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INFORMED SOURCES March 2004

Darling's Review – content free spin

confused, misleading and clearly rewritten at the last minute, Alistair Darling's ‘Statement on the railways' revealed confusion at the top

As this column has remarked before, when a politician says things about the railway industry that we know are not true, you are left wondering whether he is a fool or a knave. Either he doesn't know any better or he thinks we don't know any better.

Take Paragraph 6 of Transport Secretary Alistair Darling's statement on the railways, made on 19 January. Having waffled on about last year's billion passengers and the obligatory 40 years of ‘substantial under investment year after year', he then claimed that because of this history of underinvestment, in July 2000 ‘the Government announced public investment of £33billion over 10 years – doubling railway investment over a five year period'.

So, fool or knave? Because the ‘£33 billion investment', in the 2000 Plan was, in fact, made up of £14.7billion of ‘Public Investment' and £14.3billion of ‘Public Resource'. And Public Resource gets spent on grants and subsidies, which is not the same as investment.

Given that Mr Darling was Chief Secretary to the Treasury from May 1997 to July 1998, and Shadow Chief Secretary to the Treasury from July 1996, you might expect him to know the difference.

But in paragraph 13 he was at it again. ‘The £64billion of public and private investment announced in 2000 is making a difference'. Table 1 shows the true situation.

You will note that the total is £60.4billion not £64billion. This is to avoid double counting, because some of the public resource expenditure, in the form of Revenue support, goes to pay the return on private investment.

So instead of £29billion of public money going into the railways, the actual figure is £26billion And don't worry about numbers not adding up exactly, the 10 Year plan warned that there was a lot of rounding up going on.

Table 1

10 Year Transport Plan investment and public expenditure £billion (2000/01 prices)

Source: 10 Year Transport Plan

Vanishing projects

Anyway, whatever the investment, Mr Darling assures us, it ‘is now beginning to make a difference'. Really?

That total investment of £49 billion was made up of:

• £38 billion Passenger infrastructure enhancement and renewals
• £7 billion New and replacement rolling stock
• £4billion freight.

Table 2

Source: 10 Year Transport plan 2000

Table 2 shows the ‘broad range of projects' which the authors of the plan assessed that the ‘expected level of investment' would be able to deliver over the life of the plan'. There was a similar delivery list for £18billion of public and private investment for transport in London . This included ‘a new East-West rail link such as CrossRail'.

Going through Table 2 you can see that boiling frogs have also swallowed great chunks of the 10 Year Transport Plan. The investment announced in 2000 is certainly making a difference, but as we enter the fourth year of the plan, projects are being heaved overboard to keep it afloat.

And while that £34billion of Private Investment sounds impressive don't forget it includes Network Rail's renewals and diminishing number of enhancements. Between 2004/05 and 2008/09 the company is set to spend £12billion on renewals alone.

Bowker's Law

Not only can't the Transport Secretary differentiate between investment and subsidy, he doesn't seem to have taken Bowker's Law on Board. Here he goes again in Para 42. ‘The principle of public and private partnership is right for the railways and will continue. It brings in money from two sources and that's important – we're spending £73million every week on the railways and that's levering in a similar amount from the private sector'.

Err, no Minister. There are two sources of money for the railways, says the Law, the farepayer and the taxpayer. Full stop.

So while the taxpayer is indeed spending £3.8billion on the railways this year, some of it is going to pay the return on Network Rail's burgeoning Debt and the ROSCO's borrowings to buy new trains. That may or may not add up to £3.8billion, but Network Rail's debt is hardly something to cheer about.

Confused

Leaving readers to ponder about the Transport Secretary's status, what about the rest of the statement? Well, it is horribly confused, lacks coherent development and was, according to a mix of rumour and informed sources rewritten over a weekend to placate Richard Bowker .

But at least there is the formal recognition that ‘a very serious difficulty' facing the railway industry is its structure and organization. The manner of privatisation ‘has led to a fragmentation, excessive complication and dysfunctionality that have compounded the problems caused by decades of under investment'. With customary modesty I lay claim to being the first to describe the railway as dysfunctional months ago – but at the time was regarded as an old railway nostalgist for saying so.

Anyway, according to Mr Darling ‘There are too many organizations, some with overlapping responsibilities' and this gets in the way of effective decision making and leads to ‘unnecessary wrangling and disputes'. As opposed to necessary wrangling and disputes, one assumes.

Now, ‘the long term inefficiencies and costs of the privatisation settlement (boiling frogs passim) have become an even bigger barrier to the success of the railways'. Thus, declared Mr Darling, ‘we need to put right the problems that the authors of privatisation left behind' - within the spirit of public and private sector partnership, naturally.

Believe it or not, the aim is to provide the railway with a structure and organisation ‘to take it through the next 20-30 years. If achieved this would be longest period of stability since the 1923 Grouping, making the Thousand Year Reich seem unambitious.

Help needed

According to Aliatair Darling, ‘It is also the case that the TOCs have in many cases brought innovation to services that was lacking in the past'.

Now I reckon ‘many' means double figures. And I can't think of 10 innovations introduced by TOCs since franchising started.

So if any of the shock troops of privatisation who wince there way through this morass of reactionary thinking would like to send in their lists of 10 examples of innovation that was lacking in the past, I will publish them.

How is this to be done? Well the Government will publish its proposals ‘in the summer' (Informed Sources Third Law applies). They will be based on two principles

First, the railways must operate in the public interest and it must be for government to decide how much money is spent on the railway and determine priorities. So goodbye SRA and ORR then?

Hang on, he said two principles. The second is that public and private partnership is right for the railways. Thus independent economic regulation is essential ‘and will be central to our proposals'.

This compartmented logic really confused the City. So the long suffering David Rowlands, Permanent Secretary at the DfT, had to rush out yet another letter of comfort saying the Rail Regulator was inviolable, sacrosanct and omnipotent and Gordon Brown is only too pleased to cover any increase in track access charges he may suggest.

So just bye-bye SRA then? That seems to be the general expectation, but you don't tickle the ivories to feed the Prime Minister's axe hero fantasies for nothing.

In another display of compartmented logic Alistair Darling announced that Richard Bowker and the SRA would evaluate ideas for reform from within the railway industry and pass them on to him. Err, but no one in the running for a franchise is going to tell the SRA that it would be a good idea to curb the role of the SRA.

So the Department had to send another letter round saying ‘You can speak to us direct if you would rather'. And when Alistair Darling was twitted in the House on the anomaly he said “We have asked Richard Bowker to evaluate the industry's representations, but we have always made it clear that people are free and should be encouraged to make representations directly to the DfT , and they are already doing that'. I bet!

There was Civil Aviation Safety evening at my local flying club recently. Discussing flying in cloudy conditions, the CAA man pointed out that when you take off you have several options in the event of the cloud base lowering.

You can fly round it, divert to another airfield, turn back and so on. The key to staying alive is to choose the best option before conditions deteriorate to the point where you have no choice – at which point you may fly into the nearest high ground.

This, of course, applies to life in general and politics in particular. When Labour took power in 1997 it had all sorts of options for the railway. But because the Blair Government is essentially middle class professionals they probably thought that privatisation was what the grossly inefficient state railway needed.

Now the Government is bumbling round in the murk at 600 ft, they don't know where they are and the cloud base is below the hill tops. The review is clearly a Mayday call. Time for the instrument rated old railwayman in the back seat to take command and climb safely up through the cloud.

Continues.........

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