posted by Patrick Crozier at 11:45 AM

The public control fallacy

This morning I caught an item on Radio 4's Week at Westminster programme. Labour MP, George Stevenson who is a member of the Transport Select Committee said something along the lines of "The good thing about Network Rail replacing Railtrack is that it will bring the infrastructure back into public control [ie state control]." This is nonsense - it was never outside state control. The state controlled Railtrack's income, prevented it from running its own trains, imposed train operators on it and prevented it from running its own maintenance. It also imposed a constantly shifting set of incentives. One week Railtrack was supposed to be cutting costs, the next hitting punctuality targets and the next running a 100% safe railway. No wonder it exhibited all the characteristics of a victim of post-traumatic stress disorder: from one week to the next it simply had no idea what it was supposed to be doing.

posted by Patrick Crozier at 11:20 AM

Not satisfied with buggering up the railway...

the state is now buggering up the statistics. They are desperate to make sure that the guarantees they have given to Network Rail do not show up as state liabilities even though everyone knows that if everything goes pear-shaped it will be the state ie the taxpayer who will have to cough up. A Treasury insider says:

“People like making comparisons with Enron. Enron were taking things off the balance sheet to hide them. We have written them down in a long minute and published them,”

So what's the point in doing it then if everybody knows about it? From now on City institutions will simply keep two sets of statistics: the government's set and the real set. Credibility will be lost but it is difficult to see what will be gained.

posted by Patrick Crozier at 7:38 AM

In the news

Rum and Ribena woman jailed for jet uproar
Jail for railway pickpocket who stole £30,000
Confusion reigns on status of Network Rail
State bodies go to war over funding for Network Rail plus Graphic

posted by Patrick Crozier at 1:20 PM

More on Amtrak

The other night, following on from the news that Amtrak is in deep trouble, I decided to do some web surfing on Amtrak. I came across two articles, one from Cato and another from the National Review both saying pretty much the same thing: close it down. But I came across a far more interesting article from Trains.com on the situation immediately before and immediately after Amtrak started operations in 1971.

All railroads that operated passenger trains when the new law was signed had until May 1, 1971 to become members of the NRPC, or continue to run their own passenger trains. The NRPC membership price was either cash, or passenger equipment/services based on half the road’s passenger losses for the last full year of operation (1970), or purchase of common stock in the new company. The biggest advantage to joining NRPC was of course, relief from the financial burden of maintaining passenger service.

"...relief from the financial burden of maintaining passenger service." Now, that is an interesting line. You see most companies operating a loss-making service either try to figure out ways of making it profitable or close it down. But not these guys. Why not? Could it be that Congress had beaten them to it and obliged them to maintain operations?

The group was charged with setting up a nationwide passenger railroad system that would take over operation of all intercity passenger trains. Amtrak’s planners managed to achieve something the freight railroads would not have until 1980: freedom from regulation. The Interstate Commerce Commission had no say over how Amtrak was formed and how it was to operate.

Gasp! Freedom from regulation. How nice - and how typical. That's what the state does: it changes the rules and the US is just a guilty of this as the UK. But more than that it does so in such an underhand manner. In the Amtrak case the headline was/would have been: the privatised system doesn't work, the nationalised one does. Ergo, state is better than private. The deregulation is conveniently forgotten.

And deregulation is massively important. As I understand it US freight railways were in deep trouble in 1980. That year's deregulation (could this really have happened under a Carter administration?) enabled them to bounce back. What might have been had America's passenger railways been able to do the same?

For passenger train lovers, May 1, 1971 was a day of reckoning, as Amtrak began its first day of operation, and many privately operated long-distance trains made their final arrivals. The first day saw 184 Amtrak trains running on a 23,000-mile network that served 314 communities.

Sadly, this was half the amount of some 440 passenger trains that had run the day before. Even factoring in the 34 additional trains still privately run by freight railroads after May 1, the loss of service was staggering, and many large cities and small towns suddenly had no passenger service at all.

Gasp again! The sheer gall of it. And despite shutting down half of America's passenger service they still couldn't make money.

The parallels with the UK situation and Network Rail are breathtaking. A private industry is regulated to death. The state takes over. It frees itself of all those tricky little regulations that it was so happy to impose on private enterprise. And then it still finds ways to lose money hand over fist.

posted by Patrick Crozier at 8:36 AM

In the news

Will rail passengers benefit?
Fiasco over Railtrack costs £21bn
Most drivers break speed limits
Rail debt is not stopping here - Patience Wheatcroft
On old sleepers - Times Editorial

posted by Patrick Crozier at 12:19 PM

Reply to Wolmar - or why subsidy is bad news

Some time ago I wrote to the journalist Christian Wolmar pointing out the error of his ways. He was kind enough to reply. I then replied to him but what with the fall out from the Potters Bar crash he didn't get around to replying. Still, this is what I wrote:

"...since the railways are subsidised..." This, of course, is the thing I baulk at - I would rather that there were no subsidy and hence that the state would not have to involve itself in railways at all. I once calculated (and of course I have forgotten how I did it) that 70% of the subsidy goes to franchises that account for only 25% of the passenger miles. And that is not to say that if the subsidy were removed that 25% of the passenger miles would disappear at a stroke. I would have thought that there are all sorts of commuting services around Manchester, Leeds and Glasgow that could be viable. These may well account for a disproportionate amount of the 25%.

It seems to me that subsidy is a nightmare now, has been in the past and is a nightmare abroad just as much as it is here. No one seems to do it particularly well. In France it is hugely expensive. In the US it is also hugely expensive and on the regional railways in Japan it causes no end of local rows.

I think I know the reason. The problem is that railways are long term and politics is short term. Railways have (at least) a 20 year cycle of investment. Politics, on the other hand runs on 4-year electoral cycles and the general economic cycle - which has a habit of tripping politicians just when they don't expect it (usually when the finishing touches have been put to a CrossRail proposal).

Politicians want results quickly. There is not point in putting up the money for a project that won't see the light of day for another 7 or 8 years. Where are the votes in that? On railways there are almost no quick wins. I am struck by the Japanese experience. There they have spent decades getting all the little things right. Identifying the problems, analysing them, proposing solutions, implementing solutions and monitoring progress. And then repeating the cycle. If only our railwaymen had the space and time to do that. I find it remarkable that the Labour government that knew perfectly well that it would be in for 10 years managed to blow the opportunity so completely. If Blair can't plan for the long term - what politician can?

Contrast this political short-termism with the entrepreneurial long-termism of people like Stephenson, Brunel, Watkin or even Andrew Gritten of Central Railway.

Having said that, I accept that for the time being subsidy exists. How should it be done? I think the best approach is to separate the viable parts of the network from the unviable parts. This is more or less what they have done in Japan. The advantage of this approach is that you can allow the viable parts to get on with the business of running railways unmolested by government interference.

So what do you do with what's left? My best guess is that local governments should be allowed to own or subsidise whatever they like. At very least it will allow local people to assess whether X rail link really does offer value for money.

So far I have only considered subsidy as a means of keeping open otherwise bankrupt lines. Subsidy is also used to lower fares and to fund big projects eg. WCRM.

I am not a big fan of artificially low fares. We know what the effect is on the London commuter market: overcrowding leading to delays. What is less well known is their effect on the investment market. When prices rise this sends out a signal that there is a demand not being satisfied. This encourages either new suppliers to enter the market or existing suppliers to increase capacity. When prices are held down this signal is not sent out.

I am also extremely dubious about grand projets. Don't get me wrong, I think the TGV is magnificent and I am sure the same applies to the Shinkansen. But are they really the best use of the billions spent on them?

posted by Patrick Crozier at 11:09 AM

Network Rail

Interesting piece from the BBC

This week should spell the end of the line for Railtrack. In its place will arrive the new, not-for-profit Network Rail.

But if the relaunch of the railways is to be a success, there are key tasks to get underway:

1. Look after the passengers

The main difference between Railtrack and its successor is the absence of shareholders.

Network Rail will be a company limited by guarantee, meaning that should it make a profit, the cash will be put back into the railways rather than to shareholders.

This could enable Network Rail to have a long-term vision. But the public perception of how the company is doing will also be important, if only because of the political pressure.

And what happens if it doesn't make a profit? This is a serious question because it is difficult to see what incentive it will have to do so. The board, as I understand it, will be appointed by the government and will comprise all sorts of interested parties from the TOCs to trade unions. It is difficult to see how these parties will find common cause. The TOCs will want to keep the costs down while improving reliability on their bit of the track. The unions will want pay rises for their members. The government will want the railways to disappear from the front pages. At least with Railtrack there was one overriding and unifying objective: making money. Sure, there may have been disagreements as to the best way of doing that but those are far easier conflicts to resolve.

The idea that such an organisation is likely to have any sort of vision, let alone a long-term one, is laughable.

2. Make a safe, reliable network

Avoiding crashes while improving punctuality is key to Network Rail's success - for these are the public's two big concerns.

Chris Cheek, editor of Rail Industry Monitor, says this is a difficult balance.

"Broadly speaking, the politicians and the public want a 100% safe railway - there isn't such a thing. But there's a lot you can do to minimise that through training and systems."

Common sense! Oh, my giddy aunt.

What Network Rail will have to do is set tough safety and training standards for its contractors; and get punctuality back to pre-Hatfield levels.

Not without rewriting a whole bunch of contracts it won't

Although punctuality has improved since the immediate aftermath of that fatal derailment, still one in five services is delayed. Pre-Hatfield, almost 90% ran on time.

Currently, maintenance workers are trying to clear the backlog of mundane tasks, such as trimming trackside trees. (As those who board trains in autumn know, "leaves on the line" can cause commuter chaos.)

First of all, I am not sure they are - I haven't read anything in the railway press about this. Secondly, I seem to remember hearing that what with environmental conciousness these days it is actually quite difficult to chop down lineside vegetation.

3. Modernise

Slam-door stock, stained seats, tumble-down stations, aging rails - much of the network is in need of a spring clean, if not a facelift.

Slam-door stock has nothing to do with Railtrack/Network Rail

If Network Rail wants to lure people back to train travel, it will have to be worth our while. But modernisation is a slow and costly business.

Indeed it is. Funny that no one pointed that out when the infrastructure was in the private sector.

If timetabled repairs and upgrades are carried out on time and on budget, says Mr Cheek, the UK should have a more modern and efficient rail network by 2006.

"But we won't end up with a network where the trains can run faster than they do now, with extra capacity."

Does this make sense to you because it doesn't make sense to me?

This is because major projects - such as upgrading the West Coast Mainline - are working to a different schedule.

Network Rail is not the only player in the West Coast project - train operators, the Strategic Rail Authority and construction companies are also involved.

This multiplicity of interests has thrown up many unanswered questions, says Mr Cheek, and delays seem almost inevitable.

4. Sort out the money

Although the new company will not have shareholders, it will still have to raise huge sums from private investors.

How much? It seems setting up Network Rail is going be a more expensive business for the taxpayer than the old Railtrack.

So what was the point of nationalising it?

Buying off Railtrack shareholders - a crucial step if the government is to retain the trust of private investors - could cost up to £500m.

After that, Network Rail says it will need more taxpayers' money - perhaps £10bn - on top of the £15bn already coming its way in the next few years.

Then there is the money to be raised from the markets, which will be guaranteed by the taxpayer. And is anyone willing to bet that Network Rail will not come back cap in hand for even more?

Not me. Actually, this is the really frightening thing. Network Rail has had it mouth stuffed with gold, other people's gold, on tick. Even Network Rail will take a few years to go bust and when it does...

5. Get a united network

In launching Network Rail, Mr Byers said it would lead to "a railway system that is united and not fragmented; a railway industry with a shared strategic vision".

But there is little evidence to support this view.

The splintering of the rail industry, into dozens of lone companies, is often cited as the main fault with British Rail's privatisation.

Network Rail will have no power to reverse this fragmentation. Train companies will still run their lines, maintenance will still be out-sourced, there will still be an independent rail regulator, and a Strategic Rail Authority.

So what's changed? "Nothing - it'll just be a different company in Railtrack's place," says Mr Cheek.

Ha! This is the nub. The real problem is, and has always been state-enforced fragmentation. Replacing Railtrack with Network Rail is like re-arranging the deck chairs on the Titanic: it does nothing to solve the fundamental problem.

He does, however, see a greater willingness to co-operate since the Hatfield crash and "get the structures in place to improve the rail network".

And that, at the end of the day, is what we all want.

But this has been true for some time. The various parties in the industry realised that the contracts didn't work and so started setting them aside and concentrating on the real job.

posted by Patrick Crozier at 7:50 AM

In the news

Railtrack reinvents itself
Q&A: What future for New Railtrack?
How do you relaunch the railways?
Prescott quits rail union

posted by Patrick Crozier at 6:50 AM

In the news

'Spads' not the only railway danger
The true cost of railway safety - actually these are both rather old stories which I encountered while surfing the net.

posted by Patrick Crozier at 4:04 PM

Rules, rules and less rules

The news that fewer signals, rules and restrictions might, might, make roads safer put me in mind of an LA pamphlet by John Harrison A Corporate Culture of Freedom: Central Planning Doesn't Work in Business Either.

posted by Patrick Crozier at 3:40 PM

Amtrak

The news may be doomladen but I am pretty sure that America's politicians will cook up some fudge to keep it operating until the next crisis (followed by the next fudge followed by the next crisis...).

It seems odd to note that just about everywhere, the US included, people want to hang on to their rail services even if they don't use them. Exactly the same debates take place in the UK, Japan and elsewhere. I can think of no industry like it. In the UK we made whole-hearted and then half-hearted attempts to hang on to our steel, coal and car-making industries but eventually we realised it wasn't worth the candle and allowed them to close. But when it comes to railways it seems an entirely different logic applies. Why, I just do not know.

posted by Patrick Crozier at 3:15 PM

A curate's egg

Brian's piece on platform information screens correctly points out that it is not all gloom and doom on the railways.

In fact there are some minor improvements here and there from extra services, to more coffee shops, better leaflets and on-line ticketing.

So why have some things got better and others worse?

I have a theory about to explain this: where private sector TOCs are both free to make changes and those changes are likely to show a return within the timeframe of the franchise then the change will be made. Therefore, there is every incentive to let platform space, publish leaflets that promote new and existing services and set up on-line ticketing enterprises.

On the other hand, there is little to incentive to get right things like maintenance and the building of new depots as they cost a lot of money and it takes a long time to see a return on the investment.

There are all sorts of things that are rendered almost impossible simply by goverment-imposed fragmentation. For instance, it would make a lot of sense for TOCs to improve the reliability of points by installing back up point motors just like they have in Japan. The problem is that Railtrack owns the points. Railtrack has little insentive to improve track reliability itself because it has almost no impact on its income. The TOC could enter into a deal with Railtrack but that means a negotiation probably a protracted one. Moreover, to make it worthwhile you'd want to put up the fares but you can't do this because fares are subject to Government regulation.

There are also all sorts of things that you would have thought would not take a great deal of effort but many train companies seem to be incapable of carrying out. Take for instance cleaning. It is not particularly capital intensive, one would sort of expect it in this sort of industry: aircraft are usually clean; but it is often done very badly.

That's to say nothing of some of the liveries that some train companies have deemed fit to employ.

By the way, I think the Platform Information Screens are a franchise commitment and so ultimately have been paid for by the taxpayer.

posted by Patrick Crozier at 2:39 PM

Transports of Delight - we have an answer

Following my appeal for information I now have two answers: one from Robert Dammers and one from Natalie "Smartypants" Solent. Even better they agree that the phrase "transport of delight" appears in the hymn "King of Love my Shepherd is". Natalie goes one further and quotes Macaulay:

The first protector whom the English found among the dominant caste was Archbishop Anselm. At a time when the English name was a reproach, and when all the civil and military dignities of the kingdom were supposed to belong exclusively to the countrymen of the Conqueror, the despised race learned, with transports of delight, that one of themselves, Nicholas Breakspear, had been elevated to the papal throne, and had held out his foot to be kissed by ambassadors sprung from the noblest houses of Normandy.

Looking up the word in the dictionary I find that transport can mean "any powerful emotion". So, maybe, talking about the World Cup is not so out of order after all.

posted by Patrick Crozier at 7:32 AM

In the news

Amtrak faces Wednesday shutdown
Politicians hold key to Amtrak rescue
Removing signals 'would make roads safer'
UK transport plan has '£15bn hole'
'Crisis over' for Virgin train services
Rail union 'to cut cash to Labour'
Outrage as drink driver's sentence cut
Tube drivers pass red signals

posted by Patrick Crozier at 7:09 AM

In the news

Delays after closure on District line
Teenager loses limbs in train accident
Rail crisis turned into BBC drama
Railtrack deal delayed
Network Rail to get access to billions
Shareholders face further delay in Railtrack payout
New bid to police trains

posted by Patrick Crozier at 10:55 AM

Somes thoughts on the Comet disaster

For those who don't know the de Havilland Comet was the world's first passenger jet airliner. Unfortunately, metal fatigue kept causing it to crash. The story of the Comet was the subject of a recent Channel 4 documentary which did what Channel 4 documentaries always do and blamed the crashes on capitalism.

This has provoked a spirited defence from surviving members of the design team. From these scanty pieces of evidence it is difficult to form any definite conclusions. One can speculate on the role of the Air Registration Board - by taking on the safety role did they help absolve de Havilland designers of responsibility? And one can speculate on the general technological shift from UK to US that was going on at the time and how the Comet was the last hurrrah of the British aviation industry. But at the end of the day it is only speculation.

What one can say with a reasonable degree of accuracy is that de Havilland that made a plane that crashed is no longer in business and that Boeing who made a plane (the 707) that didn't crash, is. Safety is good business.

posted by Patrick Crozier at 10:33 AM

Of smoke and mirrors

Reading the Government's latest plans for what-used-to-be-called Railtrack leaves me with one overriding feeling: utter confusion. We already had the £9bn guarantee along with the £10bn cost of the West Coast Route Modernisation and the £60bn or so 10-year plan. And now we have a £10bn contingency reserve and yet another Regulatory Review.

It sounds like we're being had - and judging by the size of the figures we're being had on the grand scale - but I can't say that with any great confidence. The Government seems to be devising ever more complicated and confusing schemes for a concept that we used to be able to encapsulate in one word: spending. It sounds like huge sums are going to be raised from the City only for the bills to fall into the lap of the taxpayer in five years' time or so. But I really don't know.

posted by Patrick Crozier at 9:36 AM

Here's a question...

Can anyone tell me where the phrase "Transports of Delight" comes from and what it means? Three different people have now suggested it as a title for this blog. Help, I'm feeling ignorant.

posted by Patrick Crozier at 6:24 AM

In the news

The Comet still provides good service
Muggers jailed for rail raids 'orgy'
Railways may need extra £10bn
The reluctant middle-class militant - a Railtrack shareholder sues