Return to Archive -by date - by topic - 1999
Railtrack, as we have come to expect, completely missed the point in responding to the Rail Regulator's conclusions on the valuation of the asset base and the financial rate of return that will determine track access charges from 2001. According to Chief Executive Gerald Gerald Corbett, the Regulator has taken an ‘old-style utility approach which will lead to a weakened an under-funded Railtrack which cannot deliver what everyone agrees has to be done'.
What Mr Gerald Corbett and his Board seem unable to grasp is that to the rest of us Railtrack, despite its guaranteed income, is behaving like the boring utility from hell. It's approach to investment makes British Rail, ham strung though it was by the Treasury, look like a venture capitalist on a spree.
But, Railtrack will protest, did we not invest £1.25billion last year? Will not this year's investment be over £1.4billion?
No it will not be. Modern equivalent asset renewal is not investment. And the policy switch since the middle of 1998 to asset life extension rather than renewal is certainly not investment. According to the latest Network Management Statement, enhancements in the current year are budgeted at just £130million.
Equally, Railtrack keeps on repeating that it is keen to bear risk. Really? The examples it quotes are Channel tunnel Rail Link Part 1 and the Passenger UpGrade 2 on the West Coast main line.
We fail to see the remotest connection between Railtrack's purchase of the CTRL, when it has been built, and the level of track access charges needed to sustain the national network. The Railtrack Board seems to think it is owed a favour by the Government for rescuing the CTRL. We doubt that Messrs Prescott and Reid see it like that.
As for PUG2, linking 20% of access charges on a £600million investment seems a significantly smaller risk that funding £500millions worth of tilting trains. And, as reported in Informed Sources this month, even renewal in the WCML is being downgraded to life extension as Railtrack seeks to ‘upgrade' the premier route on the cheap.
Similar considerations apply to Railtrack's veiled threat that the Regulatory review could impair the ability of the Railtrack Group to take part in the public-private partnership on the Underground. Can they be serious?
LUL is a commercial opportunity which must wash its own face. Is Railtrack saying that if it won an LUL PPP deal which then went pear shaped, the resulting losses would affect the national railway?
Central to this whole debate is the lack of understanding of the working railway, let alone vision, in Railtrack's upper echelons. Compounded by a lack of political judgement, highlighted both by the response to the Regulator's report and the earlier whinge that TOCs running more trains were spoiling what would otherwise be a reliable railway.
There is an emerging consensus within the infrastructure industry that Railtrack is now worse than ‘old British Rail' when it comes to investment. At least when BR finally made a case for investment, it went ahead and spent all the money. In contrast, when Railtrack announces a project, it then seeks to cut back the original budget to the bare minimum to meet some business case. This is happening even now on the WCML.
As a result of this we can only applaud the Regulator's conclusions on the periodic review. Nor should Railtrack be surprised. As the servant who had not multiplied his talents was told, ‘Out of thy own mouth will I judge thee'.