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Brace yourself for another prejudice driven bodge
An early resume of the key features of the Governments Review of the railways, which came into a chum's possession as the saying goes, suggests that those responsible at the Department for Transport and the Treasury still haven't got their first class minds round railways. Produced by a DfT/Treasury Steering Group headed by Sue Killen the DfT's Managing Director Railways since October last year and Nick Macpherson Managing Director Public Services at the Treasury, it looks suspiciously like the result of one of those brainstorming session where you all shout out your ideas and someone writes them down at random on a white board.
Alistair Darling focused the review on cutting costs and improving performance and a key aim is to ‘regain government control of public expenditure on rail'. In future The Transportr Secretary will ‘determine the role of rail and the size of the network'. He will also ‘specify the key outputs in terms of safety, performance and capacity'.
An iterative process will determine the cost of the railway. The ORR will price Network's rail contribution to the specification. The Secretary of State will then say ‘Bloody hell, I can't afford that, how much would it save if we closed the ECML north of Newcastle '? ORR does its sums again and eventually the two figures align.
And money is likely to be very tight. The draft says that the current Comprehensive spending Review (SR04), ‘is bound to disappoint the railway industry and its users'.
Here we come to the £1.75 billion question. As reported last month, as a result of the Interim Review the railway ought to be getting £5.37 billion of public support this year and next, but Network Rail is borrowing roundly £1.5 billion each year to keep within the SRA's existing budget.
But from April 2006, the full whack in access charges and grants has to be paid, leaving the Treasury with an extra £1.75billion a year to find. ‘We need to decide in SR04 the extent to which we reduce the £1.75bilion by some combination of fares increases and service thinning or cuts' says the draft. I hope they have read the small print in Tom Winsor's agreement to the borrowing fudge.
Network Rail has clearly impressed the review team which sees the company continuing to operate under regulatory control against specified key outputs and project delivery. The infrastructure provider will take over responsibility for the timetable. Sole responsibility, it seems, because ‘there will be no 60 person timetable conferences'. Other new roles will include taking over utilisation capacity studies and coordinating research.
Internal governance is for Network Rail not Government. However Government and TOCs will have nominated directors on the board with a remit to oversee finances
As widely expect, the SRA is to be abolished. This is not because it failed ‘but because it does not have sufficient autonomy to become the single decision maker'. Presumably this refers to the inability to control Network Rail's costs.
Franchises will, instead, be let by an agency within the DfT. The aim is to have 15 TOCs, one for each Network Rail region (sic). TOCS will bid to run the timetable determined by Network Rail, with price and reductions in delay minutes the sole criteria for bids. Supporting this ‘narrow focus' on reliability, past performance will be taken into account at prequalification
New franchises will ‘operate under contracts which are simpler than the existing regime' and designed to ensure that the specified Timetable is operated. Failed TOCs will not be rescued.
Franchises will be longer – say 15-20 years – with five year break points. They will be renewable if the TOC is delivering ‘on reliability and price and has a satisfactory safety and customer satisfaction record'.
Both Network Rail and the TOCs will have separate contracts with Government, rather than each other. The ‘phoney' customer/supplier relationship between Network Rail and the TOCs will end, as will compensation payments under track access agreements.
Vertical integration has caught on, with the draft contemplating joint ventures between Network Rail regions and TOCs.
Right first time is clearly not on the cards. The new structure must be amenable to further change without new legislation so that if Network Rail is ‘reclassified to public sector' (nationalised) Government should be able to exercise control through the existing contract without having to set up a statutory agency.
However, the authors warn that the final version of the proposals will have to ‘stress the limits of what can be achieved via structural reform'
Safety and standards is likely to generate controversy. As widely trailed, oversight of passenger safety will be vested in the ORR – the so-called Civil Aviation Authority model. Rail will cease to be classified as a major hazard industry
Domestic standards are being replaced by European Technical Standards for Interoperability (TSI) which will be considered a full and sufficient basis for acceptance with no secondary ALARP analysis required. Responsibility for setting residual domestic standards will be vested in Network Rail and the Rail Safety & Standards Board will be wound up. A priority for Network Rail will be rationalizing 300 Railway Group and 2000 company standards.
Although this report is based on an early draft, the substantial achievements of RSSB reported in my Safety Report on page xx this month, plus the fact that RSSB is leading the charge on European standardization, you wonder whether the authors understand the new structure.