IN another guise I write for a magazine about worldwide transport and logistics matters, which helps keep me informed of many international developments.
Among recent material to reach me was a copy of an interview – in the The Hindu newspaper – headed ‘Lessons from UK rail privatisation’ – with UK rail minister Tom Harris.
The Labour minister told the Indian publication that privatisation happened for the wrong reasons, in the wrong context and was done by the Conservatives in a wrong way.
He went on to say that there was an assumption that privatisation would allow the new owners to oversee the decline and death of Britain’s railways – and that it was the wrong structure.
But Tom Harris added: “When the Labour Government returned in 1997, we did not want to return the railways back to the public sector for a number of reasons, not least of which is cost.”
This, of course, totally overlooks the fact that, prior to the 1997 general election, Labour in opposition had threatened many times to take the railways back into the public sector. The problem was that Labour’s threat allowed Railtrack to be floated on the stock market relatively cheaply, raising only a modest £1.9 billion for the Exchequer (after a write-off of £225 million to get Thameslink started).
However, Railtrack then managed a steady increase in its share price, mainly by not spending adequate money on maintenance and renewals. By October 1998 its equity value had grown four-fold to £8 billion, so no government was likely to countenance the network going back into the public sector.
But then, of course, it all, quite literally, fell apart at Hatfield – although what really broke the back (and the bank) of Railtrack was the mismanagement of West Coast route modernisation, which soared from an original £2 billion to a forecast £14 billion.
Tough action by Richard Bowker, when heading the SRA, got the WCML cost back to nearer £8 billion, but the project will be finished four years later than planned, and with only 125 mph top speed instead of 140.
Railtrack's replacement, Network Rail, is not reckoned to be in the public sector – yet the Government guarantees all its borrowings. And the reason NR is having to spend so much is to catch up on all the maintenance and renewals not done, or not done properly, by its predecessor.
So today we still have a hugely expensive railway. And, as oil heads towards $150 or even $200 a barrel and calls mount for a rolling programme of electrification, studies show that electric infrastructure costs in Britain can be up to four times higher than in the rest of Europe. Partly, this is caused by high disruption costs due to massive blockades, compensation to TOCs and huge payments for bus replacement services.
Current estimates for main line electrification, which Network Rail and the Railway Industry Association are now determinedly trying to reduce, are up to £1 million per mile.
Despite telling The Hindu that privatisation’s structure was wrong, Tom Harris nevertheless went on to say: “I now believe we’ve got more or less the right structure.” By this he seemed to mean that we have got Network Rail instead of Railtrack.
But we have still got a structure that separates wheel from rail, with an infrastructure owner, Network Rail, which seems more focused on engineering excellence than on operating the network. Plus a multitude of train operators and franchisees whose differing (and sometimes competing) interests have to be moderated by the Office of Rail Regulation and/or the Department for Transport.
Many railway professionals still argue for the management of train operating (wheel) and infrastructure (rail) to be brought back together. That doesn't necessarily mean re-nationalisation, as Mr Harris implied in his interview with The Hindu, when he asked: “My question is, what will re-nationalisation give us that we don't already have?”
Re-integration of wheel and rail (or, at least, closer integration) seemed to be on the Conservative agenda when Chris Grayling was shadow transport spokesman, but since he was moved to the work and pensions’ portfolio the Tories have gone quiet on the subject.
Maybe they are looking again, as they did in the early 1990s, at events in New Zealand. The government there decided last year to buy back the rail infrastructure for just one New Zealand dollar (39 pence) to be controlled by OnTrack, a ‘down-under’ version of Network Rail. Last month it also agreed to buy back the train operations from Australia's Toll Corporation, and re-integrate infrastructure and train services.
“The government believes a fully modernised rail system will be a central component in our work to build a truly sustainable economy,” said New Zealand Prime Minister Helen Clark.
The Kiwis have decided public ownership is their preferred route. But it needn’t have been. The crucial decision they have taken is to integrate train operations and infrastructure management under a cohesive management structure.
Helen Clark said: “Buying the rail operational business enables the government to implement a sustainable, integrated transport strategy and to invest in the business to further rail’s potential to contribute in a much more meaningful way to the economy.”
Maybe we might hear a British Prime Minister saying something similar in a year or two.