Fares, rail policy and DfT news

08.12.16

Grayling admits DfT did not evaluate East West Rail privatisation benefits

Transport secretary Chris Grayling has admitted that the DfT did not carry out a thorough evaluation of the time and cost benefits of privatising the new route between Oxford and Cambridge, despite the major decision marking the first time since the 1990s that Britain will have integrated rail operation.

Pressed at the Commons by Liberal Democrat MP Tom Brake, who represents Carshalton and Wallington, Grayling argued that the “assumption that Network Rail should always do everything does not ever give us any benchmarks to judge whether someone else can do it better”.

Instead, the secretary of state proposed: “I want to use this as an opportunity, in a way that does not affect the rest of the network, to test the way that we are doing things, and to see whether we can do them quicker and better.”

As well as inquiring about a potential cost-benefit analysis of the East West Rail privatisation benefits, Brake also asked the transport secretary if he envisaged other projects being run in this way, and if he would consider allowing the public sector to bid for train franchises going forward.

While he dodged the latter question, Grayling did imply that the model, if successful, could be replicated – arguing that it is “good for our rail sector to have a bit of contestability”.

The Oxford-Cambridge corridor is a much broader project than just a railway line. It is seen as a key development corridor by the Treasury and the National Infrastructure Commission,” he added.

“We also need to look at the construction of improved ​road links between the two, so it is much more complicated than simply saying, ‘it’s a railway line’. However, we need to build a model that secures developer contributions on the route.”

Although only having taken up the post a few months ago, Grayling has already caused a significant stir in the DfT’s rail decisions. As well as announcing that East West Rail would be taken forward by a new organisation yesterday, he also outlined plans for closer, more joined-up working between Network Rail and operators – potentially through alliance models already seen elsewhere in the industry.

He has also scrapped plans to devolve suburban rail operations in the capital to Transport for London (TfL), despite the previous transport secretary, Patrick McLoughlin, making firm commitments around this to former London mayor Boris Johnson when plans were first announced in January. TfL had already picked the four routes that were ideal for devolution, and the capital’s mayor, Sadiq Khan, endorsed the proposals in a recent business case.

(Top image c. Dominic Lipinski, PA Wire)

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Comments

Noam Bleicher   08/12/2016 at 11:05

That's the second time in two days we've heard of a Grayling decision made on political grounds. An EWR infraco independent of NR might be a good thing, but really I find it worrying that decisions regarding the future of our network are being made in this ad-hoc way.

Lutz   08/12/2016 at 13:14

The same old left-wing dogma; it would be better if the opposition parties focused on results which are sadly lacking.

John Anderson   09/12/2016 at 11:34

Would that be the same 'left-wing dogma' that delivered the UK railway network at an annual cost to the taxpayer roughly 1/3 to 1/2 of that of the current long running farce (appearing at a station near you since 1993...........)?

Roger   09/12/2016 at 12:46

Poor Liz Truss, having to sort out the mess Grayling left behind at Justice caused by his dogmatism, and now he's started on the railways. God help us. (and the next Transport Secretary, who will have to put it back together)

Jerry Alderson   09/12/2016 at 14:45

@JohnAnderson. firstly you mean the British not the UK railway. The railway in Northern Ireland was left unchanged and is still 100% nationalised. Any attempt to compare the economics (certianly using just headline figures) of railway in 2016 with 1993 is impossible. So much has changed in that time both on the railway and outside it (environmental and safety standards, taxation, public expectation and technology). In BR days the subsidy was spent on OMR (day-to-day operation, maintenance and renewals). Today both O and M are covered by the farebox leaving R plus a huge amount of investment that never occured in those latter BR days plus servicing NR's debt mountain. It is a lot cheaper to run a declining business (you simply close down every part of it when expensive renewals are needed that are not covered by revenue), as BR did, and today's one where the government has decided that growing demand must be catered for by substantial investment. If government had not invested to increase capacity then there would be no debt mountain to service and no enhancements. Admittedly there would be fewer passengers and that would bring in less revenue overall but it would probably be more profitable revenue.

Andrew G   09/12/2016 at 17:13

In that case then the East-West rail link may be prosponed or will it still get the go ahead but will be having a "Bedford-Cambridge" missing link if the scheme will only go between Oxford and Bedford.

Kev   09/12/2016 at 19:03

I wonder if just one day in the current or future the cabinet employ someone who is time served in railway, road traffic operations. there are plenty of private railways in operation in england who have to manage everything themselves, its called the PRESERVATION sector of railway operations, they have to make a quid last a year sometimes...look at some of these operations...

David Fenner   12/12/2016 at 20:43

A separate EWR is an interesting concept but it links with and crosses so many other rail routes its independance is going to be severely challenged. Given Network Rail and almost all other major rail operators in other countries are heading toward a small number of large integrated control centres a railway that is running perhaps 20 miles before each link to an adjoining operator is not going to find life easy.

Pdeaves   13/12/2016 at 08:37

Kev, your point is valid but omits one important factor. Preservation railways can rely on volunteer labour in a way that others can't. As labour is the biggest single cost, the difference is significant. David Fenner, it will be interesting to see how interfaces work. For example, will the 'small' company be more-or-less forced to do things Network Rail's way to maintain safe handover? Will technical standards be set so that the 'small' company has little, if any, say in *how* things are done? 'Open access' (mainly, but not only, freight) will have to remain so contracts and rights remain. What about timetabling? That will have to be carried out in conjunction with Network Rail; probably NR will do the lot. I personally foresee a situation where the only difference is the name on the headed paper.

Pdeaves   15/12/2016 at 14:34

The article states "the first time since the 1990s that Britain will have integrated rail operation". Let us not forget the Isle of Wight that has never NOT had an integrated railway!

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