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Railwatch 068 - July 1996

Profit before freight

Concern was expressed in the House of Lords over the sale of former British Rail land, following privatisation. Speaking for the Government, the Earl of Courtown said on 23 March that it was the duty of the British Rail Property Board to "identify and dispose of all its underused or surplus land and property at a proper commercial price."

Lord Berkeley (chairman of the Piggyback Consortium) said he had received complaints from both present and future rail operators that the BR Property Board and Railtrack were thwarting their plans by selling off railway-connected land for supermarkets rather than leasing them to operators. "Is it not scandalous that short-term profit motives are preventing rail freight business from developing?" The minister replied that under the 1993 Railways Act, property was divided between Railtrack which took on the operational property and the BR Property Board which took on non-operational property. Concern over the sale of non-operational sites should be addressed to the BR Property Board.

Lord Ewing of Kirkford said that answer seemed to be contrary to the terms of the legislation. The 94 strategic sites at issue in the question "were handed over to Railtrack to be held in trust for the future development of rail freight." Should not the Government at least impose the terms of its own Act via the Regulator?

The minister replied that there are roughly 100 former sites owned by Railtrack which have been designated as strategic freight sites. Freight operators could call for a lease if they can return a strategic site to rail use. Railtrack has to consult with operators before a site can be deleted from the list. Doesn't this beg the question of what happens to a site where there is no immediate prospect of rail development. Presumably Railtrack could then sell the land for a supermarket thus ending for ever any possible future use for rail. How about insisting every supermarket built on railway land must be rail connected?

Lord Wallace of Saltaire wanted the minister to make sure that care was taken "to safeguard disused rail track that may now be needed to reinvent trains and tram tracks in urban areas." The minister confirmed that BR would consult Railtrack, train operating companies and local authorities before proceeding with the disposal of disused track.

Lord Clinton-Davis said it was clear from evidence that several noble lords had received, that Railtrack and the BR Property Board are more concerned about the sale of the assets, to the detriment of freight interests, notwithstanding their statutory obligations. He called for an independent inquiry into what is happening to those public assets.

Freight privatisation

Former transport minister Baroness Castle of Blackburn asked why the Government had decided to sell all three freight companies to one bidder, and what was the price at which they had agreed to sell? "The market's strong preference was for a combined sale of the three companies," said Viscount Goschen, the Parliamentary Under-secretary of State at the Department of Transport. During oral questions in the House of Lords on 5 March, he added: "The terms of the sale, including the price are commercially confidential."

Baroness Castle remonstrated that one of the main reasons given by the Government for privatisation was to introduce competition. Furthermore the refusal to disclose the price did not accord with the policy of open government. Viscount Goschen said newly formed companies could come in and move heavy freight on the railways.

But not light freight?

Lord Carmichael of Kelvingrove referred to section 113 of the Railways Act which states quite clearly that there must be competition, management bids must be promoted and the best value for the assets must be achieved. Lord Carmichael had heard that Wisconsin Central had paid £225 million and that a management buy-out offer of £240 million had been rejected. Was it also true that the value of the assets of the three freight companies together were something like £6 billion? "Is there not a case for the audit office to have a close look at this whole business?" Viscount Goschen said figures would be given in due course.

"Too late!" replied Lord Carmichael.

Lord Bruce of Donington wanted the full particulars to which Parliament is entitled. "It is a national asset that is being disposed of. It does not belong to the Government, and neither does it belong to any of their minions."

Viscount Goschen said the Government felt strongly that to disclose information at this stage would prejudice BR's bidding position in future. Lord Carmichael suggested that the offer made by Wisconsin and the value of the assets might be quite staggering. Furthermore was the figure of 6,000 redundancies rumoured to be involved, accurate? Viscount Goschen said rail freight must improve its efficiency and reduce its cost base. In other words, yes!

Channel rail link

The winning consortium to build the Channel Tunnel rail link was announced by Transport Secretary Sir George Young on 29 February. The winners, London and Continental Railways, was formed of Halcrow, London Electricity, National Express, Virgin, Warburg, Arup, Bechtel and Systra.

He said the private sector would be taking on the running of Eurostar, procuring the construction of the high speed railway, operating and maintaining the railway after its completion and providing international passenger services. In short an entirely new business: a complete private sector railway. The minister went on to detail all the many benefits the new high speed line would produce to the British economy. The consortium will be getting the following "sweeteners":

  • European Passenger Services, free of capital debt.
  • Union Railways, the state owned company which has carried the project through so far.
  • The land and property needed for the project.
  • Those parts of the lands they don't need for the project they are free to develop as they wish!
  • £1.4 billion of taxpayers money.
Sir George said: "We have linked payment of grant to construction milestones to incentivise London and Continental, and to ensure real progress is made. We do not expect to make the first payments before the year 2000." Sir George added that it was a historic day for transport in Britain. "It is because of private finance and private initiative that this impressive project can go forward today."

According to Clare Short, Labour's Shadow Transport Secretary, it was also because of £5.7 billion of taxpayers' money. This was because the Government was handing over £3 billion of public assets, including Waterloo International Station, land at King's Cross and St Pancras, 120 acres at Stratford, and Eurostar. She wanted to know if there was any fixed date for work to begin. Would the Secretary of State apologise to the country for the delay caused to the project by the Government's ideological obsessions?

"The taxpayer is being asked to pay £5.7 billion instead of £1 billion, which would have been the cost of bringing the project forward in 1989." Sir George responded that if the project had gone forward in 1989 the route would have missed going through Stratford and all the development opportunities this has released.

David Chidgey (Lib-Dem, Eastleigh) welcomed the planned link with the North London line and so to the West Coast main line. He wanted the new line to be built to accommodate large-gauge freight and to facilitate piggyback operation. Combined with a £70 million upgrade to the WCML we would then have "a proper, efficient, modern connection between our freight system and the rest of Europe." Sir George replied that the CTRL would certainly be able to carry piggyback traffic and was being provided with freight loops.

In answer to a question from James Couchman (Con, Gillingham) concerning use of the CTRL by domestic services, Sir George said he had made it clear that domestic services would run on it. "When the franchise is let, I imagine that the franchise director will include, among the passenger service requirements, an obligation to run a certain number of domestic services on the new CTRL when it is built." The question of "sweeteners" was raised by Labour's Graham Allen on 26 April when the Bill for the Channel Tunnel fast link was approved by the Commons and sent to the House of Lords. It was given an unopposed third reading after 16 months of scrutiny.

But Mr Allen (Nottingham N) said the largest sweeteners in the history of privatisation were being offered to get the link built. Railways Minister John Watts said everyone was united about the need for the link.

Frequent delays

In questions to the Minister in mid-March, Jim Cunningham (Lab, Coventry SE) asked about the frequent delays on the West Coast main line. Railways Minister John Watts replied that Railtrack had a large investment plan, "the first stage of which will be the letting of a contract to develop a new signalling system later this month." This has now become the standard answer to all questions regarding problems on the WCML. A proper investment plan would tell us what sort of services we could expect in, say, the year 2000. Thus we would know target journey times to the major cities, what sort of trains would be operating and what this would mean in terms of upgraded infrastructure. Instead there are no clear goals because nobody has the faintest idea who will pay for what!

Mr Chidgey asked about the derailment outside Euston station on December 14 last year, and why earlier warnings concerning the state of the track had not been heeded? Mr Watts said Railtrack had been given a year in which to get the track up to standard.

Peter Thurnham (Con, Bolton NE) asked for further details of the new signalling system. "How long will it take to come into effect?" Mr Watts replied: "It is difficult to be precise about how long development of the new signalling system will take." He's right there! Modern Railways magazine quotes the companies involved as saying it would take six to seven years, with doubtful prospects that it would work in the end! In parallel "Railtrack will undertake a large investment programme in track and power supplies." Why is Railtrack so coy about telling us exactly what work is involved. It seems the Minister knows. Why can't we be let in on the secret?

When the Minister had been asked by Tony Lloyd (Lab, Stretford) what the proposals actually meant in terms of improvements in journey time, comfort and access to cross channel services on the Manchester to London route, the reply had been that Railtrack were "considering" possible upgrade options for the line which would allow faster trains.

Safety procedures

In oral questions during February, Clare Short asked Mr Watts how many rail vehicles were being prevented from entering service pending approval of Railtrack's safety procedures. Mr Watts replied that Railtrack had advised him that it is not preventing any rail vehicle entering service. It was the panel of independent experts set up by Railtrack which was requiring standards which no manufacturer could reach. We have class 365 express networkers, new class 325 Post Office EMUs, class 373 North of London Eurostars and the class 92 electric loco unable to run.

Dr Robert Spink (Con, Castle Point) wanted the minister to confirm that privatisation and holding down fares would get more passengers on to trains and would work wonders for employment on the railway.

Profit motive

Questions about the way privatisation was being implemented were asked by Mr Chidgey for the Liberal Democrats on 17 April. "Will Britain have an efficient, modern transport system to boost our economy into the next century? Or will we be left with a bare bones of a transport network, fought over by private interest motivated only by their personal and their corporate profit?

Mr Chidgey said the railway had to be maintained to the highest standards of safety within the context of an integrated transport system. He said the Treasury's insistence that franchises should be limited to the minimum period has actually stifled investment. As a result, it had lost the very benefits that could have been gained from a partnership between the private and public sector. There is little incentive for franchise holders to invest in rolling stock which could last for 30 years when they only had a licence for seven.

By contrast Sir David Madel (Con, SW Bedfordshire) said it was vital for Railtrack to get across the message about the benefits of privatisation to its work force.

CrossRail

The Government's failure to provide adequate investment for good rail services was highlighted on 22 April when Labour complained about the shelving of the CrossRail scheme. Shadow Transport Secretary Clare Short pointed out how important CrossRail could have been to London's public transport network. The two-track rail line would provide the equivalent of 28 lanes of road across the capital without the massive environmental damage road traffic would bring. She said the reason it was being put off was because committing Railtrack to spend £2.8 billion would put off people who might be tempted to buy Railtrack shares. (Railtrack has taken over "responsibility" for the scheme which started as a joint British Rail-London Transport project.)

"It is being delayed deliberately because, if it went ahead and licences were sought, it may endanger the flotation of Railtrack," she said. "This enormous damage is being done to London yet again as part of the destructive consequences of rail privatisation."

Steven Norris who is the minister responsible for public transport in London said the Government remained "committed" to CrossRail. But "Railtrack would look at CrossRail as a private sector entity and would take account of the risks and rewards that came with the project".

But former Tory cabinet minister Peter Brooke (City of London and Westminster S) said: "The Government has prolonged the already considerable blight along the line of rail." Mr Norris said he was sorry for the blight. "We are keen to ensure that those whose properties are affected by the CrossRail scheme do understand that the Government remains committed to the scheme and will see it happen."

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