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INFORMED SOURCES March 2003

Boiling frogs ate my Strategic Plan

With the future deferred for lack of cash, there's a strong sense of déjà vu. Remember Future Rail?

Last year's Strategic Plan, called SP 1 by the Strategic Rail Authority but henceforth SP02 in this column since the nomenclature links it to the year of publication, was not exactly flush with useful information. There was a list of Major priority investment projects and a bar chart showing the Indicative timescales of major projects.

But of the cost of this programme there was nary a sign. Indeed I teased SRA Chairman Richard Bowker that someone must have Tipexed this vital information out of my copy.

So, as with British Rail's Future Rail prospectus of 1991, which was similarly numerically challenged, I did the job myself. And SP02 came out at around £25billion.

When SP03 came up subsequently I reminded Richard about this lack of financial detail. Of course SP02 was Sir Alastair Morton's cuckoo in the SRA nest when Mr Bowker took over and, in retrospect, he would have been better off insisting that Sir Alastair had published it before he went.

But that is all coal through the firebox and I was assured that SP03 would contain all the numbers I would ever want. But guess what? It has even less information than before.

Less is less

Not only no project costs, again, but no timescale bar chart either. All we get is a table outlining the Status of industry investment plans. On the other hand do get a plethora of financial information on the rising costs of the railway, analysed separately.

Table 1

Table 1 compares the costs of SP02 and SP03. It carries the usual health warning that while schemes are listed to the nearest £10million the totals should be taken as indicative.

What we can say with confidence is that over the past year projected investment has fallen from £25.5 billion – a figure endorsed by SRA last year, to around £17billion. A drop of around 35%

Obviously, in the case of the Channel Tunnel Rail Link the imminent completion of Phase 1 knocks 2.2bn off the total. Similarly, the Virgin Cross Country re-equipment and route upgrade is pretty well complete, as is the installation of TPWS. Perversely, the cost of the West Coast Route Modernisation has risen, even though I have subtracted the £2.1billion already spent.

On the other hand Southern Region traction power supply upgrade wasn't in last year's Table. Also new is the CTRL domestic electric multiple unit fleet.

Cuts bite

So where have the cuts bitten? Both the SWT and South Central infrastructure upgrades have been put on hold. SRA's plans for a phased approach to Thameslink 2000 have been frustrated by Deputy Prime Minister John Prescott. This has probably put it back four years – beyond the SP03 event horizon.

And the East Coast Main Line upgrade will now proceed as a series of local enhancements. My estimate of £800million for is probably generous.

Note that the already overdue renewal of the Great Western Main Line is still missing. A modernised GWML. showing the rest of the world how to run a high speed diesel railway, was part of Richard Bowker's vision for 2013 in a recent speech. That aspiration is already tight.

A point to note is that some projects listed are not yet funded. SRA says that the funding of the SR power supply upgrade is still being discussed with Network Rail. the East London Line Extension, where there are concerns over cost escalation, will be privately funded as a Special Purpose Vehicle(SPV).

Other economies of note include the dropping of gauge clearance and capacity enhancement on the Felixstowe-Nuneaton cross country Freight route. Further schemes on this route are under development (a popular qualification in SP03) but will now ‘take longer'.

Similarly, a ‘more focused scheme is being developed for the projected Southampton-West Midlands freight scheme. This includes a review of options for signalling and grade separation at Reading and shorter trains than originally proposed.

ECML

It is the ECML upgrade which best illustrates ‘Bowkerism'

Enhancement will now be taken forward as individual schemes on a case-by-case basis and integrated with Network Rail's renewal programme.

This incremental approach reflects experience on the WCRM and is intended to improve cost management and reduce overheads. In other words, the railway can't do big projects any more.

According to Richard Bowker, Railtrack ‘in cahoots with the SRA', had got the cost up to £3-4 billion. ‘But', he adds, ‘when you look at it you discover the truth'. Which is that tilting trains are ‘barmy'.

‘Hang on a minute', I expostulated at the press conference', ‘John Prideaux knew that. Brian Perren published the analysis in Modern Railways in, from memory, 1987'.

‘I know that', said Richard, ‘but these things have to be properly exposed and properly discussed'. ‘Properly'? Was that a subtle put down?

Anyway, what the SRA has discovered is that the ECML is ripe for Pareto. ‘You can get a very, very large percentage of the benefits you really need for a very substantially reduced amount of costs'. He instances Allington and Shaftholme Junctions which would allow more trains an hour in 10 years time. ‘A big jump from where we are today but without a £4 billion price tag'.

According to SP03 ‘the first elements of the revised ECML programme will be early priorities'. Thw Allington chord line should be installed, in 2004/05 to separate trains crossing the main line. Preliminary works to improve capacity at the southern end of the ECML should follow ‘shortly after'.

Stepping stone

So what are we to make of SP03? According to Richard Bowker ‘it is, in a every sense a stepping stone between where we've come from to where we need to get to'. He sees it as the mid-point in the process of making the case for rail which will be presented to the Government's Comprehensive Spending Review early in 2004.

It is, he says, a very honest and direct. But also thinks that it ‘recognises the success of the last 12 months'. Success? ‘Well I know it's not the thing people think of first, but there has been a tremendous amount of progress over the last 12 months and the Plan makes that clear'.

Honest and direct it certainly is, but the ‘progress' lies mainly in identifying burgeoning costs and cutting back on projects which the poor little rich railway can no longer afford. Richard also claimed that it laid out ‘what the issues are, in particular relation to things like costs, and what in our view we must and will do to sort all this out.

Yes and no again, I'm afraid. The analyses of historic costs are encouragingly detailed. But I found the way forward inadequately signposted. This is not surprising given that the real assault on Network Rail's costs is down to Rail Regulator tom Winsor's Interim Review kampfgruppe.

Persuading Gordon Brown

Richard Bowker appreciates this. In his view the Government is not so naïve as to expect cost increases which have ‘ factored up by three' since privatisation to ‘drop down'. Cue fanfare of trumpets. The man who has steadfastly insisted that it didn't matter what it cost BR is now using the Ford factor.

He explains ‘what we've got to demonstrate at the end of this year is that we've got a plan, which may take twelve months, eighteen months, two years, whatever, that shows how it (costs) is being got back under control. It is crucial at the end of the year that we demonstrate that we understand the causes and we've put the things in place to get them sorted'.

Richard Bowker thinks that the SRA's recent withdrawal of grants for passenger and freight schemes for the rest of this year and 2003/04 is a precursor to demonstrating financial grip when seeking more funding. ‘If as an industry we can demonstrate that we can manage short term reprioritisation, that we can actually deliver it, think how positive and powerful that will be when we go to an unconvinced Treasury who say “but you've never demonstrated that you can get on top of cash, you've never demonstrated you can make budgets meet”'.

Sadly, this uplifting thought was greeted with a duet of ‘they'll ask you to make more cuts and the ‘resident prophet of doom (no, not me for once) was told to ‘go and sit in cynics' corner and talk to himself'.

Richard Bowker argued that the corollary of acquiescence is to let the budget rip and blackmail the Treasury into forking out. Oh no it isn't.

Richard said that one of his heroes was Sir Peter Parker who, shortly before his death, advised him that the only way to win the money round was to play the game to Treasury Rules. Nearly right.

What you have to do is play it to Sir Humphrey rules and for a new mentor the SRA Chairman could do worse than John Welsby, Chief Executive to Bob Reid's BR Chairman in an age when railwaymen really knew how to control costs.

Faced with a £240 million budget cut demand for next year, big John would have gone to the Department, smiled his Borgia smile, said of course he could save £240million, and taken the civil servants through the implications. Freight grants? Berkeley will go ballistic but I wouldn't worry. Rail Performance fund? Leaf-fall could be worse and we might get the odd SPAD but the Minister can tough it out.

Aspirations

Assuming Gordon Brown is persuaded, I asked, what funding would SRA be seeking from the Treasury? GWML modernisation perhaps?

Well the projects in Table 1 will be reassessed in the light of the Government's overall 10 Year Transport Plan. Things (unspecified) that should never have been included in the first place will be ‘chucked out' of SP04 while the SRA will ensure that things that ought to be featured are included. ‘It's all about getting back to the core business'.

This sounds ominous, so I pressed further. How much funding would he be asking for? There was passion in the reply

‘Will it be a bigger number than £33 billion? Probably. Will it be the right number? I damn well hope so.

Whose job is to decide whether to give us that investment? The Government And that will be their decision. But we are not going with a fudged proposal'.

1991 once more

Personally, I think time is against him. There simply isn't time to reverse the Ford Factor. And the likely state of the economy argues against a generous settlement.

It is all redolent of 1991 when BR published Future Rail, seeking £1 billion a year investment sustained throughout the decade. This is what it would have bought:

*West Coast Route Modernisation and InterCity 250 trains

*Channel Tunnel Rail Link

*Kings Cross development

*Ongoing total route modernisation, including new trains, in Network SouthEast

*Heathrow Express

*CrossRail

*Thameslink 2000

*60 miles of new or reopened Regional Railways routes, 150 miles of electrification plus 100 new stations

*Growth in Trainload Freight's aggregates and raw material traffic

*Expansion of intermodal freight through new swap body and small wheel bogie technology

*New electric locomotives and a network of freight villages for International traffic.

Talk about déjà vu. Shortly afterwards the recession bit.

Which makes the point that Richard Bowker has to think long. CSR 2006 is probably a more sensibly timescale for making the case for rail. By then some showcase projects might be in and working and costs better understood. But he will have to run flat out to meet even that date.

Richard Bowker reckons that SP04 will get a more sympathetic response than Future Rail because railways are more relevant to the nation's transport than they were in the 1990s. That's true, but only if they offer value for money in competition with other modes and other spending priorities

And if the Interim Review gives Network Rail the money it says its needs to run the existing railway, SP04 will be even sparser than this year's offering.

Press conference Double Act

Bowker: ‘I still think there is a view out there that the government will keep writing the cheques, the money will keep flowing, and we can be as inefficient as we like but it doesn't matter.'

Ford: ‘Do you really believe there are people stupid enough to think that?'

Bowker: ‘Yes'

Ford: ‘That would explain your complaints about management then, wouldn't it?

Bowker: ‘I think there are people stupid enough, and it is stupidity.'

Ford: ‘Can you name any of them?'

Bowker: ‘No, (pause) I'm not sure I've got that long.'

Continues.........

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