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Public v private: what next for the ownership of Britain's railways? Public v private: what next for the ownership of Britain's railways?
(about 7 hours later)
The man charged with being the voice of rail passengers is peering over a locked gate to an empty platform at Alton station in Hampshire, now the end of the branch line.The man charged with being the voice of rail passengers is peering over a locked gate to an empty platform at Alton station in Hampshire, now the end of the branch line.
In the 1970s, the track onwards to Winchester was deemed surplus to requirements and closed by British Rail; today, when the industry is clamouring for more capacity, that track and platform is used for a steam heritage railway, the Watercress Line.In the 1970s, the track onwards to Winchester was deemed surplus to requirements and closed by British Rail; today, when the industry is clamouring for more capacity, that track and platform is used for a steam heritage railway, the Watercress Line.
Back on the main station, a South West Trains service waits to carry Alton’s £4,000-a-year commuters the hour or so to London Waterloo. Back on the main station, a South West Trains service waits to carry Alton’s £4,000-a-year commuters for the hour-or-so journey to London Waterloo.
“That train is owned by a bank, leased to a private company, which has a franchise from the Department for Transport to run it on this track owned by Network Rail, all regulated by another office – it’s complex,” ruminates Anthony Smith, chief executive of watchdog Transport Focus.“That train is owned by a bank, leased to a private company, which has a franchise from the Department for Transport to run it on this track owned by Network Rail, all regulated by another office – it’s complex,” ruminates Anthony Smith, chief executive of watchdog Transport Focus.
Related: Industry chiefs weigh up Network Rail privatisation, new minutes showRelated: Industry chiefs weigh up Network Rail privatisation, new minutes show
Another shake-up of the UK rail network’s complicated ownership structures is on the cards and Alton, famous for “sweet Fanny Adams”, could be a small part of the test bed. A review into the future financing of the railway is due to be published alongside the budget next week – a document, campaigners and unions fear, that could usher in a stealth privatisation of Network Rail. Another shakeup of the UK rail network’s complicated ownership structures is on the cards and Alton, famous for “sweet Fanny Adams” – a young girl murdered here in 1867 – could be a small part of the test bed.
‘Devolution’ and ‘alternative finance’ are the buzzwords, and this so-called Wessex route operated by South West Trains, with various veins threading out from Waterloo through south-west London suburbia to Southampton, Portsmouth and Dorset, has been mooted as a possible first stretch of the British railway network to be either sold or let as a concession to an operator with responsibility for both the track and trains. A review into the future financing of the railway is due to be published alongside the budget next week – a document, campaigners and unions fear, that could usher in a stealth privatisation of Network Rail.
“Devolution” and “alternative finance” are the buzz phrases, and this so-called Wessex route operated by South West Trains, with various veins threading out from Waterloo through south-west London suburbia to Southampton, Portsmouth and Dorset, has been mooted as a possible first stretch of the British railway network to be either sold or let as a concession to an operator with responsibility for both the track and trains.
The review, conducted by HS1 chief executive Nicola Shaw, was commissioned by the Treasury last summer in the aftermath of the meltdown of Network Rail’s £38.3bn five-year investment plan. The chairman was axed and ministers pointed angry fingers: the Shaw review had the look of bringing the track owner to heel.The review, conducted by HS1 chief executive Nicola Shaw, was commissioned by the Treasury last summer in the aftermath of the meltdown of Network Rail’s £38.3bn five-year investment plan. The chairman was axed and ministers pointed angry fingers: the Shaw review had the look of bringing the track owner to heel.
The potential break-up of the national network, selling it off route by route to private firms in the manner of utilities, or operating long-term concessions – much as the stretch of high-speed track Shaw herself runs – looked to be clear avenues.The potential break-up of the national network, selling it off route by route to private firms in the manner of utilities, or operating long-term concessions – much as the stretch of high-speed track Shaw herself runs – looked to be clear avenues.
Full privatisation had been politically toxic since the days of Railtrack, which spent six years presiding over a series of disasters in which passengers were killed before going bust. But Shaw insisted all options were on the table. Full privatisation had been politically toxic since the days of Railtrack, which spent six years presiding over a series of disasters in which passengers were killed, before going bust. But Shaw insisted all options were on the table.
The mood music, though, appears to have changed. Instead of the Shaw review being a turning point, it now appears more a staging post on a journey Network Rail has already embarked on, to the satisfaction of the Conservative government. Mark Carne, Network Rail chief executive, speaks enthusiastically of the capital discipline now imposed on a sector where all parties – including politicians eager for new development – had turned a blind eye to the maxed out credit card. The mood music, though, appears to have changed. Instead of the Shaw review being a turning point, it now appears more a staging post on a journey Network Rail has already embarked on, to the satisfaction of the Conservative government.
Mark Carne, Network Rail chief executive, speaks enthusiastically of the capital discipline now imposed on a sector where all parties – including politicians eager for new development – had turned a blind eye to the maxed out credit card.
Related: Competition regulator backs scrapping of rail franchisesRelated: Competition regulator backs scrapping of rail franchises
In a recent speech to industry leaders, transport secretary Patrick McLoughlin struck a conciliatory note: “Perhaps the government was overambitious ...we all made mistakes.”Most importantly, perhaps, McLoughlin sent a clear signal that he was expecting “evolution not revolution” and that if Shaw’s report was advocating a radical upheaval, the government might not be responding any time soon, even if there wasn’t an EU referendum to ensure the delay. In a recent speech to industry leaders, transport secretary Patrick McLoughlin struck a conciliatory note: “Perhaps the government was overambitious … we all made mistakes.”
Shaw is tight lipped on the contents of her report, but hinted at something relatively consensual: “Dictatorial isn’t really my style.” Most importantly, perhaps, McLoughlin sent a clear signal that he was expecting “evolution not revolution” and that if Shaw’s report was advocating a radical upheaval, the government might not be responding any time soon, even if there wasn’t an EU referendum to ensure the delay.
But some element of private money in the infrastructure appears inevitable. In an email to all staff in February, Carne wrote: “You will read a lot about ‘privatisation’ versus ‘nationalisation’. These definitions miss the point.” New Network Rail chairman Peter Hendy’s own review of its problems, published in late autumn, offered to stump up £1.8bn by selling off railway arches and station retail space, to make sure the five-year plan could go ahead, with the chancellor granting an extra £700m. Shaw is tight-lipped on the contents of her report, but hinted at something relatively consensual: “Dictatorial isn’t really my style.”
On Friday, Network Rail went further, announcing it had hired KPMG to market its power lines to global investors, and would also be looking to raise money from its telecoms assets. This was quickly denounced as the “thin end of the wedge” by the RMT rail union; if Network Rail had clung to a distinction when announcing the sale of “non-core assets”, the electricity substations and overhead lines that power most trains clearly cross the operational line. But some element of private money in the infrastructure appears inevitable. In an email to all staff in February, Carne wrote: “You will read a lot about ‘privatisation’ versus ‘nationalisation’. These definitions miss the point.”
New Network Rail chairman Peter Hendy’s own review of its problems, published in late autumn, offered to stump up £1.8bn by selling off railway arches and station retail space, to make sure the five-year plan could go ahead, with the chancellor granting an extra £700m.
On Friday, Network Rail went further, announcing it had hired KPMG to market its power lines to global investors, and would also be looking to raise money from its telecoms assets.
This was quickly denounced as the “thin end of the wedge” by the RMT rail union; if Network Rail had clung to a distinction when announcing the sale of “non-core assets”, the electricity substations and overhead lines that power most trains clearly cross the operational line.
Long-time industry observers are scathing: Roger Ford, industry editor of Modern Railways, described proposals to flog off its power and telecoms networks as “madness on a stick” that highlighted the inexperience of the board in rail. Telecoms infrastructure, Ford said, had indeed been sold off before under Railtrack – and expensively rebuilt.Long-time industry observers are scathing: Roger Ford, industry editor of Modern Railways, described proposals to flog off its power and telecoms networks as “madness on a stick” that highlighted the inexperience of the board in rail. Telecoms infrastructure, Ford said, had indeed been sold off before under Railtrack – and expensively rebuilt.
“They’ve been through this once and it was a disaster. The Germans and the French tried it too and had to rebuild the networks. It’s gone wrong in three countries – why do they think it’s going to be any different now?”“They’ve been through this once and it was a disaster. The Germans and the French tried it too and had to rebuild the networks. It’s gone wrong in three countries – why do they think it’s going to be any different now?”
Even those who believe private finance can usefully be brought in balk at this. Jon Hart, transport legal expert at Pinsent Masons, points out: “If I am a commuter on the late running 7.15am, is that down to the train, the operator, poor track or the fact Newco hasn’t paid its utility bill? This model could introduce a new layer of complexity to a complex model.”Even those who believe private finance can usefully be brought in balk at this. Jon Hart, transport legal expert at Pinsent Masons, points out: “If I am a commuter on the late running 7.15am, is that down to the train, the operator, poor track or the fact Newco hasn’t paid its utility bill? This model could introduce a new layer of complexity to a complex model.”
Related: Report calling for abolition of Network Rail increases fears of privatisationRelated: Report calling for abolition of Network Rail increases fears of privatisation
Under current plans, responsibility for individual routes will be devolved. The Wessex route was also the basis for an experiment that saw a so-called “deep alliance” between Network Rail and the train operator, Stagecoach-owned South West Trains, with a joint management team responsible for the track and trains that was regarded as positive despite eventually breaking down over money.Under current plans, responsibility for individual routes will be devolved. The Wessex route was also the basis for an experiment that saw a so-called “deep alliance” between Network Rail and the train operator, Stagecoach-owned South West Trains, with a joint management team responsible for the track and trains that was regarded as positive despite eventually breaking down over money.
Elsewhere, different targets and financial incentives for Network Rail and train operators have routinely led to a blame game. Hendy suggested last week that Shaw could help align those incentives for all parties, saying he was “optimistic that we can live in greater harmony to deliver a better service on a daily basis”.Elsewhere, different targets and financial incentives for Network Rail and train operators have routinely led to a blame game. Hendy suggested last week that Shaw could help align those incentives for all parties, saying he was “optimistic that we can live in greater harmony to deliver a better service on a daily basis”.
All will hope so. Smith’s organisation surveyed passengers last time a major overhaul was taking place, the abolition of the Strategic Rail Authority in 2005 – where Shaw was chief operating officer – and he recalls: “People only had a very rough idea of who did what. When you explained it, people lost the will to live – or were amazed anyone got the trains running at all.”All will hope so. Smith’s organisation surveyed passengers last time a major overhaul was taking place, the abolition of the Strategic Rail Authority in 2005 – where Shaw was chief operating officer – and he recalls: “People only had a very rough idea of who did what. When you explained it, people lost the will to live – or were amazed anyone got the trains running at all.”