Posted 4th November 2010 | 14 Comments

McNulty warns costs must drop or closures lie ahead

THE man who has been given the task of assessing rail's value for money for the government has warned that continued taxpayer support of more than £5 billion a year cannot be sustained, and that closures are inevitable unless the industry can trim its costs.

Sir Roy McNulty was speaking at the annual conference of the Derby and Derbyshire Rail Forum, whose delegates were told that costs must come down. If not, there will be less investment and a 'smaller network'.

Sir Roy was appointed by the last government to carry out a review of rail spending, and his full report is due early next year. However, since the election the new transport secretary Philip Hammond has asked him to provide an interim report, which should be published later this month.

However, although Sir Roy warned that closures were possible, he said that was still Plan B, and that he was working on Plan A, which involves maintaining the momentum but reducing the amount the industry spends.

But he did deny reports that a list of possible closures had already been prepared. "That's not true," he insisted. "That would be Plan B, and we are concentrating on Plan A."

He also questioned whether the industry was perhaps too obsessed with 'standards', and whether there are too many bodies responsible for developing and maintaining them.

He revealed that his research this year had uncovered more issues than had been expected, and these were now being investigated in detail.

He had found that the industry was suffering from poor control of its costs, and was being hindered by a lack of clear objectives from government.

"There is also very little innovation," he added, "which surprised me in an industry where a substantial part is run by the private sector.  We are investigating whether the present structure of the industry is stifling new ideas."

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • DJW, York, England

    Rather than attacking guards and staff in general (there was a report today in the Torygraph that salaries had gone up by more than 20% higher thanf private industry since 1996 - true, but take home wages haven't, as privatisation just consolidated drivers' wages into a salary rather than overtime and allowances) could someone not focus onto the fact that ROSCO's charge a fortune to lease out 30-year-old trains that are falling to bits and have to be maintained BY THE TOC's with bits of newspaper and blocks of wood (no, I'm not joking). If traincrew were one tenth as bolshie as some people make out they'd fail 50% of the trains on the Northern network before they left depot.

    There's a growing tide of right-wing newspapers trying to get the general public to feel that rail staff are all millionaires who are cossetted from reality on fat pensions and wages not far short of city bankers, obviously to deflect from the growing fact that privatisation, while making many shareholders and directors fabulously rich, has been an utter failure in the face of rising commuter and leisure traffic

    . Apparently all the industry's problems are to be solved by creating 1000's of 'Mcdrivers' on burger-bar terms and conditions. As Richard Littlejohn recently opined 'There's thousands of Poles who can do your job for half the wage'. What a pity the Poles can't be trained in journalism, as I'm sure they wouldn't come up with such cack that the staff are all rolling in it as the reason that a railway that has increased patronage by 40% in 6 years, like Northern, yet still has 30 year old equipment but is paying up-to-date prices for it, is operating at a higher cost than a German counterpart that also enjoys greater subsidies.

  • Adam, Norwich

    Here we go again Dr Beeching, leave off our railways, you know dam well that roads cost a lot more money than the railways, in fact some roads are not that well used and should be closed, that would save the taxpayer lots of money, and the fact remains that some of our rail line cost more money is due to the fact that they are under invested in, one in particular comes to mind, Blackpool South to Colne were the line once crossed in to Skipton North Yorkshire, its just 11.5 miles of railway, by the way this was not a Dr Beeching closure, but Barbera Castle MP.

    Now a group called SELARP (Skipton East Lancashire Rail Action Partnership) are trying their very best to get this vital missing link back as a Link between the West Coast Main Line and the East Coast Main Line, which they know would be very well used for both pasenger and freight, so once again people will have a fast direct link with Manchester, Leeds, Bradford, Liverpool, Preston. Now their sticking point is Lancashire County Council, saying that it only backs the project in principal, that means no funds for the Full study or Grip 3, SELRAP knows that a large part of the project would be funded using private funds and so does LCC, so whats the issue with putting up 1.5 million for the study, when it makes economic sense to do so, stoping any though that the Colne to Preston line could close, due to the fact its not making much money when they created the proble in the first place along with the Government of the time.

  • Paul Davies, Warrington, England

    I've read what has been said so far from the above and from McNulty. I drive trains for a living, and anyone in the industry will tell you that there is too many Cheifs and not enough Indians. Too many managers working against each other and tit for tat pettiness is all too rife. For instance, if a train company has one of it's trains running late then Network Rail charge for that late runner. The company will then look how it can claw back that charge and try blaming, ie, poor signalling. Going back to a national railway I dont think will solve anything. We do need in my veiw to cut out management, get more drivers on more trains that can operate on a well run infrastructure, because what we have now is just a joke. Network Rail is a cashcow, poorly run and full of poor management. How can replacing a rail take twelve months to plan ? There are parts of the McNulty report that screams obvious. We can only hope common sense prevails and he starts at the top where the biggest savings can be made, we've never had so many people travelling on trains, so to cut services would be an even more than obvious mistake.

  • Peter, Reading, England

    If closures are on the agenda, then Network Rail must be one of the chief culprits.

    On the one hand it has signally failed to control costs - anyone who visits a signalling centre on a night shift will see immediately how millions are hosed away on chaotic possession and train planning - and on the other it has done next to nothing to develop the network.

    Since the TOCs are currently just short term franchises, Network Rail must necessarily take on this role. But it has compeletely failed to do so. When anyone comes up with a project to expand the network, it just kills it stone dead with crazy cost estimates.

    All it can think of is trying to cut costs by petty penny pinching at local level while a top-heavy management structure is left untouched. They are even building a new palace in Milton Keynes to house these managers.

    So let's wash out this failed quango and go back to vertical integration. Merseyrail wanted to start the process: let's let them get on with it.

  • H Harvey, Birmingham

    There is no doubt that the Last Conservative government saddled the railways with the confusion and costs that is todays privatised franchised railway. Even members of the current conservative party have confessed to this disaster.
    Yet we are again the same conservative party reorganising to destroy the railway they failed to destroy in the 1990s.
    Unfortunately the Labour [party also failed gfthe railways by their failure to renationalise in the early years of the Blair governments.

    The rising patronage on rail has little to do with privatisation despite claims to the contrary whereas BR may have suffered from duplication the current system suffers from multiplication on a grand scale.
    Now only fools would consider Hammond a fool and he must realise that this is the major problem as must McNulty and must raise the question as to why they apparently fail to mention it.
    To suggest closure as McNulty hasepoertedly threatened againstyt a background of significantlly rising patronage must raise suspicions of prejudice.
    Surely not after all Mcnulty has a aviation background and Hammond has ended the 'war on the motorist when I seem to remember the labour government falling over backwards to placate the followers of JC and do I recall another Hammond somewhere.
    Surely the prejudices of Motorway Marples and his deputy Beeching have been exposed many times and the lessons learned by now..

  • Greg Tingey, London, England

    Network Rail, under the now-thankfully-departed Coucher, has a lot to answer for here.
    If NR's costs can be got down, we won't need closures.
    I don't think they are politically acceptable any more, especially given re-openings in Wales and Scotland.
    We do need SENSIBLE investment.

  • Paul, London, England

    The fact McNulty is even discussing a Plan B involving line closures is very worrying. But at the same time, this Plan B defies every form of logic.

    The use of rail as a mode is higher now than it has been for 65 years. In todays digital age, people are increasing time poor, yet have higher and higher mobility needs for work and leisure. Hence that increase in public transport use, where one can use time most productively and arrive at many destinations more quickly. If you then add into the mix our climate change challenge, the imminent arrival of peak oil that will substantially increase the cost of air and private car travel, plus the increasing need to travel - the only sensible answer can be increasing investment in more clean public transport capacity. Hence the need for a high speed network, electrification of existing routes, re-signalling and remodelling to release capacity, longer trains and platforms and re-opening closed routes.

    Given that there isn't any spare cash for such investment, McNulty's report must focus on Plan A - the need to reduce the costs of the rail industry to principally free up valuable cash for investment.

    Should TOCs be incentivised to provide extra capacity ? How can this be achivied where TOC's are in danger of abusing a captive market? Should NR lead investment in stations and track, or should this be driven by the TOC ? What is the cheapest, simplest and quickest way of delivering this ?

  • John Ball, Falmouth, UK

    A lot depends on the attitude of local councils. Some have shown a readiness to support their local railway - for example Cornwall County Council backing the reinstatement of crossing facilities at Penryn and a half hourly service during the day 6 days a week on the Falmouth branch, or Dorset County Council backing the signalling costs of restoring a regular service on the Swanage branch. However, Wales and Scotland have been more prepared to invest in railways than in England.

  • David Spencer, Bolton, UK

    =We must find ways of reducing costs and increasing efficiency. As a regular passenger reduction in costs are not difficult to identifiy. One obvious reduction is the 7 day railway in which we have special timetables for Sundays. No other railway in Europe operates this way. It must cost a fortune to simply have trains in the right place on Monday morning. The second saving is one man operated commuter trains. We do not need guards on trains. Roving inspectors can check tickets but to have guards sat on their bums all day is rediculous.
    The third idea is Parry People Mover use. There are lots of lightly used lines where the PPM vehicles would dramatically reduce costs.

  • John Buckeridge, Woodford Halse, England

    We have to accept that closures are inevitable now that Hammond wants to give TOCs more control over the services they run and Network Rail has been told to reduce its costs. The industry is in many ways back in the position it was in the late 1950s with Network Rail haemorraghing debt despite relatively high passenger numbers. The structure of the BTC was, like today's privatised railway, a bureaucratic nightmare.

    The next question is: which of the lines will close and what kind of a fight will be put up? The worst-hit areas will be, as always, the Beeching survivors such as the St Ives line and other secondary routes like the Erewash Valley route. This is another reason why talk about HS2 should cease until we get the industry's structure right. Lucky for Scotland and Wales that they have control over their railways.

  • andrew ganley, cheam, uk

    Strange BR managed to run a railway on alot less than 5billion,when will
    people wake up to the fact that rail privatisation has been a big mistake,
    unless your a Stagecoach or First group shareholder!,

  • Paul Martin, York, North Yorkshire

    A worrying full circle.

  • Rob, Leeds

    Please don't let this happen. We should be expanding our railways - re-opening closed lines, NOT closing them.

    This sounds like a sad day to me.

  • Barry Purslow, Anaheim, USA

    Sounds like Dr Beeching has returned. The finest rail system in the world cannot be destroyed. Find ways to control costs or it may be.