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INFORMED SOURCES October 2005

Developing the HLOS

Don't be fooled, the man in Whitehall will be running the railway

In computer programming, a ‘high level' language was something more user friendly than machine code. And I reckon that Transport Ministers are hoping that the ‘High Level' output spefication will be similarly remote from the sharp end. But look at this extract from the Railways Act.

That looks more like the railway equivalent of machine code than Java Script to me. Contrast it with the Direction by the Transport Secretary in 1974 that ‘BRB shall from 1 January 1975 operate its railway passenger system so as to provide a public service which is comparable generally with that provided by the Board at present'.

That ‘may include' could provide a ministerial escape hatch. On the other hand, the HLOS has to be sufficiently detailed for ORR and Network Rail to price accurately or Chris Bolt will send it back.

To meet his requirements, the HLOS will have to be geographically specific, at least down to route level. And services and performance will have to be detailed, for example frequencies on intercity routes and load factors on commuter services.

And in delivering the HLOS, the DfT, not forgetting the Scottish Executive which has its own tartan HLOS, will be on their own. While expecting the two specifications to be in a form which can be costed and which can also be turned into an output specification for Network Rail ORR will not consult on the content.

Detail

And there is more bad news for the Sir Humphreys. How is the HLOS going to cope with sections of the network where capacity is constrained?

According to Informed Sources, between Coventry and Birmingham , for example, the HLOS will have to decide on the allocation of paths between Virgin intercity services and Central Trains' local services while maintaining freight capacity. This means getting the elegant finger tips into the muck and brass of existing franchise business plans (Virgin West Coast and Cross Country), the dismemberment and replacement of the Central Trains franchise, not to mention local transport issues in the increasingly self assertive English regions.

Or try the East Coast Main Line, where Network Rail is already struggling to provide the Office of Rail Regulation with pathing information for the current and competing bids for Scotland to Yorkshire coal traffic, two open access operators wanting new or additional paths and GNER needing more capacity to meet its franchise commitments.

You would need a heart of stone not to smile bitterly. But without such detail how can Network Rail cost its business plan.

Then there is the SoFA, which is going to be even less comfortable than the usual fences for sitting on (Groan –Ed) As explained above, railway costs cannot be ‘magically cut'. The best that can be expected for CP4 will be a continuation of the downward trend in the current Control Period.

Keeping mum

If at any time during PR2008 a mismatch between service levels and funding levels starts to emerge, ORR will alert DfT and seek a political decision from ministers on cost reduction options such as service cuts. Here the Act is ambiguous.

After the radio silence debacle in ACR2003, the civil servants wanted the Railways Act to require the Transport Secretary to revise either the HLOS, the SoFA or both to close the gap between service levels and funding. In the event, the Minister ‘may' do this, or he may be like Dad.

In such an event, ORR would expect to be able to advise ministers on which outputs would need to be removed from the HLOS to balance the budget. If the ministers duck the decision, ORR would then be responsible for making cuts under Schedule 4 of the Railways Act.

Would buckets of opprobrium then fall on Chris Bolt 's , leaving ministers smelling of roses? What do you think?

Remember that Chris Bolt is all for transparency? So naturally, any such advice to ministers will be made public. This will identify, in broad terms, where ORR sees the worst value for public funding in the railway. In other words the consequences of doing nothing will be public.

While limited to the five years from April 2009, PR2008 will, effectively establish funding levels for the railway for the next 20 years. Until ministers state otherwise, ORR is assuming that the funding for CP5 (from April 2014) will be similar to that provided in CP4. There is one exception. Conceivably, the Government could ask for spending to be deferred, along the lines of the ‘maintenance holidays' used by British Rail at times of financial stringency.

Benefits

Of course, there are some upsides to the new Review process. Rather than simply pricing established traffic levels as in previous ACR, Network Rail will now be able to shape the railway. ORR is hoping for proposals to cut costs over and above the incremental reductions in Network Rail's current business plans for CP3.

Such proposals might see maintenance carried out in innovative ways or scheduling of expenditure changed. Or they could require additional up-front funding to gain substantial long term cost savings. Such options would be evaluated within the review process

There is also the issue, yet to be resolved by DfT, of how TfL and the Passenger Transport Executives will exercise their rights to contribute to the Periodic Review. These rights were established in the 2005 Railways Act, but when they are to be exercised is unclear.

A proactive role would see TfL and the PTEs making their inputs during the iterative Preparation phase.

Alternatively, they could take HLOS as the base case and seek to add or modify services to meet specific local requirements, drawing on their transport budgets.

It seems unlikely that the latter course would be acceptable, particularly as proposed service changes and cuts, which TfL and the PTEs might reverse, will be made public during the Preparation Phase. On top of which the delay to the HLOS will leave little time for changes requested by TfL and the PTEs to be evaluated and costed.

Continues.........