Return to Archive -by date - by topic.
We've got the full paper on page xxx, but here's the background
Sandwiched in the second session between Richard Bowker and John Armitt was Dieter Helm, of New College Oxford. Dieter is a specialist on the regulated industries and was invited to consider a new structure for the railway at the March 23 Seminar.
Once again the choice of speaker was significant. Apart from his expertise, Dieter is to the right of Adam Smith when it comes to the efficacy of market forces. He thus provided a counter-balance to the railwaymen's enthusiasm for integration.
Like the other speakers Mr Helm had just five minutes to make his case. This is a brilliant concept because you can't afford to waste time setting up the argument.
Hence Dieter Helm opened with ‘the railways are in a mess'. He described privatisation as ‘far from ushering in a new age of the train' and praised Darling's review because ‘there are few areas of the economy where so much is being spent for so little'.
According to Dieter ‘recognising failure is a necessary step towards sorting out the railways'. And reduced costs and improved performance could be achieved through a number of evolutionary steps.
You can read the full paper in this issue. But to bring you up to speed here are some bullet points.
For Mr Helm the solution lies in: clear objectives; ‘substantially' reduced regulatory and policy bureaucracy; and a simplified structure for the industry. Dumping both the Conservative's original privatisation model and Labour's 10 year transport plan to the dustbin of history, he argues that the railways' objectives should be determined by the level of funding available from the Treasury.
Good grief! Back to the 1980s or what? Back to the days when BR proposed a 25% cut in costs over five years, was told to deliver in three, delivered, and was then told to go back and do it again.
For Dieter Helm the answer to the question ‘what are the railways for?' would then be determined by the value which can be obtained from the finite funding provided. But, surely privatisation was intended to get the railways out of the constraints of the Treasury?
Yes indeed. But that that was then. Now Dieter Helm sees an end to stable long term funding, 10 year transport plan style.
In the real world, allocation of public expenditure, plus the effect of wider swings in economic performance, are ‘bound to constrain funding to, at best, a three-year public expenditure-round process'. This would see the Treasury determining total short term expenditure.
This must be music to Treasury ears and is what is happening anyway under the Comprehensive Spending Review. As a result, long term projects such as the East London line extension may have to be dropped, deferred or curtailed for lack of cash.
But it can't have cheered up John Armitt. He believes that more effective long term planning is needed to make the railway industry more efficient.
Currently, the Periodic Review gives Government the opportunity to re-specify the outputs it wants from the railway every five years. John Armit would prefer a 10 year integrated transport plan.
And he has a point. Many management and engineering decisions have a delivery timescale of ‘four to eight years'. ‘If we're going to get real efficiencies we're going to need to be taking the opportunities that are 10 years out not five years out', Mr Armitt believes.
To support this argument, he instanced the signalling supply industry. ‘A couple of years ago' there was a shortage of signalling engineers, followed by the current situation where engineers are being laid off.
Nor has the Regulator helped. The Interim Review includes provision for a further mini=review of signalling expenditure in two years' time because the profile of resignalling schemes ‘is not clear'.
But as chief Executive of Network Rail John Armitt is quite clear that there ‘is major signalling renewal out there for the next 10 years'. Planning on that basis would generate significant efficiencies.
For Alistair Darling, listening to this debate, long term funding was not the problem ‘If we are going to put all this money into the railways we have to get benefit from it'. Organisation change was the means to this end.
‘My experience in this industry is that when people analyse a problem they always conclude by finding 70% of the fault with someone else'. Transport Secretary Alistair Darling March 23 2004 |
Summarising the morning's discussions Transport Secretary Alistair Darling emphasised that the government would have to make the decision on a new structure for the railway. He added that while a number of points in common were emerging from the Seminar and the parallel consultation, there were also ‘small differences of emphasis'
During the seminar, no one had defended the status quo or proposed a return to BR (eh?). The general view was that a ‘simple streamlined structure where it is clear who is in charge, who is responsible and who is to be blamed if it doesn't work is absolutely essential'.
After the subsequent Glasgow seminar the policy seemed to have firmed up. Mr Darling told Radio Scotland ‘(The new structure) will be far more streamlined, it will have far better controls in place, we'll get rid of all the myriad of people that are now responsible for the railways in one way or another and make it much more accountable so that we can have an organisation that can spend the money that we're putting in place and as a result get a more reliable, better railway'.