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Network Rail's Strategic Business Plan ( SBP ), the company's response to the Government White Paper which included the High Level Output specification (HLOS) and the Statement of Funds Available (SoFA), is an impressive document. In 224 pages it outlines in considerable detail plans and budgets for the next Control Period starting on 1 April 2009 .
Overall, the way forward is well documented, cogently argued and, even, presented with passion. We can only applaud its vision of a railway going forward, providing more capacity than required by the seemingly cautious figures in the HLOS.
Now comes the expected ‘but'. While Network Rail says that it has worked with train operators on various aspects, such as performance and capacity, the SBP fails to align with the Government's comprehensive aspirations for the railway in England and Wales as articulated in the HLOS and the SoFA,
Network Rail increasingly talks as if it represents the whole railway but the SBP only serves to illustrate the divide between operators and infrastructure owners. Take the perennial issue of the Public Performance Measure (PPM). The monthly tables are reported almost exclusively as an issue for operators. Yet when it comes to delay minutes the elephant in the corner is Network Rail. In only a handful of TOCs is responsibility split 50:50. On average the ratio is nearer 2:1 against infrastructure causes.
Worse, where the TOC's are continuing to reduce their delay minutes Network Rail has been stalled for a year, at 30% above pre-Hatfield derailment levels. According to a graph in the SBP Performance will still not have got back, let alone below, those far from Halcyon days by March 2009 compared with a 30% fall predicted for TOC incurred delays.
From this unsatisfactory position, the SBP argues that the PPM targets for England and Wales in the HLOS are unattainable. Even getting close would require additional expenditure of up to £400 million. And, anyway, who says passengers notice when the PPM gets over 90%.
Compare this Marie Antoinette approach with the hand to mouth existence of the franchise owning sans culottes. In the struggle for existence, well to keep or win franchises, they are compelled to commit to ever high PPMs, to be achieved despite ever diminishing subsidies or soaring premia. They see the solution to performance as better management rather than a deluge of money.
And it is not just PPM. Time and again a requirement in the HLOS becomes an optional extra in the SBP. The seven day railway? Capacity enhancements? Would you like to enter your PIN number Secretary of State?
But it is when it comes to Network Rail's day job of Operations Maintenance and Renewal, that the different worlds of private sector train operation and company limited by guarantee infrastructure owner really clash.
For us, a seminal moment when reading the White Paper was the statement on the first page of the Executive Summary that subsidy levels for the railway should return closer to the ‘historic norm', something this magazine had been espousing for several years. Subsequently this nirvana was defined by Government as the five years before Hatfield, when support for the railway was also declining.
Network Rail in the SBP has no time for this return to a golden, well, silver gilt, age nonsense. The suggestion that major savings in maintenance and renewal costs could be achieved ‘simply by reversing the expenditure increases which were observed in the aftermath of Hatfield' is dismissed out of hand. The post Hatfield cost explosion was not about engineers panicking Railtrack's Administrators into signing blank cheques on safety grounds. No, the surge in spending reflected additional expenditure needed to compensate for previous underinvestment.
In this new, alternative universe, it has been an amazing achievement for Network Rail to stabilise the railway, in many case improving the condition of the underlying assets while, in parallel, getting very close to the 30% efficiency savings set by the Rail Regulator in the 2003 settlement for the current Control Period. Suggestions that further savings - 30% plus according to ORR or 23% from DfT Rail should be the basis of the new settlement does not go down well. ‘Just let us, and our contractors, get on with it, won't you' is the sense of Network Rail's reaction to such efficiency aspirations.
In this new railway we have to accept that Network Rail knows best when it comes to efficiency targets. Adhere to DfT Rail's, let alone ORR's, demands and ‘more significant steps' would have to be taken to reduce Network Rail's costs, including reducing, rather than increasing outputs'. This would also harm relations with a supply industry still recovering from the last decade of uncertainty.
But, steady as she goes is not an option. Well, not in the muddy arena where politics and railways collide. Demanding that ORR steps back and gives Network Rail ‘space to deliver its planned improvements with flexibility to deliver the required outputs in the most efficient way' is all very well, until historic Norm enters the fray.
It may well be that, ‘intrusive regulation' could stifle Network Rail's ability to focus on driving through its improvements', but, after Tom Winsor's raid on the Chancellor's back pocket for CP3, the 2005 Railways Act ensured that in future Ministers would have to specify both what they wanted aND say how much they were prepared to spend get it.
If Network Rail can't provide what the Government wants for the money available, we don't think the ORR has any option but to intrude. Network Rail has indeed done many good things since taking over Railtrack. But 07.00 hours on 3 October 2002 was not the start of ‘year zero' expunging all that had gone before.
As we said at the beginning, the SBP is a coherent exposition of Network Rail's plans for the next Control Period and the funding needed to support them. But it assumes that the infrastructure owner knows its business best, the railway costs what it costs and the Government should pay up and stop seeking unrealistic efficiency savings. It would be very hard for the Government to back down on either the HLOS or the SoFA.
We put the gap between funding available and the SBP 's interpretation of the SoFA at between £3billion and £5billion. Reconciling this difference will not be easy. While the Government has delegated the role of Procrustes in fitting the HLOS into a too small SoFA to the HLOS, we see difficult times ahead for all concerned..