[UK][Article] End of the line for rail subsidies

sceptre

First part of a two-parter. File under "opinion". It's rather critical of rail subsidy, though I'm interested in reading the second part.

End of the line for rail subsidies

In the first of a two-part series we look at the spiralling cost of train travel

Sir Christopher Foster
Sunday August 3, 2003
The Observer

What is the future for our railways? Over the last year rail traffic has hardly grown and is now flat. In the last few years the cost of running the network has about doubled despite no additional capacity being added. Surely the time has come for a radical rethink on whether to abolish across-the-board rail subsidies?

Instead, perhaps, public money should be targeted only where it is essential - on the commuter lines in London and the South-East, for instance - and let the market take care of the rest. But what ever happens, it is imperative that we know all the facts about the subsidy soakaways that are our railways.

Why have costs risen so much? The first factor pushing up rail costs since Hatfield has been a return to adopting engineering rather than commercial standards for maintenance. If an engineer says that something should be done then it is done whatever the cost. The genius of the railways from the days of its greatest chairman, the first Sir Robert Reid, was that it struck a balance between what was desirable on engineering grounds and commercial reality.

Cost-effectiveness improved dramatically. There was no loss in reliability. Indeed it improved. And the acid test was that safety continued to improve. There were fewer accidents; fewer lives lost. A successful business has both to run safely and meet its financial targets. The reversion to putting engineering standards first has just about doubled the costs of running the railway. Reports from the Strategic Rail Authority suggest it has priced out of existence virtually every addition to capacity except for a cut-back scheme for the West Coast main line.

The second reason why costs have risen so much is expenditure on safety. It cannot be sensible to spend as much as £100m to save one life on the railways - some reports suggest that the actual figure implied by some schemes of Automatic Train Protection may be much higher than this. In any case it is a figure several times greater than we spend in any other public policy area.

This is not sensible for two reasons. First, we could save many more lives for much less money elsewhere: for example on the roads where there are a multitude of schemes which could save a life for £2 to £3m. Or take the NHS. Think of the kidney machines that could be bought. Second, it is not through massive expenditure that the railways have continued to improve their accident record. Rather, according to those in the industry, the credit goes to cheaper measures such as better training and the use of breathalysers.

What has gone wrong with the railways is a mixture of instant politics and the law. John Prescott's fatal cry after the Ladbroke Grove that 'we will spend whatever it takes' encouraged legal inquiries to recommend almost whatever was suggested irrespective of cost. However such safety measures have not only added hugely to rail cost. They have also reduced capacity, so diverting traffic to road where, of course, the accident-rate is higher.

Another reason for higher costs is the far greater than anticipated price of disrupting rail services when maintenance takes place. This adds a third or more to rail costs. One could go on. Even Europe threatens to add to the problem by demanding expensive inter-operability standards across the EU. Is anyone surprised to be told that the European Rail subsidy is already greater than the Common Agricultural Policy?

No wonder the talk of nemesis is nigh. Now we are told by the SRA that there will be yet greater temporary disruption of services to keep costs down during maintenance schemes. Moreover there are whispers from the SRA of a 10 per cent cut-back in services. But which services? So far the SRA has been extremely secretive. We need better and more open analysis of every maintenance, investment and closure scheme. Bearing in mind that 85 per cent of passenger traffic is by road, we also need to be able to compare the benefits and cost of individual journeys by road and by rail. If there are rail closures and cuts, we must be sure that what goes is of the least economic and social value.

But talking of social value, what now is the social case for subsidising the railways? It is not to help the socially excluded for they are much more likely to use bus or car. Almost 50 per cent of rail travel is by those in the top 20 per cent of household incomes. One argument has been environmental. But with greener cars on the horizon this argument for rail subsidy - especially of long-term investment - loses its validity.

Another argument for rail subsidy is to relieve road congestion, but with congestion charging on the agenda for Britain that is no longer valid. Road charging will divert some passenger traffic to rail but much more - as in London - to buses and bicycles. Unfortunately most diverting to trains will be in cities and towns in the Midlands and South-East where rail capacity is already inadequate. We need to know much more about all this from the SRA. But if a case for subsidising rail can still be made, it is urgent that the SRA makes it, by giving facts and figures to show what will be the social gain from such vast expenditure. Unless the SRA makes such a case we move for the first time to a position where a comparison, even in London and the South-East, between road and rail should be purely financial, since road pricing implies a financial return, too, from road maintenance and investment. I venture that the case for rail will be strongest only for longer journeys and for commuting in London and the South-East. (And there will be an enhanced case for buses, cycles and pedestrians.) But if this is wrong, it is for the SRA, which has all the information, to explain why.

For the Government's Transport Plan to get back on track we need an over-arching transport strategy. As both rail and road investment decisions are long term, all this needs to be thought through now. We do not hav'e much time to get a sensible, rational, sustainable rail policy, or a policy for rail and road.

· Sir Christopher Foster is the former chairman of the RAC Foundation and was an advisor to the Government, 1992-3 on rail privatisation

shotamoose

Originally posted by sceptre
Is anyone surprised to be told that the European Rail subsidy is already greater than the Common Agricultural Policy?

Well I am, since I thought the CAP took up over half of the EU budget.

Some of the points he makes are good. When a government says "We'll spend anything", there's obviously a great danger of value for money going down the pan. I wonder how relevant this is to the Irish situation, though, where the Government isn't exactly waving a chequebook at the railways.

Are there any figures for Government investment in the railway system, on say a per-mile basis and/or as a % of all expenditure and/or as compared to incomes from fares, over the last ten years or so? Would be interesting to compare it with other European countries ...

There's plenty to disagree with too. Maybe spending on training and breathalyser tests is more cost-effective most of the time, but clearly not in a context of a severely deteriorating track network.

And

But talking of social value, what now is the social case for subsidising the railways? It is not to help the socially excluded for they are much more likely to use bus or car. Almost 50 per cent of rail travel is by those in the top 20 per cent of household incomes. One argument has been environmental. But with greener cars on the horizon this argument for rail subsidy - especially of long-term investment - loses its validity.

The socially excluded may be 'more likely' to use bus or car but there are still plenty of them who rely on rail, so cutting rail services to them will impose a significant social cost. And greener cars may be 'on the horizon' but they are a VERY long way off being the popular choice.

sceptre

Originally posted by shotamoose
Well I am, since I thought the CAP took up over half of the EU budget.

I was wondering for the moment what kind of drug-injected chili I'd been eating when I posted that. Then I realised in was in the article. Wheew. He's certainly including national government subsidies in his calculations though.

John R

Originally posted by sceptre
Sir Christopher Foster is the former chairman of the RAC Foundation and was an advisor to the Government, 1992-3 on rail privatisation

It's very interesting that amongst all that rail bashing not one mention is made of the colossal money pit caused by the ridiculous privatisation scheme this fool was an advisor for.

Altogether a completely biased piece from the former chairman of a pro-road/anti rail pressure group.

jd

Why have costs risen so much? The first factor pushing up rail costs since Hatfield has been a return to adopting engineering rather than commercial standards for maintenance. If an engineer says that something should be done then it is done whatever the cost. The genius of the railways from the days of its greatest chairman, the first Sir Robert Reid, was that it struck a balance between what was desirable on engineering grounds and commercial reality

I'm reminded of the old adage -if only engineers were in charge-nothing would make a profit, if only accountants were in charge, nothing new would be developed...

Victor

This is why you need "management" between the two.

Originally posted by jd
if only accountants were in charge, nothing new would be developed...

Well the auditors want to know how this compares to last year