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Of course, you can also save money by buying a less capable railway – if everyone agrees
Clearly, the Rail Regulator's Interim Review of Track Access Charges has to take into account how much railway the state can afford to buy. Today we have the network Railtrack was funded to deliver under CP2 If Network Rail is not delivering and is costing more, then the state might choose to save money by buying less railway.
So in parallel with the Interim Review, the SRA has been developing a ‘Specification of Network Outputs'. This is, in effect, the state's shopping list. Or as SRA Chairman Richard Bowker puts it, is ‘a specification of the outputs (he) wishes to buy from Network Rail'. These outputs will represent ‘the best value for money from the network.
SRA put its Specification out to consultation in July and when the responses came in at the end of August, the freight operators were falling over each other to nuke an admittedly feeble document.
Broadly, the SRA is adopting the Mussolini approach to making the trains run on time. Namely, concentrate the effort and money on the high profile services. On behalf of the SRA Network Rail has evaluated the inputs and outputs of three scenarios.
Scenario 1 (Differentiation) – More prioritisation of maintenance and renewals based on route categories
Scenario 2 - Minimum maintenance consistent with safe operation to bring spending back to CP2 levels.
Scenario 3 – Alternative possessions policies.
For this work, the network was split into five route categories
*Primary – inter-city and other key routes
* London and South East - commuter routes
*Secondary – other mixed-traffic through-routes
*Rural – primarily rural routes carrying mainly infrequent passenger trains
*Freight only routes.
This would see maintenance and renewal ‘strongly prioritised' by type of route. On the Primary and L&SE routes, performance and asset condition would remain as in the Network Rail business plan.
On Secondary routes, track renewal volumes would be cut to 50% of the Business Plan base case. In addition, preventative maintenance on structure would be done only as part of a major refurbishment and a policy of life extension introduced for signalling systems.
Rural and Freight routes would be maintained on a ‘minimum short term cost basis'. Structures would be maintained to ‘manage safety risks' and track renewals would be a ‘substantially reduced'. Signalling policy would be the same as for Secondary routes.
Network Rail reckoned this scenario would save around £600 million a year when fully implemented. Temporary speed Restrictions would rise ‘significantly' on Secondary, rural and Freight routes and delay minutes would increase.
This spreads the pain by spending the minimum on maintenance in the short term. In other words, Network Rail doing what it can with the money allowed in CP2. This would result in ‘significant reductions' to outputs. Performance would deteriorate ‘significantly' across all routes as TSRs multiplied. Capability would be limited and services curtailed. Things might not be quite so bad if Network Rail could borrow money to tide it over.
This maintains the outputs and maintenance and renewal levels in the current Network Rail Business Plan while cutting costs through longer possessions. Greater efficiency would allow the total number of possession hours to be reduced, but possessions would be more disruptive, resulting in more compensation to operators ‘under current rules'.
Modelling this scenario assumed longer weekend night time possessions on Primary and L&SE routes and week night possessions on Secondary and rural routes. Also examined was the ‘travelling factories' concept where renewals and maintenance of track, signalling and plant is carried out by a multidisciplinary team during an annual blockade.
Estimated cost savings range from £350million a year to £750 million if ‘travelling factories' were introduced.
Drawing on these scenarios, the SRA' draft strategy is aimed at improving performance on the more heavily used part of the network, while cutting maintenance costs on the lightly used routes, in addition to the savings determined by the Regulator.
In developing the strategy the categories have been grouped.
*Primary/L&SE/Main Secondary
*Other Secondary/Rural/Freight
‘Main secondary' covers routes which have regular interval passengers services to/from London or link key Ports to the Primary routes, plus the principal Trans Pennine Routes and the principal longer distance routes in Scotland (Edinburgh/Glasgow-Perth/Inverness/Dundee/Aberdeen.
Within the overall TAC set by the Regulator, routes in the first category would get more money to bring forward improvements in service performance. This would be paid for by reducing expenditure on second category routes as in Scenario 1.
Those of us living north of Watford might well see this as a combination of seeing the soft southerners alright while not upsetting the Northern PTEs and the Scottish Parliament excessively. In the lower group Network Rail would identify ‘management actions which could mitigate any adverse effects in such a way that train performance is protected'. A novel form of ‘protection' is foreseen, involving ‘some degree of journey time extension on less well used parts of the network if and when TSRs become applicable'.
In other words, the trains get slower and slower. If Richard Bowker is ever tempted to accuse bad old BR of managing decline again, or criticise maintenance holidays on rural routes, this consultation document hangs like a sword of Damocles over his head.
Possessions would be tailored to the type of route. On the primary network, 40 hour weekend possessions would be introduced so that engineering work did not ‘routinely encroach' into Sunday afternoons and evenings. L&SE would have 54hr weekend possessions. Secondary routes would have longer week night possession, while rural and freight routes would also have day or night possessions during the week. These arrangements would maximise plant utilisation.
Implementing ‘differentiation' would require changes in franchise agreements, including Passenger Service Requirements and Service Level Commitments to journey times and connections. On routes where there were constraints on pathing or connection commitments, intermediate stops could be reduced. Have you got a spare sword I could borrow, Mr Damocles?
Differentiation, says the SRA, would mean more certainty on the maintenance and renewal work to be accommodated by Primary and LSE routes during a timetable period. On other categories contingency allowances would have to me made for TSRs, ‘which may not be precisely forecas0table'.
Cutting back infrastructure capability has other consequences. Where structural renewals are needed and cannot be funded ‘it may be necessary to limit axle loadings on a route'. This may mean a change of traction and rolling stock or, in the case of freight, diversions, says SRA. Sounds like good news for Class 37 owners, comments Capt. Deltic.
What about cost over-runs in the new regime? Well you could revisit the Interim Review. But SRA favours ‘obligating Network Rail in the first instance to implement activity reductions, according to agreed criteria without the need for a formal re-opener'.
Helpfully, the SRA spells that management-speak out again. In the event of overspend and under-delivery, Network Rail could reduce spending and allow outputs to ‘flex' as a means of restoring financial control in CP3.
Gosh! That innovative use of ‘flex' which could well win the Blood & Custard ‘Euphemism of the year award'. If I understand this policy correctly, applied retrospectively it would have seen the West Coast Route Modernisation limited to 110 mile/h and limited to Euston-Rugby.
Now you may have noticed that freight operators come a poor last to the soft southerners and the placated northerners in the SRA's master plan to save money. Which suggests that even the Authority has yet to get its head round the fact that the railway has been privatised.
This is probably all my fault as a result of suggestions in this column that Network Rail is under state control as a subsidiary of the SRA and that the buccaneering franchise operators have been swept away by the new Service Delivery Units which deliver exactly the service Richard Bowker specifies.
All this is true, but the industry still works within the legislative and contractual framework stemming from the Railways Act 1993. And in this framework open access operators have contracts with Network Rail which specify what the infrastructure operator will provide. And these contracts are nothing to do with the SRA.
So you can imagine that the Freight boys were pretty miffed at the SRA's suggestions that their routes could be ‘flexed' with burgeoning TSRs and draconian limits on axle loads so that inter-city service and London commuters could have better quality infrastructure.
How miffed? Here is Freightliner writing to the Rail Regulator about the Specification. ‘We regard this paper as a completely inadequate attempt to address complex issues, and believe that it does not comply with the minimum requirements for a consultation on such issues. We believe that you should not pay attention to the SRA's views as expressed in their paper, but should develop your own much more sophisticated analysis in moving towards your conclusions'.
Now at one Rail Freight Conference some years back Tom Winsor lost his rag when Bob Goundry of Freightliner had the temerity to complain about the workload imposed on freight operators by responding to all the Regulator's Consultation documents. ‘Our rivals on the roads don't have this drain on resources' was the message. A tight lipped Tom replied ‘fine, if you don't care what happens to you, don't bother to respond'. And more besides.
How changing times change attitudes. Here is another excerpt from the same letter referring to the Interim Review. ‘We are impressed by the thoroughness and apparent accuracy of your work on Network Rail's costs, and fully support the development of the analysis and its adoption in your conclusions'.
What was it Kipling wrote in his poem ‘Tommy'.
Oh it's Tommy this an' Tommy that an' “Tommy go away”,
But it's “Thank you Mr Winsor” when they face the SRA.
What the interim review covers is passenger access charges. What the Freight operators see in the SRA's Specification are potentially serious implications for freight whereas, in the famous Appendix A to the second Interim Review consultation document, the Regulator points out “In the case of open access passenger and freight train operators, the SRA has no contractual relationship with them analogous to franchise agreements. It would require to persuade them to negotiate a lowering of Network Rail's obligations to them in their track access agreements”.
Indeed, in the Third Consultation document summarised above the Regulator warns about the very faux pas the SRA has committed. He says “ The Regulator would not expect to allow a reduction in the outputs that Network Rail is required to deliver below the baseline set at the last periodic review if the changes are incompatible with contracts Network Rail has with its customers for the period after April 2004. He would therefore expect the SRA to explain what steps it is taking to ensure that its overall aspirations for service patterns are consistent with the contracts held by Network Rail's train operator customers. In practice, this may mean that, before the conclusion of the interim review, the SRA would need reach agreement with train operators about the services these operators will run”.
Sadly, no doubt encouraged by fool railway journalists writing headlines like ‘Bowker gets a grip', the SRA Chairman has got a touch of the Il Duces and thinks he can tell the freight operators to FIFO. When the Freightliner letter appeared in the Daily Telegraph the SRA's official response was ‘stop whingeing, stop niggling'.
Now I could give you all a good laugh by quoting some of the livelier demolitions of the SRA's treatment of freight in the operator's responses. But since either the Regulator or the courts will decide it would be an indulgence.
nother reason for restraint is that there are suggestions that the published document was SNO-Lite after the Department for Transport took fright at the original version. We do have to remember that, as ever, railway strategy is ultimately determined by the Railways Directorate of the DfT and the Treasury