreciate some honesty from the man, yet, he says he will be keeping the investment. In no world is that really a reality and most rail commentators have pointed out the department will have to make cuts in capital expenditure.

Of course there is one area where costs could be reduced effectively, namely at Network Rail. NR does cost between 30 and 50 present more in maintenance per mile than continental railways, and Roy McNulty will report on how the not-for-profit organisation operates and can reduce the debt. At the RAIL conference Hammond said that he had received a ‘scoping study report from Sir Roy. I suspect that this gave him a number of preliminary conclusions about the state of NR’s finances. Yet, at the both the conference and in front of the committee he couldn’t give a cogent response to question as to where the NR may be scaled back. In fact there were no specifics. I’ll just post all of his response to the question here, so that you can get the full force of his evasion.

Q24: “Just thinking on my feet, it is not something that has been talked about actively in the department in the time that I have been there…Clearly, because of what I have already said about the way we will, in every day working terms, think about Network Rail’s debt, we will not be able to take the attitude that the previous administration did to ever rising Network Rail debt. We will have to look again at how we finance the capital investment in the railways. The mere fact that it may be borrowing by Network Rail does not mean we can ignore it. We will want to look at that as capital spending in the same way that we would if it was financed by public capital investment directly. That will mean that we need to look at the model once we have Sir Roy McNulty’s conclusions and hopefully have come to some conclusions before we begin the negotiations around the next control period, control period five.”

Did you read any ideas within that? No, I didn’t either. I find it hard to believe that a man who has been doing the job for nearly three months has no ideas whatsoever about where NR could make savings. I suspect that he is avoiding answering the question of where NR will have to cut back because to do so would reveal changes he wants to introduce that may actually go against the coalition and which would break promises. Either that or he is out of the loop to the point of incompetence.

You can read all of Hammond’s responses to questions HERE, but I suspect it won’t get you far because he never gives an informed response to a question regarding Britain’s railways.The reality is that he hasn't had that decency to tell the travelling public what he is really keen to do, put up fares and cut back services. He comes across as a man who is evasive but has an agenda that he is not keen to reveal. That, I’m afraid, is simply not good enough!

Philip Hammond's full keynote speech at the RAIL conference can be read in the latest issue of RAIL Magazine pp. 34-37.

Proving that Philip Hammond, the Transport Secretary, is pro-car, anti-rail...Sardine time!

The new Secretary of State for Transport, Philip Hammond, is still a worrying figure. I never know what he is going to do next. Last week he announced that the last government's train carriage procurement programme would undergo an “urgent reappraisal.” This programme was put in place by Labour in March 2007 to build for Britain's railway network 1,300 brand-spanking, shiny new carriages by March 2014. By March this year 526 had been delivered with around a 100 more on order. The carriages were introduced to ease the capacity problems that have the potential to make everyone feel like a sardine in the near future, as it was estimated that by March 2014 there would be a 17 per cent (64,900) increase in peak commuter traffic into London, and a 27 per cent rise (17,400) in the numbers of people travelling into other cities.

With the economic crisis in full swing, it was unlikely that these sorts of projects would be immune from cuts. Lets face it, while capacity is a severe problem between 8 and 9 am, when there is on weekdays half the day's inward London commuter traffic, capacity is not a problem at other times. Therefore, the rational for vast expenditure on just one hour of traffic is not as great as safety equipment, new lines or maintenance. After all, people can just travel earlier if they don't like it. That is, at least, what some people think.

The backdrop for the “urgent reappraisal” of the project was the National Audit Office's (NAO) report on the government's plans to address the potential capacity problems. Now the report, which has been framed by almost every news outlets as being a 'hammer-blow' to the project and a shocking indictment of profligate Labour spending, was quite measured in looking at the programme from a viewpoint in a changed economic environment. If people had bothered to read it (well I've read the summary) they would have realised this.

It stated a number of things that perhaps we should have really expected with an economic downturn. Firstly the growth in commuter passengers is unlikely to materialise as predicted. We're not, however, talking a 20% drop, not even 10%, but only a meagre 5%, and even that is a bit pie-in-the-sky as the report suggests that “There are some signs that the recession has indeed reduced the use of rail but the extent of the impact is not yet clear.” Secondly, the report stated that the cost of building the new carriages has gone up since 2007, which means that the Department for Transport would either have to incur more cost to fund the same number of carriages, or keep spending at the same level and purchase fewer carriages. This was, quite naturally, a good chance for the Daily Mail to attack Labour by accusing it of wasteful spending.

But in reality the report was a mixed one for the former government. It criticises the model that they used for predicting passenger rises, stating that the sample of information used was not large enough. The predictions also did not take into account the relationship between economic growth and passenger numbers, and made assumptions that simplified the realities of the real world so that result could be obtained. Thus these factors may have distorted the predictions. But let us not get totally disheartened. Overall the report stated that the forecasting was 'robust' and was based on a 'good knowledge of the railway network.' Indeed, it also states that the real world assumptions were inevitable given that it is incredibly difficult to predict some passenger behaviour, for example when a passenger changes off their 'preferred' train because they don't want to be on a crowded one. Further, it also stated that the models used for economic growth were 'in line with treasury guidance,' and on this count the DfT cannot be blamed as they wouldn't really go elsewhere for this information now would they? Therefore, there may be some room for justifiable criticism of the forecasts, but in reality I will give the Labour DfT 6/10, as some things were done right.

Indeed, Philip Hammond saying that the former government was profligate with money actually contradicts the report. It states that the Department, 'is assessing each scheme again for value for money before approving them.' While on a cursory reading this may seem that these assessments were introduced by the current government, the NAO was actually compiling information for the report between July and October 2009. It was, therefore, the previous government that was assessing each project's value for money, and for Hammond to make this claim when the initial rational for the procurement project was sound and the change in economic environment was unknown in 2007, is verging on ridiculous. Let us not forget, it was they who actually commissioned the report, and there is nothing to say that they wouldn't have decided to put the new carriages on hold as well. Hammond is therefore just using the report to bash the previous government. While that is something I am never afraid of doing, I won't do it unfairly.

In truth, I think it is sensible in the short-term for the government to reassess the building of new carriages, especially as the cost is now higher than it was before. What has really got me worried, what has really made me stir, is Hammond. I suspect this will be used by him as the basis to rule out, for the term of this government, any new carriage procurement or capacity-increasing measures. It will mean that as the passenger traffic continues to grow (and remember they can't prove yet that there has been any drop in numbers) the government will simply allow passenger trains to become more crowded. I can't prove for sure that this is Hammond's long-term thinking, but it wouldn't surprise me given the evidence that I will now present proving his pro-road, anti-rail perspective.

Now I have banged on about Hammond's suspected pro-road attitude before in the blog, citing comments he has made that I think allude to it. Yet I (and the rest of the media apparently) have found nothing concrete, nothing solid, that confirms all the fears of those in the railway industry or in the press that he holds these views. Hammond, as the head of the Department of Transport, isn't exactly going to state that he prefers one form of travel over another is he (and congratulations to Norman Baker, Minister of State for Transport for dodging the question on the Daily Politics Show earlier). To come out explicitly favouring one sort of transport when he hasn't been long in the job would be lunacy.

So I did a bit of digging on a wonderful site called 'They Work For You', looking for any comments that Hammond has made on his possible love of cars as opposed to railways. I did not expect to find the evidence that follows. This evidence conclusively proves what I have come to suspect in the last few months. In a debate in Parliament on regional policy in January 2003 Hammond made this comment:-

“Although everyone would like railways and airports in their regions that will help to generate economic development, such transport investments depend on volume and critical mass to deliver effective services. I am afraid to say—because it flies in the face of much Government thinking—that only roads, as a form of transport infrastructure, are likely to deliver the short-term immediate benefits to the regions where economic development needs kick-starting.”

How about this this one from a debate in November of 2003 on the Quality of Life, when he said:-

“If those people go by train, they will have plenty of time to ponder on the longer journey times and decreased reliability of a railway that is soaking up ever-larger volumes of taxpayer's money. And they will perhaps have a chance to consider the Government's extraordinary feat in turning a poorly performing element of our infrastructure—our national railway—into a worse performing one, which now seems to need to double as a bottomless pit for public finance, if we are to avoid its imploding completely. If they go by car, they will be able to contemplate the £45 billion in taxes that Government impose on motorists, while considering that Britain's spends the lowest proportion of motoring taxes on transport of any country in the western world.”

His last comment is from the Finance Bill, debated in June 2008, in which he uses a 'road' example and breezes over rail investment as being good for business:-

“One can envisage such situations with railway or new road infrastructure, if we are trying to encourage private companies, as the Government have done with the M6 toll motorway for investment in road infrastructure. Similar considerations would apply—very long payback periods for very durable pieces of investment.”

I will let you read what you will into these comments individually. However, joining the dots between them, which are all clearly on the pro-car side of the fence, and his more recent statements that I have detailed in a previous blog entry, (To be found HERE) the evidence suggests that we have a Secretary of State for transport that is very anti-railways and very pro-roads. Therefore, having Hammond as Transport Secretary may potentially mean that rail investment as a whole will suffer, while the car reigns supreme. I feel I need to be dipped in Oil, it's Sardine time!

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The Worrying Transport Secretary, Mr Hammond...

So this has been a tough week for me...I'm starting to worry about the new transport secretary. I wrote a few weeks back about how traditionally Conservative governments haven't ordinarily been the best for the railways in terms of investment, attitude and simply being logical about policy. It is quickly starting to seem that Philip Hammond, the new Secretary of State, simply isn't the best for the Department of Transport (DfT). This isn't a matter of cuts, we know that they'll happen. Indeed, under the new regime, nearly £700 million has already been cut from the DfT's budget, including £100 million from the profligate Network Rail, £108 million from Transport for London, £309 from grants to local transport authorities for investment and the £50 million 'Better Rail Stations' scheme has been scrapped. This said, certain things such as Crossrail, the new High Speed line and, much to my astonishment, the electrification scheme, have all been guaranteed and the government's commitment is secure.

No, my concern is that Hammond is a man who is unsuitable for the Department for Transport. This is especially pertinent as there are so many other individuals that, in my opinion, would have been better in that post. Lets look at Hammond's résumé. Now being Secretary of State for Transport you'd expect to find some background knowledge of transport matters apart from the fact he pootles around in his car. Yea, I couldn't find anything, not one jot, apart from his intimate knowledge of his Jaguar XJ. Hammond was elected as MP for Runymead and Weybridge in 1997, and before then had a business career in property, manufacturing, consultancy and oil and gas. He also had a position of the board of the property developers, the Castlemead Group, and has had various consulting jobs, most notably for the Malawian Government and the World Bank. As such he apparently still holds onto many business interests, having a small fortune of a 9 million pounds according to the New Statesman.

So let me get this straight, this man has not had a career anywhere near transport, that's of course beyond flying to Malawi and driving. OK, well surely in opposition he was shadow Transport Secretary and has learnt about Transport issues? No, wait, that was Theresa Villers. Hammond was Shadow Secretary to the Treasury. Therefore my conclusion is that Hammond doesn't know about transport beyond his own experiences of it. Instead, he knows about money. I appreciate that money is a big issue at the moment, and we need someone that is savvy about such things, but on the flip side we also need someone who knows about transport, not just from their subjective perspective. But hey, the last holder of the post, Lord Adonis, wasn't that aware of transport issues before he started, beyond being very interested in them and, I suspect, being a railway enthusiast. But he learnt on the job, listened to experts, read all the documents. Therefore, while I genuinely feel that government posts should always be given to people who actually know about the department they are working in (George Osborne...really?), if we have to have have Secretary of States with no background pertinent to the job of the department, then they should take time to understand everything they can about it.

In this vein I'd expect Hammond at this stage to be making measured and constructive comments...right?...sorry, wrong again. Hammond has already deferred to his own subjective opinion when opening his mouth. Firstly, as I pointed out recently, Hammond believes that under Labour there was a 'War on motorists,' something he announced on his first full day in the job. Where? Do you hear the guns? Or perhaps the distressed motorist yearning for the battle to be over. Lets get this straight, the 'war' never existed. Its in his head. But then again, he is a motorist! What's more he has already talked, in an interview with the Evening Standard about his attitude towards cyclists, a number in which I count myself.

Now, just to put this on record, I believe that a lot of cyclists are idiots, who are reckless to the point of insanity. But I was knocked off my bike about a month ago, even though I had right of way, good lights and was being cautious. The moral is that even we cyclists who obey the rules of the road are just as much at mercy from bad driving, as drivers are from reckless cyclists. Therefore imagine my consternation when Hammond in an Evening Standard interview stated that, “Cyclists need to be more aware of the risks around them. It frightens me to death when I see them pull out around other cyclists, completely unaware there is a car behind. Maybe they need wing mirrors.” So it is completely the fault of the cyclist is it Mr Hammond? That's what he seems to be saying. While many cyclists clearly do need to be more aware of what is happening around them, I think that so do many more drivers. This isn't a one way street, everyone on the road needs to address why hundreds of people get killed and injured on them every week. Hammond, is clearly is deferring to his subjective view for his opinion.

But can it get worse....? You bet. Apparently the man cares about the environment. In the Evening Standard interview, he clearly had no views about the environmental aspect of public transport, barely mentioning them. His only viewpoint was that when he brought his new Jaguar XJ it was the 'greenest in its class.' This again highlights that Hammond is a car-lover and even though he denied being a 'petrol head' it strikes me that all the evidence points to the fact he is. He did, however, state as a convenient caveat that he doesn't like Top Gear. There is no logic in this statement. I didn't like Michael Portilo's recent BBC series, Great British Railway Journeys, where trekked round the country rail. So, by that logic, I must hate railways. Wrong...I love railways, I can't get enough of them.

It strikes me that Hammond is quite clearly a fan of the roads who hasn't the experience to deal with public transport. But, being a man who knows about business and money, he will know about sweating assets and earning revenue. These things, of course, will need to be done, but I suspect, however, he will have a detrimental, motorist-centric, view of transport policy. I really do hope that he does become more friendly towards every other form of transport, other than the car, but I don't hold out much hope. In short, we need better than this...Hammond isn't good enough.

If you want to read the Evening Standard interview with Philip Hammond, it can be found HERE