Memorandum by Rail Passengers Council
(TYP 16)
The Rail Passengers Council welcomes the opportunity
to be a witness for the Transport Sub Committee's inquiry into
the 10 Year Plan.
Clause 228 (4) of the Transport Act 2000 provides
for the RPC network to "keep under review matters affecting
the interests of the public in relation to railway passenger services
and station services". To this end the RPC network has begun
to consider rail in a broader social, economic and environmental
context. The network sees rail as the backbone of an integrated
transport system and therefore takes an interest in matters that
affect all modes of transport. This memorandum follows the outline
of the press notice although the Rail Passengers Council has not
addressed every item.
The Plan makes a number of assumptions including
factors such as motoring, public transport and fuel costs and
land use policy.
— What assumptions should be modified
or challenged?
The 10 Year Plan was published in July 2000.
There was little information and analysis around at the time to
confirm that the outputs set out in the document were the right
outputs and were affordable within the money available. Annex
3 of the 10 Year Plan laid out its investment and charging assumptions.
Although there is no doubt the plan was published in good faith,
was heralded with much optimism, there were a number of exclusions
from these assumptions. A series of events have subsequently highlighted
problems with the assumptions made for rail in particular.
Significant exclusions from the plan for rail
included the cost of implementing the Disability Discrimination
Act and the implications of the Uff/Cullen recommendations. The
result of the Rail Regulator's review was also unknown at the
time the plan was being drawn up. The latter alone resulted in
a £1.5 billion payment from the SRA to Railtrack.
The inadequate maintenance of the network prior
to the Hatfield derailment skewed the projected costs of this
part of Railtrack's work. Given the rising costs involved in maintaining
the network and completing existing projects, the sums earmarked
for investment in Britain's railways in the 10 Year Plan are unlikely
to deliver all the improvements to the network that were first
anticipated and the assumed costs for these projects at the time
of the plan, based on Railtrack's 2000 Network Management Statement,
have been rendered obsolete.
At the time of the 10 Year Plan, it was also
assumed that Railtrack had the financial ability to deliver its
enhancement programme. Project Endeavour, which resulted in the
SRA taking over Railtrack's enhancement programme earmarked a
further £1.5 billion of public funding for the beleaguered
company. This and the Regulator's review have essentially eaten
away at the £4 billion earmarked for the SRA's rail modernisation
fund laying open questions about the public sector capital support
assumed in the 10 Year Plan.
Revenue support to the TOCs has also increased
owing to the SRA's request for some TOCs to go on to short term
contracts, in order to facilitate a remapping of the network.
These contracts are on "cost plus" terms. That is to
say that when the franchises were let to the TOCs they were let
on individually agreed bases, with a declining subsidy profile,
to the TOCs' risk. The TOCs took a view of potential passenger
growth and their ability to cut costs and if they could not deliver
that would be their problem. With the refranchising process, individual
TOCs who were asked to alter their franchise agreements to facilitate
the franchise remapping exercise have asked for payment to change
their franchise agreements. In doing so they have asked for payment
for what running their existing services actually cost plus a
profit margin. This is costing significant amounts of public money
unaccounted for in the 10 Year Plan.
It could not have been envisaged, at the time
of the 10 Year Plan that Railtrack would be called into Railway
Administration by October 2001. Railtrack sat at the heart of
the railway and unless all the functions that Railtrack was set
up to do are assured—eg capacity allocation/timetabling,
signalling, procurement, enhancement and safety.—any strategy
for the rail industry is going to collapse. Meanwhile it is not
clear how soon a successor for Railtrack can be up and running.
The current situation is delaying planned projects, is costing
the public purse in Administrator's and legal fees and is discouraging
to potential private investors. Infrastructure renewal, maintenance
and enhancement costs are spiralling as risk is factored into
the "on cost".
The last 12 months has also seen a reduction
in the amount of rail freight passing through the Channel Tunnel
mainly owing to border immigration problems. As a result the net
effect will be counter to the assumed growth in rail freight volumes
outlined in the 10 Year Plan.
The combination of all the factors so far outlined
makes the rail industry less attractive to private investors and
there is scepticism that the £34 billion private investment
assumed for rail over the next 10 years will be forthcoming given
the present climate. More risk will be perceived in investing
in the railways and this will be priced accordingly by potential
investors.
More generally there is concern that the £56
billion total private sector transport investment assumed over
the 10 year period may be optimistic given the general downturn
in the global economy exacerbated by events following 11 September
2001.
It is also suggested that the abandonment of
the Fuel duty escalator means that models of future motoring traffic
growth (and road freight) may underestimate growth in road use
adding further to congestion problems. The recently proposed change
in land-use policy, for example regarding the need for public
inquiries and planning consent, will also not have been factored
into the traffic-growth modelling.
In particular, will the expected number of congestion
charging and workplace parking levy schemes be implemented and
when?
There is scepticism that 12 workplace parking
levy schemes will be introduced. Many cities are fearful of driving
commercial investment away to places which are more "car
friendly". This may be a case for national harmonisation
on such policies. The congestion charging schemes are more likely
to be achieved, provided the technology is there to support them.
Both schemes require that affordable alternatives to the car are
available. At a meeting of the Rail Passengers Council in June
2001, the Director of Centro stated that it was clear to him that
investing in local rail services bought less congestion in Birmingham.
Some light rail (or combined light/heavy rail) schemes have delivered
passenger growth for example, in Manchester. The reasons for such
successes should be analysed so that best practice can be introduced
elsewhere. Ring fencing the revenue from congestion charging and
workplace parking levies for investment in local transport and
road enhancements should be on the basis that there is an existing
public transport infrastructure that offers car drivers a real
choice. Any other assumption starts a classic chicken and egg
debate.
How important are the assumptions to the outcome
of the plan? What remedial action is necessary if assumptions
or targets need to be changed?
If the assumptions are inadequate, as implied
by our response to the first part of this memo, the plan might
fail to achieve its objectives in its entirity. A number of assumptions
in the 10 Year Plan have been shown to be unsafe 18 months later
and need, therefore to be reconsidered. Confidence needs to be
restored in the rail industry so that costs are not inflated to
cover perceived risk, to encourage investment and to develop and
retain skilled labour. To this end it is imperative that Railtrack's
successor body is up and running as soon as possible and some
stability is restored to the network.
Before this happens and the future structure
of the industry is clear, particularly with regards to a mechanism
for delivering enhancements and a means of accurately estimating
cost, it is difficult to see exactly what any new assumptions
should be based upon.
Are the skills and capacity available to deliver
the improvements suggested?
There is a serious shortage of human resource
at every level across the whole rail industry. This is affecting
not only the running of current services but is having a significant
effect on development schemes. The RPC expects this to be addressed
in the SRA's Strategic Plan with a particular emphasis on management
and technical skills.
In particular, there is a severe shortage of
railway signalling planners and technicians—there are too
few even to do work currently waiting to go ahead. It has been
suggested that no one company has the certainty of contract to
put that resource in place and that it is possible to grow that
base of skills within an 18 month or 2 year time scale. For any
one company that commitment in training is substantial which may
be an argument for a central multi-industry training scheme which
is financed by all of the supply side. However, uncertainty about
the future size of the market is having a serious effect.
Implementation of the Plan depends on the provision
of a mixture of public and private sector finance
How will the current situation in the railway
industry affect the need for and provision of private and public
sector finance?
There is scepticism that the current climate
can encourage £34 billion private investment in rail. The
alternative is that finance sources will be persuaded to charge
a higher rate of interest than would previously have been the
case. The Rail Passengers Council has advocated that rail's ability
to deliver the government's social, economic and environmental
policies, should be fully understood by government and, as a result,
the case for increased public funding made. The EC White Paper
European Transport Policy for 2010: Time to decide quite
vividly makes this case in a European context.
Is the balance and phasing of investment across
funding areas correct?
There is concern that owing to the contractual
nature of the rail industry, the Capital/Revenue split for the
public funding earmarked for rail is capital heavy. Furthermore,
given committed expenditure, it appears there is little discretionary
spend for the SRA in Control Period Two—ie the first five
years of the 10 Year Plan.
Are more flexible financing arrangements required
to deliver major local schemes?
Local authorities have been the champions of
many schemes. The role of local authorities and, in the future,
Regional Development Agencies and regional authorities, in initiating
schemes could be encouraged and developed to ensure that regional
priorities and needs are being taken into account. Financing schemes
which encourage local participation in implementing solutions
for local problems is to be encouraged.
The RPC network welcomed the extension and simplification
of the Rail Passenger Partnership scheme which now covers capital
projects as well as feasibility studies. It also welcomes David
Jamieson, MP Parliamentary Under-Secretary of State's clarification
to RPC Western England "that while the RPP Scheme would be
the main source of funding for local schemes, in the case of major
projects (those with gross capital costs of over £5 million)
where a significant proportion of the funding gap is not eligible
for RPP support, it is possible for LTP funding to be made available
in addition to RPP funding."
Innovative flexible financing arrangements should
be explored. For example, a developer of a retail complex might
contribute a certain amount of one-off funding for local public
transport to serve the site. It might be possible to word such
agreements so that a further contribution is made to reflect demand
or excessive car congestion.
How do the emerging multi-modal studies affect
the 10 Year Plan?
Multi-modal studies are very important depending
very much on their terms of reference which should not be drawn
too narrowly to risk missing the wider picture. They might recommend
an alteration in the balance between investment in roads and investment
in public transport. However, the outcome of Multi-modal studies
will, in some cases be well into the 10 Year Plan. The danger
therefore is that action on recommendations, especially in rail,
might not happen until the second half of the 10 Year Plan. This
would be too late to realise the targets set out in the 10 Year
Plan. There is no assured funding associated with multi-modal
studies.
The Plan sets a number of targets for growth
in areas such as travel by rail and bus and reductions in factors
such as congestion and vehicle emissions.
Are the targets and the dates for their achievement
well designed (eg is reducing congestion the right objective)?
Targets set out in the 10 Year Plan to which
the railway will contribute include reducing road congestion,
improving air quality and reducing greenhouse gases. These targets
should influence, and not be adjunct or secondary to, the specific
priority targets for rail as outlined in the 10 Year Plan and
reiterated in the Government's Draft Directions and Guidance to
the SRA.
There is concern that, in the case of rail,
a lot of emphasis has been placed on the three priority targets
of increasing passenger kilometres by 50 per cent, increasing
freight usage by 80 per cent and reducing overcrowding. Reducing
fares, increasing rail service frequencies and rising motoring
costs impact on passenger rail demand. There is, therefore, concern
that the targets for passenger growth and reduced overcrowding
may be mutually exclusive within the set timeframe.
In laying out targets for rail, there has to
be a clear understanding of the priority for government policy
objectives. At present, some of the objectives are competing.
Road congestion in cities and towns around the
country is a national problem. On the micro side, Builth Wells,
a town of a few thousand people, saw extra services on the Heart
of Wales line as a means towards tackling town centre congestion.
On a larger scale, Rob Donald, Director, CENTRO, has made it clear
that investing in rail services bought less road congestion in
Birmingham. Targeting services within urban areas, rather than
between them, is likely to have a greater impact on road congestion
and is likely to increase the number of passenger journeys which
is distinct from passenger kilometres.
Short journey commuters are not as commercially
attractive as long-distance travellers are. However, in the recent
PIXC figures, five London train operators were in breach of capacity
limits. Targeting capacity for commuter services is more likely
therefore to reduce overcrowding.
Enhancement of local services can help tackle
social exclusion and peripherality and can aid economic regeneration
but is unlikely to be commercially attractive in isolation and
will be dependent on subsidy. Intercity journeys, in contrast,
may be self-financing and passengers may have a choice of alternative
modes but these choices may be less sustainable and be less environmentally
friendly.
Parliament needs to decide what it wants from
its transport system. The EC White paper suggests that given European
policy objectives concerning sustainability, congestion and CO2
emissions, rail is the target growth area.
What other targets, if any, should be included
(eg modal shift, walking, traffic levels?)
Modal shift should be encouraged. This is likely
to be an outcome of the multi-modal studies and is in line with
European objectives. There should be a target, for example, to
switch passengers from air to rail on UK internal flights eg between
London and Manchester. Modal shift could also be encouraged to
less polluting modes of transport such as inland waterway transport.
Targeting rail bottlenecks would be in line
with the EC White Paper and would help to ensure that rail passenger
and freight growth targets can be achieved.
Encouraging walking and reduced traffic levels
is to be lauded. However to have a great effect this would require
a change in the need to travel per se. Centralising hospitals,
schools and banks, the high cost of living within walking/local
transport commuting distance, out of town retail parks and supermarkets
are amongst the things which contribute to the need to travel
by modes other than walking. The Government has previously recognised
that integrated transport involves integration with spatial planning
Should a more regional approach be adopted for
target setting?
Dialogue with local authorities, devolved government,
regional assemblies, PTEs and other stakeholders such as the RPC
network is vital to ensure that the Government is fully aware
of the economic, social and environmental impacts of its targets.
A regional approach should provide the opportunity to take advantage
of national, regional and local government transport strategies.
The 10 Year Plan is the investment plan to deliver
the Government's integrated transport policy.
What impacts will policies in the European White
Paper on Transport have on the Plan?
The EC White Paper may change the emphasis on
the Plan's targets. The European White Paper on Transport spells
out the need to develop sustainable modes of transport. It advocates
harmonisation of taxation on commercial transport and seeks to
level the playing field between modes for charging for infrastructure
use to reflect the cost of damage to the infrastructure, the environment
or added congestion. The aim is to incentivise the use of the
cleanest modes or the least congested networks.
The White Paper has a target to restore the
rail/road balance to 1998 levels and advocates redirecting Community
co-financing to give priority to rail, sea and inland waterway
transport. It highlights the need to get a European freight network
for rail and advocates dedicated routes for freight. It also advocates
a network of high-speed passenger routes.
A case could be made for a dedicated freight
line to revitalise international rail freight; which could be
shared with international rail passenger flows towards the end
of the 10 Year Plan, if backing were given now. Moves should be
made to tackle the increase in domestic air traffic where destinations
are easily reachable by rail.
The Rail Passengers Council will be responding
to the DTLR consultation on the EC White paper.
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