Another rail disaster

I have to admit that the recent statement by Transport Minister Keith Brown had some positives – like confirmation of an investment of £5 billion over five years in improvements to the network, the commitment to complete the Borders railways and the electrification of the Edinburgh – Glasgow line. But there are still areas where the Holyrood Government’s decisions can threaten the economy, the green agenda and the social and economic mobility of the entire population.

The Scottish Nationalists have been engaged in a ‘consultation’ about rail for the past year and in that process they have let the veil slip on how they see the future of Scottish rail; and the central message is that they still favour private rail companies that are less regulated and have less concern for Scottish needs.

Essentially the Scottish Government proposals continue the work of the report on rail commissioned by the Westminster government last year and chaired by Sir Roy McNulty. He is a transport specialist, but sadly not a rail savant. His experience as President of the Society of British Aerospace Companies, Chairman of the Department of Trade and Industry’s Aviation Committee and the Civil Aviation Authority and his post as a director of Gatwick Airport didn’t enhance his knowledge of how to run a railway!

Mind you, he did have some insights. In particular, he attributed inefficiencies in the British model to fragmentation – the splitting up of the railway network. He realised that a railway needs to have central direction so that independent profit-driven private companies are forced to think about other issues than producing a dividend for investors. They need to think about – for example – passengers! Not to mention freight trains.

McNulty explained that fragmentation has led to a lack of leadership in the industry. It is, he said, “the first barrier to efficiency”. Unfortunately and illogically, but no doubt considering that he was writing the report for Tory ministers, his recommendations then flew in the face of his diagnosis. His report went on to suggest greater – not less –fragmentation! In particular he wanted to see Network Rail, which is responsible for maintenance and improvement of the track and signalling, split up.

The Scottish government is considering adding to that fragmentation. It’s not just considering more private involvement in track maintenance, it is also intent on introducing another private company to run the sleeper services. To our mind, there is no need: cross-subsidisation is the heart-beat of railway networks.

Money drains from the industry every day, taken out by investors who own the trains; by lawyers who draw up franchise agreements; by accountants who draw up business plans; and by consultants to advise investors. Management costs have increased by 56 per cent since privatisation.

Bear with me for a moment while I revisit the original reasons that the John Major government used to justify selling off the publicly-owned single national rail service in the Railways Act of 1993. The Tories said they wanted more competition and investment. It never happened. There is no competition. If you want to go from Oban to Glasgow you get a choice of one. Or, I suppose, the option of not going. Within Scotland, you go ScotRail or you stay home. You don’t need to be Einstein to realise this is not competition.

And investment? The only people to invest more in the network today are the public, whose contribution has increased year upon year. The ScotRail franchise is the second most heavily subsidised passenger rail operation per passenger mile in the UK, after Wales. Between 2010 and 2011 it received £290 million of public money. Your money.

This is because money drains from the industry every day. It keeps being taken out by investors who own the train operating companies and the rolling stock; by lawyers who draw up franchise agreements; by accountants who draw up business plans; and by consultants to advise about areas investors don’t know about. The duplication of having a host of different companies is obvious; management costs have increased by 56 per cent since privatisation. Since privatisation, more than £11 billion of public funds have been misspent on debt write-offs, dividend payments to private investors and other costs.

Given this blatant disaster, the logical thing would be to spend time considering how to return rail to the public service sector, where it belongs. Or there is the ostrich approach, where you ignore the evidence and plough on. In this regard, the First Minister is a large, flightless bird with a long neck and small head.

The Scottish government has its hands tied in some aspects of the franchising process, but it has an opportunity now to reduce money being flinched from our railways. It is a chance that is being spurned.

Any more rail companies in Scotland are inherently bad news, and although at the moment only the sleepers are proposed as a separate service, the principle has been breached. We believe the Lowland Sleeper and the Highland Sleeper fulfil an important social function, but every time one sets off on a journey it attracts a subsidy of £17,000. But how will Scottish interests be served by creating a separate franchise which would make money directly from the taxpayer rather than from rail industry revenues?

The consultation document says that the accommodation on sleepers “falls short of the expectations of today’s passengers”. It is true that the service is deteriorating because of the ageing rolling stock – the carriages. We argue that improving the service would increase passenger numbers, and so reduce the need for a subsidy. That’s why we welcome matching £50 million investments by the Westminster Government and the Scottish Government. No private franchise would be prepared, or even able, to carry out this sort of project. It would take what it could while the stock still ran and then walk away, leaving nothing behind.

It is a perfect example of how the free market and franchise investors are precisely not the people to be in control of Scotland’s rail services.

Yet passengers are only one part of the economy that would suffer. The effects on freight on rail could be disastrous. The McNulty Report argues a case for giving responsibility for the track to the train operating companies – and the effect of this would be even more marked in Scotland than other parts of the UK. Keith Brown ruled none of this out. If a private company owns the track, it will clearly give priority to its own stock, so freight trains would be shunted off the main lines, slowing them down and becoming less attractive to customers. The alternative is to see more lorries on Scottish roads, which would not only be an immediate expense in terms of maintenance, but also destroy one of the main reasons that tourists visit the Highlands. They are looking for peace and solitude – not pollution and traffic jams. They want to follow the line of the lochs, not the back of an articulated lorry.

Scotland is in a unique position in the UK by having one franchise which provides almost all rail services within the country. The ScotRail franchise covers 95 per cent of rail journeys. This is a strength that should be built upon, not broken up. It is especially bizarre that the SNP would wish to do so, especially when at the same time it harps on about creating a ‘national’ police force and a ‘national’ fire service. It defies the trend of service provision in Scotland in an industry that is an obvious case for a single unit.

If Mr Salmond and his chums want to flex their right to challenge decisions made in Westminster – something ASLEF supports while we reject independence as a superficial side-show – then rail is a place they could start. Rather than mouthing slogans and waving flags, why won’t they challenge Section 25 of the Railways Act 1993 which prevents any public sector ownership of franchises? ASLEF believes all kinds of alternative ownership models should be considered, including not-for-profit models and public ownership.

We’d like to see the Scottish Government lobbying Westminster to drop the unnecessary shackles of section 25 of the Railways Act so that it can make real steps towards providing an efficient, reliable, affordable and social rail service for its people.

Instead, because they don’t understand our industry, they seem intent on breaking it.

Photograph

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