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A year ago, Informed Sources revealed that Railtrack's project costs were two to three times those of British Rail. This month, several current or proposed projects are examined and the situation has got much worse. Much, much worse.
Railtrack is now quoting costs for schemes which, to be blunt, bear no relation to technical or commercial reality. However, while it is difficult to comprehend how a straightforward renewal and upgrade project like the West Coast Main Line can escalate to the £13billion now being quoted, it is possible to apply a common-sense check to smaller projects.
Earlier this year, Ian McAllister, Chairman of Network Rail, commented that one thing he had learned was that nothing on the railways cost less than £500million. He was exaggerating to make a point. Had he said £100million, some in his audience would have been nodding in agreement.
Visiting the site of a simple set of high speed crossovers on the four track WCML at Ledburn recently we were told that the price was not £132million, as widely reported, but nearer £50million plus the same again for compensation. Talking to a senior Railtrack engineer we got a similar message – compensation to train operators typically represents 40% of total project costs.
Of course, even if you halve the numbers being quoted – like the £100million to resignal the Cherwell Valley, the resulting figure is still beyond belief, but cutting back on compensation would at least enable a direct analysis of pre and post-privatisation costs, and what is measured can be controlled, as Gerald Corbett was teaching us..
Can compensation be reduced? Railtrack seems to think it is inevitable, like death and taxes. But this is only because they still don't understand the rules of the privatised railway structure in which they operate.
Railtrack certainly has to compensate train operating companies for the disruption caused by renewals and upgrades. Big schemes generate big compensation bills. Leeds First was around £100million, Manchester South is £50million, similarly Ledburn.
These are big numbers. And since the Treasury must be looking at the black hole of railway costs with a jaundiced eye, can we point out that a new 669 bed hospital in London 's Euston Road is costed at £255m as a Private Finance Initiative.
But why is the work, which causes the disruption which generates such compensation bills, being done in the first place? Why, to provide an improved service to the TOCs and FOCs.
So, for the TOCs and FOCs it is heads I win compensation, tails I get a better stretch of railway on which to run my trains. This is such a perverse proposition that the lawyers who created the privatised railway structure must have seen it coming.
Indeed they did. And tucked away in the Track Access Conditions is Part G Para 2.3 which allows the future benefit to an operator from a scheme to be offset against any compensation for disruption.
So why has Railtrack been shelling out millions of our money in compensation without putting up a fight? Well, it's our money and there seems to be a view, even in the Department of Transport that the escalating costs of legacy projects have to be paid for. And, of course, they don't understand the rules of the game they are in.
But, as the Master sang, ‘Hard times are just around the corner'. And the new Secretary of State at Daft is unlikely to be able to get any more money for the railways. Sadly, special advisor Dan Corry was celebrity victimed just as he had got our message about current costs. Such is the transience of political life. But Alastair Darling is likely to regret his commitment to sustain railway investment under the 10 Year Transport Plan at the times the level in the 10 years before Labour came to power any day now.
While what our Industry & Technology Editor calls the Railtrack Buggeration Factor is likely to double infrastructure costs for perpetuity, reducing the burden of compensation which redoubles those costs is worth fighting for. So here is a Janet & John guide for Railtrack on how to go about it.
• The next time an operator asks for millions in compensation point out that you are doing the work for their benefit and if anything they should be paying you.
• When they get uppity refer them to the Network & Vehicle Change Committee (NVCC)
• Hire a good railway lawyer
• Make sure you have a good case and that you are not taking 18 weekend possessions, as at Ledburn for nine weeks work.
• If you don't get satisfaction from the NVCC, appeal to the Rail Regulator.
• Err, that's it.