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Railwatch 080 - July 1999

By Michael Weinberg

Freight cheats

Heavy road vehicles were still not paying their full "track costs", Peter Snape (Lab West Bromwich East) told the Commons. In a debate on 21 April he said that, despite recent increases in fuel duty and lorry tax, lorries still had a cost advantage.

He called for "that overworked concept", a level playing field, for road and rail freight. The tilting field in favour of roads for many years has led to a declining amount of freight on rail, leading to an adverse impact on traffic congestion, road deaths and pollution.

During a debate about freight costs, in particular the increase in costs to road hauliers as a result of the last budget and the disruption being caused by lorry drivers, various figures were being bandied about.

Dale Campbell-Savours (Lab Workington) wanted Dr Reid, to "dig out" the figures that really matter in this whole argument - the transport cost per tonne per kilometre by road and by rail, in each European country, including the UK.

Only when these figures were published in a comprehensible way would it be possible to explain the situation to the road haulage industry.

Dr Reid said that was a good point and that he would try to present the figures in a simplified way so the truth of the matter could be got across to the public.

Talking shop

The rail summit was "a major step towards driving up the quality of rail services throughout the country" Dr John Reid told the Commons in April.

Dr Reid, who was then a Minister of Transport, has now been promoted to Scottish Secretary. Yet another politician who spent just a few months at the Transport Department.

Despite transport being at the top of most people's concerns, the Department of Transport (now part of the DETR) is still seen as a transit camp to glory elsewhere.

Dr Reid told Andrew Mackinlay (Lab Thurrock) that a summit would be held next year to review progress and maintain momentum.

Mr Mackinlay felt the publication of the independent report to the Regulator showed that Railtrack and the franchise operators were both to blame for the current under-investment at a time when they were maximising profits. He wanted the minister, at a future rail summit, to make it clear to all parties that "the profits of Railtrack cannot be shifted to the franchisees when there is a review of access charges!"

Dr Reid said the report was being scrutinised. The Government supported the then Regulator's view that not enough of Railtrack's surplus was going into investment.

Investment

Nick Hawkins (Con Surrey Heath) wanted the minister to confirm that in 1997-8, Railtrack had invested an extra £.25billion, an increase of 69% over the last year before flotation, with a further increase of 16% planned for the current year.

Dr Reid replied that it was the independent Regulator who took the view that the figures being invested by Railtrack were insufficient. He would confirm the figure of £25billion and that this was slightly less than the Conservatives had cost the taxpayer during the sale of Railtrack.

Freight increase

Piara Khabra (Lab Ealing, Southall) asked deputy prime minister John Prescott, what was his most recent estimate of the amount of goods transported by rail in the financial year 1997-98.

Mr Prescott said the figures for 1997-98 showed a 12% growth in freight carried by rail.

Mr Khabra wanted to know what steps his department was taking to encourage this trend. Reduced use of roads would improve air quality as well as the environment generally.

Mr Prescott said one of his first steps was to double the amount of freight grants available. "We have increased that amount again, and it is being fully used. We have also made grants available to freight integration centres and are improving port facilities."

Graham Brady (Con Altrincham and Sale West) asked if Mr Prescott agreed that welcome increases in rail freight can only continue if there is continuing public support for such increases. He said some of his constituents living in densely populated residential areas were being badly affected by vibration and noise from particular flows of freight. He was particularly concerned about rail freight going to the Brunner Mond plant in Cheshire.

Mr Prescott said any transport matter had environmental consequences, whether noise or exhaust emissions.

"Those are a matter of concern in our comprehensive approach."

He was also pleased that there had been growth in rail freight through the channel tunnel, "much of it due to the changes that we have made in policy." Conservative members shouted: It is due to privatisation."

Railtrack criticised

Gwyneth Dunwoody (Lab Crewe and Nantwich) said rail freight would be undermined if Railtrack was not prepared to put money into relieving pinch-points in the system.

She wanted Mr Prescott to tell the chief executive of Railtrack the difference between wish lists, supported by even more taxpayers' money and real investment programmes funded from Railtrack's very large profits.

Mr Prescott replied that there was not sufficient rail capacity to meet the increasing demands of freight.

"That is why we have ordered a look at the new rail route to take international carriages." He said investment was the key and that the new Strategic Rail Authority under a pretty tough chairman, (Sir Alastair Morton) would ensure that Railtrack delivered on its promises.

Railtrack champion

Bernard Jenkin (Con North Essex) wanted assurance that nothing would be done to endanger the delivery of the proposed £27billion investment, "the biggest ever investment programme in the railways and the biggest ever investment by a United Kingdom private company." He wanted Mr Prescott to drop the proposal to divert the subsidy from the train operating companies to Railtrack.

Wales links

In the Lords on 19 April, Labour Transport spokesman Lord Whitty, in response to a comment from Lord Cledwyn of Penrhos about north-south railway services in Wales, said he believed the creation of the Welsh assembly would concentrate greater attention on transport systems in Wales to the benefit of the railways.

In a debate on 27 April, Denis Murphy (Lab Wansbeck): made a strong case for the reopening to passenger trains of the Ashington, Blyth and Tyne railway to benefit a population of 200,000 people.

He said there were strong social, powerful economic and pressing environmental arguments in favour.

Transport Minister Glenda Jackson said new sources on investment funding were now possible for such schemes, including the rail passenger partnership.

She said the Franchise Director was also "taking forward a wide-ranging consultation on the future development of rail services, addressing the type and level of services that the rail network should provide, consistent with the Government's objectives for integrated transport policy, value for money and affordability."

The specialist transport committee of MPs has advised the Government that Railtrack should be given a financial inducement to develop the railway network.

The MPs believe the best way of doing this is for part of the access charges currently paid to Railtrack to be diverted to the Strategic Rail Authority.

Only when Railtrack can prove it is investing for expansion and improvement - rather than merely maintaining the present infrastructure - should the SRA release the money to Railtrack.

That was a key recommendation in April of the Report of the House of Commons Select Committee on Transport on the Government's Transport White Paper.

Railtrack had argued that it had not benefited from the higher levels of rail traffic, since 91% of its access charges were fixed.

A possible solution to this problem, said the MPs, was to split the access charges into two parts, an operating charge covering day to day operation, routine maintenance and renewal, and a charge to cover capacity enhancements. The charge for the latter would be paid directly to the SRA and would only be passed on to Railtrack when the investment had been made.

The committee felt Railtrack had made large profits from favourable access charge arrangements, and large public subsidies to the rail industry. Profits had in fact been excessive.

The company had a conservative approach to investment and of the recently announced £27billion only £11billion was earmarked for capacity increases and of this only £1.4billion was actually committed to new commercial projects. £6.1billion was dependent on additional funding from other sources.

The committee did not feel Railtrack was taking much of an investment risk and doubted if it was about to become a dynamic, entrepreneurial organisation. Furthermore it did not have a good record in fulfilling its investment programmes.

They also made the following proposals to deal with the situation:

  • SRA to specify what network improvements were to be carried out.
  • Payment to Railtrack as and when programmes had been carried out.
  • Regulator to impose penalties on Railtrack if performance standards not met.
  • Funds thus raised to go to SRA, not the Exchequer.

The committee welcomed two new investment funds to be administered by the SRA but questioned whether the £100million spread over three years would be large enough to significantly improve the network. This money should not be a substitute for investments which Railtrack or train operators were going to make anyway.

On the train operators, recommendations included:

  • Extensions to franchisees to be awarded only if exceptional benefits to taxpayers and passengers resulted.
  • Existing record on safety, staff training, service performance and quality, and investment to be taken into account.
  • SRA must ensure that performance standards don't slip during last months of a franchise which is not being renewed.
  • SRA must specify level of investment in rolling stock that a franchisee will be required to make.
  • Guarantees to existing franchisees that in the event of losing their contract, leases of any new trains would be taken over by successor franchisee.

The committee was also critical of the performance of the rolling stock leasing companies, and felt the Government should regulate them as a priority. They had a poor investment performance and were not likely to produce the steady renewal of rolling stock that the railways needed. They should not be able to withdraw and release rolling stock in an uncompetitive manner.

On freight it was made clear that the SRA should ensure that Railtrack's uncooperative attitude did not prevent an increase in rail's share of the market by failing to make adequate investment in freight infrastructure. They were appalled by Railtrack's cancellation of the piggy-back scheme and wanted the Government to scrutinise carefully the company's costings and assessment of its potential before deciding whether the scheme should be abandoned or not.


Personal Opinion

The new Labour Government spent 18 years fulminating in opposition while Mrs Thatcher mapped out her car and lorry future for Britain.

They certainly had time to formulate a transport policy which would go some way towards addressing the horrendous situation in transport which decades of under-investment, dead-end ideas and inertia had brought about.

Integrated transport seemed to be the answer. Once in power they quickly learned that whatever it meant, it was jolly expensive. So they came up with a new idea that was cheap - the bus.

Yes folks: the same bus which had signally failed to persuade motorists to forsake their cars.

But no, this was a new bus for New Labour - the guided bus. Ah! the new buzz word. No evidence that it will do anything whatever to aid traffic reduction, lessen pollution, get people out of their cars to any significant degree.

But it can seem as if the Government is doing something about public transport. Getting around within our major towns and cities is a nightmare. It is a disgrace that conurbations like Birmingham, Liverpool, Glasgow and Bristol should have to go through hoops to prove to Government that they actually need rapid transit systems, when the impetus for such schemes should come from government, as it does abroad.

German cities were told in no uncertain terms that U-bahn and S-bahn networks must be provided, and to get on and plan them. Any visit to Germany will show that this is indeed being done.

Here we are told that one tram line in Nottingham is exhausting the budget for such schemes "for the foreseeable future." Why for heaven's sake?

Shortly afterwards this pro public transport announcement, the same Government is anxious to fork out £200million to save one foreign-owned car factory. No talk here of it being the last such payment "for the forseeable future." How is it the Germans, French, Dutch and Swiss have so much more public money to spend on public transport?

Why is it that a minister visiting a local authority which wants to build a modern rapid transit system tells them to go for buses instead? What a cheek!

But if this Government wants to avoid the fury of motorists who at the time of the next election will be stuck in ever-increasing jams and whose only alternative is a bus also stuck in jams, then they had better get their finger out now and start spending some money. If transport is really as important as education and health as Tony Blair says it is, then where is the extra £20billion that those enterprises are getting?

Yet our MPs know what needs to be done as the report by the Environment, Transport and the Regional Affairs Committee shows. Let's hope ministers take some notice.

MICHAEL WEINBERG

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