Train op­er­a­tors face an un­cer­tain fu­ture as home work­ing be­comes the norm, write Jon Yeo­mans, Oliver Gill and Hasan Chowd­hury

The Daily Telegraph - Business - - Front Page -

This is the 14th in­stal­ment of The Fu­ture Of... a long-read se­ries which seeks to ex­am­ine in depth what the next five to 10 years hold in a va­ri­ety of dif­fer­ent ar­eas.

The “Ivanhoe” line from Burton to Le­ices­ter has an il­lus­tri­ous her­itage. Its track was laid in 1832 by rail­way pi­o­neer Robert Stephen­son. “It’s one of the ear­li­est lines in Britain,” says Ge­off Bushell, a for­mer Army en­gi­neer and rail en­thu­si­ast. It orig­i­nally served the coal fields of Not­ting­hamshire and Le­ices­ter­shire; to­day it snakes through the Na­tional For­est, which was planted to heal the scarred land­scape.

Freight trains still ply the route but the last pas­sen­ger ser­vice de­parted in 1964, as the line fell vic­tim to the in­fa­mous “Beech­ing axe”. Bushell, who is chair­man of the Cam­paign for the Re­open­ing of the Ivanhoe Line, be­lieves the mo­ment has come to re­store the ser­vice. “Since those days, we’ve had pop­u­la­tion growth of be­tween 20pc and 40pc in cer­tain places,” he says. “There’s been a lot of hous­ing devel­op­ment. In­dus­try has taken over the old coal land. Ev­ery­body com­mutes by car; the in­fra­struc­ture hasn’t kept up.”

The cam­paign is one of 10 cho­sen to re­ceive cen­tral gov­ern­ment sup­port from the Restor­ing Your Rail­way fund, a £500m pot an­nounced ear­lier this year to look at rev­ers­ing some of the Beech­ing cuts. But its tim­ing may be all wrong. Since the De­part­ment for Trans­port’s in­vi­ta­tion for bids, Covid-19 has rocked the coun­try.

The pan­demic has wreaked havoc on the rail net­work, with us­age at the height of lock­down drop­ping to just 5pc of nor­mal lev­els and since ris­ing to barely 30pc. It is clear the rail­way is at a turn­ing point. But does its fu­ture lie in get­ting big­ger or smaller? And what does the end of the fran­chis­ing sys­tem mean for fu­ture ser­vices and the pas­sen­gers who rely on them?

Covid forces re­form agenda

The rail­ways were primed for a ma­jor over­haul even be­fore Covid hit. Dr Matthew Ni­blett of the In­de­pen­dent Trans­port Com­mis­sion sug­gests the rail­ways were a vic­tim of their own suc­cess: pas­sen­ger num­bers more than dou­bled be­tween 1995 and 2018 while safety im­proved.

“This suc­cess has, how­ever, placed in­creased con­ges­tion stress on the net­work and ma­jor ca­pac­ity up­grades have been needed to ac­com­mo­date the ad­di­tional de­mand,” he says.

And so, two years ago, then trans­port sec­re­tary Chris Grayling or­dered Keith Wil­liams, the for­mer Bri­tish Air­ways chief, to “leave no stone un­turned” in his re­view of UK rail. But as last year dragged on, it be­came clear that the Wil­liams Re­view – like so many of Britain’s trains – would be de­layed. Wil­liams, also the chair­man of Royal Mail, quickly es­tab­lished that “fran­chis­ing” was not work­ing. Since pri­vati­sa­tion, train op­er­a­tors have been handed lo­cal net­work mo­nop­o­lies. They col­lect the fares and pay the Ex­che­quer in re­turn.

This means the more peo­ple they man­age to fit on their trains, the more money they make.

If train op­er­at­ing com­pa­nies – or TOCs – got their sums right, there was a killing to be made. And, for a while, they did; through­out the 2000s train com­pa­nies hit the head­lines by rak­ing in mil­lions as pas­sen­ger num­bers ex­ploded. But mar­gins nar­rowed in the decade that fol­lowed. Dis­sat­is­fac­tion grew all round, not least with the punc­tu­al­ity of ser­vices.

Un­der Wil­liams’ draft con­clu­sions, re­vealed by The Daily Tele­graph in Fe­bru­ary, fran­chis­ing would be re­placed by con­ces­sions. The re­la­tion­ship would be in­verted: the Ex­che­quer would col­lect the fares and in re­turn pay op­er­a­tors a fee, which could be var­ied based on nu­mer­ous met­rics such as per­for­mance and ef­fi­ciency. Such plans left the Gov­ern­ment open to claims of “back­door na­tion­al­i­sa­tion”. And they were soon shunted into the sid­ings be­cause of two prob­lems. The first was that Rishi Su­nak, the Chan­cel­lor, re­alised such plans could cost the Trea­sury more, not less. A Cab­i­net split quickly emerged. But within weeks it was over­shad­owed by a far more ex­is­ten­tial threat: coro­n­avirus.

Rail in­sid­ers were shocked at the pace with which White­hall of­fi­cials moved to im­pose sweep­ing changes on the coun­try’s net­work. On Fri­day March 13, the DfT is­sued op­er­a­tors with a se­ries of pro­pos­als called Emer­gency Mea­sures Agree­ments. These EMAs, an­nounced 10 days later, ef­fec­tively re­na­tion­alised the rail­ways.

With pas­sen­ger num­bers plung­ing 95pc, op­er­a­tors were trans­ferred to a “cost-plus” deal that guar­an­teed a 2pc profit for a six-month pe­riod to en­sure ser­vices kept run­ning so that doc­tors, nurses and car­ers could get to work.

In­dus­try watch­ers pointed out that the rail­ways were now “out­sourced” rather than pri­va­tised.

Lessons from the rail­way’s past could be vi­tal when con­tem­plat­ing whether it now needs to grow or shrink. And if there is one name that dom­i­nates the mod­ern his­tory of the rail­ways it is that of Richard Beech­ing.

The for­mer boss of chem­i­cals gi­ant ICI, Dr Beech­ing was made chair­man of Bri­tish Rail­ways in the early Six­ties with a brief to stop the net­work haem­or­rhag­ing money. Beech­ing’s two re­ports rec­om­mended whole­sale clo­sures of lines. The Beech­ing cuts ac­cel­er­ated a trend that had be­gun in the Fifties; in­deed be­tween 1950 and 1980, it is cal­cu­lated that 42pc of Britain’s rail­ways, or 13,000km (8,078 miles), were closed, along with nearly 60pc of sta­tions – some 3,700.

The so­cial and eco­nomic ef­fects of Beech­ing’s cuts re­main hotly de­bated. Re­searchers at the London School of Eco­nom­ics ar­gued in a 2018 pa­per that there was a clear link be­tween the de­cline of the trans­port net­work and de­pop­u­la­tion of some ar­eas in sub­se­quent years. The re­port sug­gested that “with­out the cuts, pop­u­la­tion would have been more evenly dis­trib­uted” across com­mut­ing ar­eas, and that the den­sity of London and the South East would have been lower. In­stead, the UK was left with north-south trunk routes, but few east-west links. “A key les­son here is that rail in­fra­struc­ture af­fects the spa­tial dis­tri­bu­tion of pop­u­la­tion,” the au­thors con­cluded.

Beech­ing came to promi­nence at a time when the car was be­gin­ning its as­cen­dency. “It was a dif­fer­ent sce­nario in those days,” re­calls Bushell, of the Ivanhoe cam­paign in the East Mid­lands. “Peo­ple were own­ing a car for the first time. They didn’t need the trains. The en­ter­tain­ment was there [on their doorstep], they didn’t need to leave the towns much apart from go­ing to Derby County for the foot­ball or Black­pool once a year.”

For all his rep­u­ta­tion as an “axe man”, Beech­ing also de­liv­ered im­por­tant sug­ges­tions on mod­ernising the rail­way and han­dling freight, ac­cord­ing to Prof Colin Di­vall of the Univer­sity of York.

Beech­ing’s cri­te­ria pre­dom­i­nantly re­volved around whether in­di­vid­ual lines were prof­itable. How­ever, many rail cam­paign­ers ar­gue that dif­fer­ent choices would be made to­day – Covid-19 not­with­stand­ing.

The Cam­paign for Bet­ter Trans­port be­lieves the Gov­ern­ment should spend up to £6.4bn on re­open­ing closed Beech­ing lines; a far greater sum than the £500m cur­rently set aside, but a tri­fling amount com­pared to the vast cost of HS2.

The coun­try has changed dras­ti­cally since Beech­ing’s day but then, as now, the rail­way is fac­ing a funding cri­sis. Nearly 60 years later, the rail­ways are back fully in pub­lic hands and cost­ing the tax­payer around £700m a month.

Long-term funding will re­quire pas­sen­gers to re­turn in their droves. But even with a vac­cine, most ex­perts ex­pect there will be a drop-off in num­bers. In­ter­nal es­ti­mates pre­pared by trade body the Rail De­liv­ery Group are un­der­stood to pre­dict that pas­sen­ger vol­umes will only have re­turned to 90pc of pre-cri­sis lev­els in five years’ time. The log­i­cal an­swer might be fewer ser­vices. But, with high fixed costs on a line, sim­ply cut­ting the num­ber of trains might not be enough. Could there be a sec­ond swing of the Beech­ing axe?

The Prime Min­is­ter has hinted he is look­ing into flex­i­ble sea­son tick­ets. The rail­ways could target hol­i­day­mak­ers and day trip­pers; even of­fer be­spoke ser­vices for foot­ball matches. The thorny is­sue of funding re­mains, how­ever.

Harry Fone, of the Tax­pay­ers’ Al­liance, says: “We don’t want to re­turn to the likes of a state-owned Bri­tish Rail. Over­all, pri­vati­sa­tion has been a boon to the na­tion as pas­sen­ger num­bers have soared and tax­payer sup­port has de­clined.”

Fone sug­gests more open-ac­cess rail lines could pro­vide bet­ter value for the tax­payer.

Un­der this model, train op­er­a­tors com­pete to win pas­sen­gers on the same stretch of track: for ex­am­ple, Hull Trains and Grand Cen­tral both op­er­ate on the east coast line. Ope­nac­cess

op­er­a­tors have yet to be con­vinced, how­ever. Just last week, Grand Cen­tral scrapped plans to run a ser­vice on the west coast main line.

An­other train op­er­at­ing com­pany has drawn up its own sug­ges­tions to the Gov­ern­ment on the fu­ture run­ning of the rail­way: this would in­clude a more “com­mer­cial timetable” that could adapt to changes in de­mand quickly, in­stead of tak­ing 50 weeks to plan, as with the new timetable of May 2019 which was no­to­ri­ously botched. An im­proved “cus­tomer fo­cus” would mean a mas­sive sim­pli­fi­ca­tion of fares and re­moval of du­pli­ca­tion, and more dig­i­tal sales of tick­ets. Changes to jobs, and the in­evitable show­down with unions, would be sure to fol­low.

Think­ing green

The Gov­ern­ment’s green agenda, in­clud­ing de­car­bon­i­sa­tion, could play into the rail­way’s hands. “You have to make as­sump­tions about the fu­ture price of trans­port,” says Prof Chris Nash of the In­sti­tute for Trans­port Stud­ies at the Univer­sity of Leeds.

“The DfT has been as­sum­ing that mo­tor­ing costs and air fares will go down and rail fares will go up.”

This needs re­view­ing, he sug­gests, and it could pave the way for more rad­i­cal so­lu­tions. “If you are push­ing charges for the use of roads, there’s the pos­si­bil­ity of mak­ing a sur­plus on roads and putting it into rail.”

This would re­verse a trend for fall­ing mo­tor­ing costs and ris­ing rail fares, but might not be a vote win­ner.

Then there is the ques­tion of the fu­ture modes of train that will carry peo­ple from A to B. In re­cent years, the in­dus­try has been cir­cled by a num­ber of peo­ple keen to use tech­nol­ogy as a means of solv­ing some of its most press­ing is­sues: slow jour­ney times and emis­sions.

Among the wack­ier tech­nolo­gies be­ing sug­gested are Hyper­loop and ma­glev. Hyper­loop, backed by the likes of Elon Musk and Sir Richard Bran­son, is fun­da­men­tally about im­prov­ing speed by re­duc­ing the fric­tion and air re­sis­tance that slow trains down. Through nar­row tubes, trains de­signed like pods would, in the­ory, use mag­netic re­pul­sion to le­vi­tate just a few inches on top of the track, shut­tling peo­ple around at close to the speed of sound.

But ex­perts see lit­tle chance of these tech­nolo­gies work­ing in Britain be­cause the cost and time needed to build the in­fra­struc­ture are pro­hib­i­tive. Plans to launch an in­ter-city ma­glev train be­tween Tokyo and Nagoya in Ja­pan in 2027, for ex­am­ple, have faced de­lays.

What is more likely to re­ceive at­ten­tion is tech­nol­ogy that can re­duce emis­sions. In June, a team of re­searchers at the Univer­sity of Birm­ing­ham se­cured a £400,000 grant from the Gov­ern­ment for the roll­out of Hy­droFLEX, Britain’s first hy­dro­gen train. Dr Stu­art Hill­mansen, who worked on the project, says the tech­nol­ogy holds prom­ise in the more ru­ral cor­ners of the coun­try where the elec­tri­fi­ca­tion of shorter, sin­gle-line routes quickly loses eco­nomic value given the cost in­volved.

Fig­ures from Net­work Rail sug­gest that elec­tri­fi­ca­tion of ex­ist­ing net­works will in­crease by just six per­cent­age points to 48pc by 2039, with de­lays hurt­ing a num­ber of projects al­ready. An al­ter­na­tive is needed if tar­geted emis­sion cuts are to be met.

“Hy­dro­gen per kilo­gram is ac­tu­ally one of the high­est en­ergy den­sity fu­els,” Hill­mansen says. But there are a few is­sues with hy­dro­gen. For one, it is dif­fi­cult to con­tain, mak­ing it a “fickle thing”, and the range it can pro­duce on trains does not match diesel.

Com­pressed hy­dro­gen could solve this prob­lem and even be retro­fit­ted on to ex­ist­ing trains. Si­mon Iwnicki, di­rec­tor of the In­sti­tute of Rail­way Re­search, agrees hy­dro­gen could be a “stop-gap so­lu­tion” but he main­tains the best op­tion is to elec­trify as much of the net­work as pos­si­ble.

Ma­jor elec­tri­fi­ca­tion plans were can­celled on cost grounds two years ago. The Gov­ern­ment has shown more en­thu­si­asm for high-speed rail, in the form of HS2, which of­fi­cially be­gan con­struc­tion this month. The project has been dogged with con­tro­versy, with costs tipped to ex­ceed £100bn.

Lord Berke­ley, who wrote a crit­i­cal as­sess­ment of the project ear­lier this year, says: “The big need in the re­gions is to cre­ate a com­mut­ing ser­vice, some­thing like we have in London. [HS2] doesn’t do that. I can’t see any point be­cause peo­ple are learn­ing to work from home.”

An­other rail ex­pert re­marks: “HS2 seems to be a clas­sic ex­am­ple of a mega-project where po­lit­i­cal ap­proval is ob­tained on some of­ten quite ques­tion­able as­sump­tions about travel trends, and then achieves mo­men­tum quite apart from ac­tual need.”

An HS2 spokesman in­sists “the case for HS2 is un­changed”. “It is far too early to make con­clu­sions about the long-term im­pact of Covid-19, but the strate­gic case for HS2 – more ca­pac­ity on our rail­ways, bet­ter con­nec­tiv­ity in the Mid­lands and North, and cut­ting car­bon – all re­main im­por­tant is­sues for the UK,” he says. It will be 2029 at the ear­li­est be­fore pas­sen­ger ap­petite for the new line be­comes clear. With the EMAs due to ex­pire this month, the Gov­ern­ment is expected to an­nounce an ex­ten­sion im­mi­nently.

Min­is­ters’ plans, leaked to The Tele­graph over the week­end, re­vealed that fran­chis­ing will be scrapped from April 2021 and re­placed with an out­sourced model that tight­ens state con­trol of the rail­ways. This plan is not a mil­lion miles away from what Wil­liams was expected to pro­pose.

Mean­while, the lat­est bid­ders for the Restor­ing Your Rail­way fund will soon find out if they have been suc­cess­ful. The DfT in­sists the scheme is cen­tral to the Gov­ern­ment’s “lev­el­ling up agenda”, say­ing it is keen to start “re­con­nect­ing smaller com­mu­ni­ties, re­gen­er­at­ing lo­cal economies and im­prov­ing ac­cess to jobs, homes and ed­u­ca­tion”.

It notes that de­mand has ex­ceeded ex­pec­ta­tions on lines that have re­opened in the last decade.

The mantra has been “if we build it, they will come”. But this the­ory faces a huge test in the post-Covid world.

Nonethe­less, in the East Mid­lands, Bushell be­lieves that Stephen­son’s Ivanhoe line will once again carry pas­sen­gers. “Every­one’s be­hind it – it’s touched a nerve,” he says.

“I don’t want to fail them. It does rest heav­ily on my shoul­ders. But I do feel op­ti­mistic. We have the best chance in 30 years of this line re­open­ing.”

The Beech­ing legacy A flex­i­ble fu­ture?

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