Comment

Billions of pounds pouring into rail: there has to be a limit

Nigel Harris urges a measured response to spending cuts.

THE most common question I’ve been asked recently is: “How long will the Treasury keep handing out £800 million to the railway every month - and should we be bracing ourselves for heavy budget cuts?”

My belief is that the Government fully understands that restoration of comprehensive rail passenger and freight services is essential for rapid post-COVID economic recovery, and so the Treasury will continue to adequately safeguard our rail network. As for prospective cuts, I have previously said here that I do not subscribe to the panicky stories of a damaging Beeching 2-style programme of service/network cutbacks.

Network/service cutbacks at the fringe are politically explosive, and conflict with the ‘levelling up’ agenda to which the Government is committed. They also save relatively little cash - nowhere near enough to warrant the political earthquake they would cause.

National service cutbacks have happened in the Government’s pandemic response, but have been largely reversed already. Main line or regional route closures are unthinkable in practical/political terms.

But the railway still costs too much and must become more efficient, so where productivity cannot improve then it must spend less. I’ve said many times that this would be best decided internally, if rail is to avoid the indiscriminate scythe of the Treasury’s Grim Reaper.

Thus, when Rail Minister Chris HeatonHarris (whose stance, approach and comments have thus far been relentlessly supportive and pro-rail) told the House of Commons recently that Network Rail’s ‘enhancement budget’ was being cut by £1 billion, from £10.4bn to £9.4bn, it was the cue for (at best) much hand wringing and (at worst) angry press releases about the ‘slashing’ of rail’s budgets. The rail unions were unsurprisingly critical in their usual language, but the most poorly understood representation came from Greenpeace’s Sam Chetan-Welsh, whose daft outburst is quoted by Paul Clifton in Network News (page 9).

Let’s take a breath and be clear about what’s happening. My instinctive question was about legality, given that regulatory settlements are sealed in law for the full five years of the relevant Control Period (CP6 expires in 2024), and cannot be changed by Government whim.

Then I remembered that after the debacle of the Great Western electrification, Secretary of State Chris Grayling reacted by stopping the Midland Main Line wiring - and removing NR’s enhancements budget from the established regulatory settlement process. It was placed instead under direct Treasury control to be dealt with on a ‘pipeline’ project basis, with schemes approved individually by Government, with a ‘spending envelope’ of £10.4bn. It is that ‘spending envelope’ that has been cut by 10% or so, to £9.4bn. It is important to understand that NR’s crucial OMR (Operations, Maintenance, Renewals) budget, which ensures that the rail network is kept safe and reliable, remains unchanged in CP6 and is protected by law.

A more measured approach came from Railway Industry Association Chief Executive Darren Caplan and Rail Delivery Group spokesman Robert Nisbet (page 8). The nuance in Nisbet’s comments is worth highlighting: while investment is necessary and we do need to ensure the health and survival of our contracting industry, the bills also need to be paid today. This is a difficult balance when Government is spending not far short of the value of this ‘cut’ every month to safeguard our existing network. Greenpeace’s rant that this cut is “completely indefensible” is absurd.

We cannot identify a single enhancement which is at risk because of this cut - because the full £10.4bn funding envelope is nowhere near even fully applied for. The biggest single approved spend of that £10.4bn is the £3bn Trans-Pennine Upgrade. There are a number of other smaller projects, such as infrastructure provision to enable eight-car trains to replace four-car trains on peak services between Kings Lynn and Cambridge, and also the provision of a second northern station entrance/exit and new platform canopies designed to ease congestion at London’s Denmark Hill station.

The question arises, therefore: Is a cut really a cut if it’s something you’ve never spent before?

I don’t mean to sound flippant, but I believe we need to be measured and mature here. Am I happy to see any cut in proposed investment? Of course not. I am as disappointed as anyone else and agree with critics who wish to see the reduced spending envelope not merely reinstated but enhanced further, at the right time.

But I also believe we must be reasonable.

Since March, Government has continued to plough the thick end of £1bn a month into rail. This tells its own story about Government’s confidence in, and commitment to, rail. This demands a measured and pragmatic response to what - to me at least - looks like a not unreasonable (but unwelcome) belt-tightening.

On one side of my desk, I have recent headlines about ‘Christmas rail chaos’ and the appointment of Sir Peter Hendy CBE as a ‘tsar’ to oversee effective festive public transport. On the other side of my desk is a Transport Focus survey revealing that more than four in five of those making a journey over Christmas will travel by car, using either local roads or motorways, and that “only a small minority will be using public transport”.

Only three in ten are planning to travel over Christmas-New Year. And for just over half who do know what their plans are, this is less than they would usually travel. My point here recently that nervous travellers are using cars as ‘PPE’ is reinforced by Transport Focus, with more than a quarter of respondents unhappy to stop at service areas.

The survey also reveals that Government urging people to restrict their Christmas travel to December 23-27 conflicts with TF’s findings that those travelling by train intend to do so before December 23 and after December 27! Government thinking here is knee-jerk and muddled, seemingly driven more by panic over headlines than lucid thought. TF reveals that passenger thinking was more closely aligned with early industry plans to encourage passengers to spread journeys over a longer period - further evidence of why DfT officials should be removed from their micro-management of an industry they don’t understand.

Current Whitehall mood music suggests that the Williams Review will be published early in 2021. I hope we see proposals to reboot part of Network Rail as an arm’s length organisation, led by Andrew Haines and populated by a range of experts on the whole range of railway management, engineering and operation. This new body must take both responsibility and accountability for delivering the railway the Government wants and the UK needs.

We need Government and its officials to step back, and for railway expertise to step in and more effectively deliver the railway Government wants to see - and pay for.