Memorandum submitted by Mr George Huxley
NOTES FOR
INQUIRY INTO
PASSENGER RAIL
FRANCHISING
This is an attempt to answer some of the questions
posed in the document of invitation. However, one vital question
is missing: is there a need to continue passenger rail franchising?
Franchising was an outcome of the Robson-Wilson
(-Foster) scheme of privatisation forced upon the system by the
Treasury's insistence upon vertical disintegration of operations
from infrastructure. The insistence resulted from a deliberate
misunderstanding of European legislation: there was no need to
have separate ownership of track and signalling from operations
and rolling stock. The legislation—over-interpreted in the
cause of rapid sell-offs of public assets—is embodied in
European Community Directive No 440 of 1991; it does not require
separate ownership, but it does require separate accountability
of infrastructure and operations. That is why one can. see locomotives
in, for example, permanent way depots of the SNCF clearly marked
SNCF Infrastructure.
Separation has led to failures of communication
between track authorities and operators (remember, eg Hatfield,
Potters Bar, Aldwarke). It has also led to a mismatch between
length of operating franchises and lifetimes of assets (rolling
stock, signalling, trackwork). Under wiser leadership the SRA,
now defunct, could have shown the way to reintegration, but the
DfT lacks the technical competence and the will to enforce a radical
change of policy. Sir A Morton had argued for longer franchises
but made no progress, and his successors were concerned not to
offend the DfT and the Treasury, so that policy tended towards
looking for the lowest bids with but feeble requirements to improve
services and to enhance the system. The opportunity to review
state involvement in operations for comparative purposes was lost
when South East Trains, which performed tolerably well as a state
entity, was dogmatically offered for refranchising. The relation
between access rights and franchising was never worked out, but
DfTs micro-prescription in franchise specifications has produced
inflexible cutbacks in services—witness the appalling FGW
timetable for branches in Devon and Cornwall. The cutbacks show
how disingenuous was the talk of Mr Darling, Mr Twigg, and others
about Community Rail Partnerships.
The GNER bid was successful but it was made
before Sea Containers were known to be in financial trouble. The
bid (together with a promise of a large premium to the Treasury
to go to general taxation, not back into the railways) depended
upon a significant enhancement, namely the electrification from
Leeds to the Hambleton Junctions to permit running through Leeds
without reversal. ORR, being more concerned with open access than
with betterment of the infrastructure has, by approving additional
paths to Hull and others to Sunderland, made the GNER scheme unworkable.
There could hardly be a more vivid instance of the inherent folly
of the present organisation. Meanwhile the Treasury has been approving,
before cost overruns, enhancements to the Ml near Milton Keynes
of £36 million—per mile, but "optimism bias"
is used to stop tramway projects in the English provinces.
Some franchises have been so ruinously misjudged
by bidders that they have been adjusted to "management contracts"
(Virgin Cross Country is an example); it is hard to find a polite
economic description of such arrangements. Perhaps subsidised,
riskless, capitalism would do.
The gradual restoration of vertical integration
will be a long business. DfT makes matters harder by constantltampering
with franchise boundaries and routes, as in the East and West
Midlands. Talk of virtual vertical integration is operationally
and fiscally meaningless. However, it is necessary to start somewhere.
Partly thanks to devolutionary Danegeld, the Scottish Executive
can afford to think more rationally about railway organisation
than can the DfT and its masters in the Treasury. The notion of
vertical reintegration has received some favourable comment among
Scotch politicians and the Scot Rail TOC has also considered reintegration
of track, signalling, and operations because it is almost self-contained.
Infrastructure moreover can be jointly owned; the buspersons in
the DfT railway division have short, or no, historical memories.
Before nationalisation in 1948, and before the grouping, two or
more railway companies operated joint lines, and also exercised
running powers. In the long term the need is not so much for a
new SRA as for a kind of Railway Clearing House. Network Rail's
objections to Merseyrail's proposal to take over track and signalling
were strongly expressed, but they were more oratorical than. rational.
(Franchising has entailed another kind of subsidised capitalism—the
pretence that Network Rail, whose mute stakeholders, bound by
the Official Secrets Act, are powerless, can function as an autonomous
company. The charade even extends to Mr Armitt and other executives
awarding themselves each a grotesquely large bonus at the expense
of taxpayers from whom the infrastructure was taken.)
Another possible candidate for take-over of
track by a TOC is Chiltern Railways, one of the more efficient
TOCs. The association with Laing would make a coherent operation
of trains and track workable. It is noteworthy that Chiltern is
run by Mr Adrian Shooter, an old-time, highly competent professional
railwayman of the kind dismissed in numbers by suited accountants,
open-necked bus functionaries, promoters of obscure or semi-literate
nomenclature such as "One" or "C2C", and photo-opportune
airline executives, after privatisation.
Until the confusions between ORR, DfT, passenger
and freight operators, Network Rail, and the Treasury are worked
out, long-term planning and pompously named High Level Output
Statements cannot but be incoherent and transitory (how long did
Mr Prescott's grandiose "plan" last?) It is not true
even to say that "the shape of `third generation' franchise
agreements have (!) emerged". Franchising is a mess, and
without a coherent and positive vision for the railways (something
that the chauffeur-driven oligarchs of the Treasury institutionally
and traditionally lack), there can be no reliable forward thinking.
While blocking further electrification, the DfT cannot even coordinate
the design of a new diesel HST2.
There is an astonishing reluctance in DfT to
admit that main and branch line railways can be palliatives of
congestion. Instead the Department champions an enlarged Heathrow
and blocks tramway schemes in the English provinces. It was said
that Mr Darling was a "safe" pair of hands at Transport.
He was not safe: he was paralytic, and he lacked the guts to suspend
Mr Mitchell from duty in DfT until the outcome of the court case.
Despite the opportunities given by an unusually long tenure, he
failed to provide the basis of equitable treatment of heavy and
light rail in relation to road and air. Nearly 60 years after
rail nationalisation the questions of road, rail, and air track
costs and of the unclaimed debt interest upon the historic capital
cost of the road system have still not been addressed honestly.
The answers to the questions listed are hard
to give. Here are some attempted replies:
1. Nobody in Government knows what the purpose
is.
2. By definition it is not: there is no
discernible purpose.
3. It is chaotic.
4. Very little, with passengers having none
at all. Transport Focus is powerless. The abolition of the provincial
RPCs was a deliberate diminution of democracy.
5. Well, some persons moved easily from
SRA to DfT Rail.
6. The franchises are of the wrong type
(TOCs do not control infrastructure); there are two many companies;
franchises are too short.
7. That is a secret of the Treasury.
8. No principle, other than the bottom line,
can be seen; social benefits are rarely calculated.
9. No. We have on average the highest fares
in Europe.
10 No. ROSCOs in particular are scandalously
profitable and so passengers suffer even more inflated fares.
11. Under micro-prescription by DfT very
little scope exists.
12. There is plenty of competition between
road, rail, canal, and air, but air and road have unfairly institutionalised
advantages. On-rail competition is not desirable and there has
been little of it ever since the environmental. disaster of closing
allegedly duplicate main. lines. We do need serious vertical reintegration.
13. By experience, no, except for freight.
14. Yes, under a single company or administration¸regional
rather than nation-wide: Western, Southern, Welsh, Midland, Eastern,
North-Eastern, Scottish operations are needed; they must be capable
of cooperating with TfL and PTE railways in metropolitan areas;
when suitable, a mixture of light and heavy rail operations should
be possible together with paths for freight trains. The notions
of Joint Lines and Running Powers should be revived. We must not
be too proud or too lazy or to insular to study the municipal
practices in local transport of our continental neighbours; and
where is the British N to SLGV?
In short, franchising is a failed economic device;
it is confused and costly; and it should be gradually be eliminated
in the interests of sound railway practice and of political prudence.
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