R972 - Tightening the purse strings

There was a time when a government would trumpet its five-year plan for Network Rail’s spending. That time has gone.

But permit me a touch of nostalgia from the heady days of 2012. Justine Greening occupied the Transport Secretary’s office, and she had so much to say that the railway press pack was duly summoned to St Pancras station (if memory serves) to hear her speak.

Greening told RAIL: “We’ve had under-investment in railways under previous governments. I’m not going to make that mistake.”

At the plan’s official launch, Prime Minister David Cameron said of the £9 billion High Level Output Specification (HLOS) investment: “In what is the biggest modernisation of our railways since the Victorian era, this investment will mean faster journeys, more seats, better access to stations, greater freight links and a truly world-class rail network.”

What the plan promised was a huge electrification project, including the Great Western Main Line into Wales, the Midland Main Line to Sheffield, and the trans-Pennine route from Manchester to York via Huddersfield. Wires would run from Bedford to Bletchley and onwards over a reopened line to Bicester and Oxford to meet GW wires.

There would be an electric route from Southampton to the industry of the Midlands and South Yorkshire via Oxford. It was a genuinely exciting time and provided rail’s contribution to a feel-good summer that culminated in the success of London’s 2012 Olympic Games.

In retrospect, it was a high spot for Britain’s rail network. The first stumble came within weeks, when the DfT awarded its Intercity West Coast franchise to FirstGroup, triggering legal action from incumbent Virgin Trains that ultimately led to DfT reversing its decision.

The franchising system never really recovered. Sure, there were successful awards later in the decade, but the winners of the deals for TransPennine Express, Northern and South Western ran into all sorts of difficulties - as did First when it finally took charge at West Coast in 2019 under a new Avanti branding.

Meanwhile, Greening’s electrification plan stalled in the face of rising costs and delays. It transformed the Western for the better, but Bristol was cut from the scheme and is today served with bi-mode trains. Oxford waits for wires, while East West Rail through Bletchley will enter service in a couple of years as a diesel railway despite all the pledges to decarbonise.

Midland Main Line wiring teams are inching northwards. They might aspire to reach Sheffield, but the current funding limit is Market Harborough. So too the Trans-Pennine wiring plan. It was on, then off, and is once again on. Nevertheless, it’s lost a decade.

Little wonder that subsequent HLOSs were more muted. The 2017 version still had money for enhancements, but was more subdued.

So, what of 2022? Well, take 2017 and push it down a notch. It’s low-calorie. There’s none of  2012’s sugar. The headline figures look bad: DfT funding was £34.7bn for 2019-24; it’s £27.5bn for 2024-29. That’s for England and Wales. Scotland has its own settlement from its government that should be published early in 2023.

If that headline lands as reality, then ministers may think they’ve scored a success, because the message it carries is that rail has tough days ahead without the cash it’s been used to. From Whitehall’s perspective, it counters trade union claims for pay rises.

But look behind the headline and the situation is different. There’s no direct comparison between 2017’s figure and 2022’s. The former included a slug of money (almost £10bn) for enhancements. That’s gone from 2022’s figure, which leaves a real-terms increase of 4.4%, according to DfT.

That’s not generous, but Network Rail seems happy. And even if this 4% rise sticks in minds, it still compares badly with union demands.

Ministers will argue that the answer to demands for higher pay is modernisation and reform. Indeed, the words appear in the HLOS, and Transport Secretary Mark Harper told MPs in his written statement that the Government would press ahead with rail reform. He pledged to address the railway’s challenges, naming fragmentation and outdated working practices.

The HLOS itself contains the motherhood and apple pie statements that you’d expect from any minister. So, the rail network needs to reflect passenger priorities of punctuality and reliability. It needs to be safe. It needs to provide value for money for farepayers and taxpayers. It needs to be integrated, inclusive and efficient.

The key test comes in how NR translates these vague high-level demands into business plans, and how the Office of Rail and Road divides the money into operations, maintenance and renewals. That detail will come over the next year, in time for Control Period 7 to start on April 1 2024.

Without precise targets, NR has a difficult job to balance the different demands contained within DfT’s HLOS. The document itself struggles to balance these demands in places. There’s one paragraph that starts talking about financial sustainability, before saying that NR must give due regard to “any disadvantaged groups that hold one or more of the protected characteristics”.

I quote that to show the very precise language the HLOS deploys in places, but the paragraph then continues with an insistence that NR supports revenue-generative flows while ensuring those that need subsidy receive an appropriate level of service.

Read into that what you will. I read into it that NR (and by extension the rest of the railway) should get on with providing level access between platforms and trains, as well as the access needed to reach those platforms.

Of course, that needs DfT to accept that Britain needs trains with lower floors. I’d urge DfT to build this requirement explicitly into future passenger service contracts, and not merely include phrases such as “promoting accessibility and inclusion”.

There are two ways of looking at the demand to support revenue-generative flows. I think it’s a strong steer towards more support for non-commuter traffic - what most people call the leisure market. To take the East Coast Main Line as an example, operator LNER has recovered strongly from the pandemic, and this recovery is driven by leisure travellers.

Anecdotal evidence (OK, the coffee shop staff at York station) suggests that Sunday is the busiest day. So, over the autumn we’ve seen NR divert LNER trains via Carlisle for several weekends and then via Spalding and Lincoln on other weekends. That lengthens journeys and cuts capacity - not what a booming route needs.

In providing whatever an appropriate level of service means for routes that need subsidy, I hope NR and DfT don’t forget that the railway is a network with trunk routes fed by and feeding branches. A poor branch service discourages travel.

The sting in the tail is that an appropriate level of service could be far lower than we see today. With funding best described as tight, we look to be entering a painful period for rail.

Nigel Harris is away.

Written by Phil Haigh

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