Rail Industry Focus

Rail services run from town halls, not Whitehall

Adam Hewitt reports on the ‘Devolving Rail to the Regions’ event held at Manchester Town Hall.

Delegates from transport authorities, councils, TOCs, rail businesses and associations came together in Manchester to discuss the devolution agenda across the UK network, which could see more local control over rail operations and infrastructure.

RTM attended the conference on May 17, where speakers included transport minister Norman Baker – who announced the goahead for the South Yorkshire tram-train pilot on the same day – as well as Transport for Greater Manchester (TfGM) rail programme director Stephen Clark, Arriva Trains’ policy director Roger Cobbe, Professor Paul Salveson, Passenger Transport Executive Group (pteg) director Jonathan Bray, Cumbria County Council’s rail officer John Kitchen, as well as representatives from Leigh Fisher, IPPR North, Abellio, Bircham Dyson Bell and HITRANS.

The DfT has been consulting on devolving more responsibilities for rail services to PTEs and local authorities, which the conference organisers said “potentially heralds the most significant change to the railways since privatisation”.

Baker said: “I reflect…in this wonderful Town Hall, why it has been that over recent decades, we’ve had decisions about Manchester taken so much in London – or decisions about Birmingham and our other great cities taken in London. That cannot be right.

“As someone who, before I was an MP, was leader of the local council, I recall with some bitterness the irritation I felt at being told by London what should be happening in my area by people who’d never been to it and were unaccountable when local opinion had clearly decided something else should happen in that area.

“The move towards devolution and localism is not a fad, not a sound bite or a headline. It is absolutely serious, and as far as I’m concerned, a one-way street.”

Baker said devolution would require a “mindshift” for some, as local regions get powers to make their own decisions, rather than having to win approval for everything from the DfT, but he said it does raise “significant challenges” too – including democratic accountability, cross-border issues, the balance between local decision-making and economies of scale, and ensuring ‘medium-sized’ schemes worth £150-200m don’t get ‘lost’, if they are not urgent national priorities but are too big for local areas to take charge of.

Baker said: “Of course, local authorities and PTEs in England can, to some degree, already influence the rail services in their areas – and PTEs have been rather better at it, than say county councils have been. But the consultation provides the opportunity for a step change in the level of commitment and involvement from local communities.”

He said he’d been “encouraged by the enthusiasm” for devolution, and hoped it would lead to more ‘corridor solutions’ to transport problems across multiple modes, including rail, rather than people “defaulting to a road answer”. He said: “The best time to get involved in this is when a franchise is being renewed.”

Refranchising and devolution

TfGM’s Stephen Clark began by saying “our cities are changing”, meaning railway use has changed too, with a greater concentration of jobs in the service sector in city centres, meaning different travel patterns. There is an intent to set up “compacts” between the 10 Greater Manchester combined authorities and the neighbouring authorities and LEPs to pursue common agendas.

He said: “It refers very positively to moves to devolve responsibilities to the north and to a joint arrangement between northern local authorities, specifically in respect to the Northern and Transpennine refranchising.”

He said rail decentralisation is coming at a “great time” and said the upcoming re-letting of those two franchises is “clearly the opportunity to be seized”.

But those two franchises cover five metropolitan areas, 19 unitary councils, nine shires and Scotland, meaning a balance has to be struck between inclusiveness and efficient decision-making: a single executive body will have to manage the relationship with the TOC concerned, and different public bodies will bear different amounts of risk. Many decisions are yet to be made on the authorities’ role in the franchise specification, its governance and the finances, he said.

A county view

The conference also got a shire county perspective from places where railways work in a very different way to the big cities. Cumbria County Council’s rail officer John Kitchen said it was important that counties like Cumbria have a say in franchising decisions, rather than it all being in the hands of the metropolitan areas, and also spoke about the railways’ role in dealing with the impact of the Workington floods in 2009.

Richard Burningham, manager of the Devon & Cornwall Rail Partnership and a former PR man and travel centre manager for British Rail, talked about devolution from his perspective, saying devolution could end up as ‘one franchise, multiple specifications’, or just the status quo but with more formalisation of the partnership responsibilities of TOCs, or maybe ‘devolution light’, or what he called the ‘virtual railway company’.

He explained that such an entity:
• Would cover a network of local services and be charged with increasing ridership and revenue, reducing costs and developing the network;
• Be devolved, but with DfT as a member and still holding the franchise pot etc. Responsible to a board comprising elected members, the LEPs etc;
• Would be able to go much further than Community Rail in increasing revenue (as well as passenger numbers) and drilling down into all aspects of the costs;
• If Network Rail would join in, this would offer much greater scope too;
• The approach would be financially sustainable for rural shire counties, minimising the risk to council tax payers.

European perspectives

The conference also heard interesting lessons from other European countries: Ingemar Lundin, the former director of Jonkoping Transport Authority in Sweden, explained how his country has “led the way” on regional rail devolution, with the regions playing the biggest role in financing the railways, co-ordinating and integrating bus and train operations and fares, and funding rolling stock. But capacity, winter maintenance and contractual breakdown are all problems for the system, and highly-subsidised regional railways compete with commercial long-distance services.

Roger Cobbe, policy director of Arriva Trains – a subsidiary of Deutsche Bahn – explained the situation in Germany. Strong state-level government in Germany has meant the regions there have very strong powers over rail. The states (Länder) get direct transfers from the federal government, plus a share of national petrol tax revenue, which is indexed, ringfenced and predictable over five-year periods. While freight and long-distance services are purely commercial, regional railway services are procured by the Länder, which in turn often devolve the tendering to cities or council consortia. Contracts range from three to 21 years, but about eight years is the average.

The overall regionally-procured train market in Germany totals about 643m train km, of which DB wins about 496m train km. The bidding process is “simple and cheap”, in contrast to the UK franchising model, and there are many small contracts of just 1m to 4m train km a year. Rolling stock tends to be specified in the contract and procured directly – as opposed to the leasing model – and there tends to be no transfer of people, trains or depots from one operator to another on initial tendering, making for very long mobilisation periods of up to three years. Innovation and new thinking is therefore common.

‘Local politicians aren’t daft’

Jonathan Bray, director at pteg, spoke firmly in favour of devolution, but was also among the most outspoken in demanding that it be implemented properly.

As he put it: “Devolution is the right way to go, but the devil is in the detail: this cannot be devolution at any price. We need a fair deal on costs and risks.

“Our politicians are not daft: they are not going to take on additional responsibilities if the deal is predicated on inadequate funding, that will mean unpalatable decisions on service cuts and fares. If Her Majesty’s Treasury wants to fulfil its genetic urge to carry on where Beeching left off, then national government will have to do it TO us, with us fighting them all the way.”

But he said there was now “unstoppable momentum” in favour of devolution, noting the additional investment and service improvement in places like Scotland, Merseyside and London where more decisions are taken locally.

He said: “Transport investment tends to go up when powers are devolved. More reliable services, more satisfied passengers. Why does devolution work? It works because local politicians and decision-makers place more value on the role that transport plays in supporting the local economy in a sustainable way. Further devolution on our rail network could bring some big benefits.”

He said such powers also have a big role in economic growth and regeneration: “Sometimes rail people and civil servants say Northern deserves to be bottom of the list for rail investment: ‘look at the level of subsidy’, ‘look at the patronage’, ‘look at the train loading figures’. But everyone agrees we need to address the north-south divide if we are to have a healthier national economy. That means our major urban areas need to perform: how can they do that without modern and efficient commuter rail networks? How can they do that without the connectivity to each other and beyond?

“If you look at Teesside or East Lancashire, these are major areas with big population centres and I would say the rail services – although they have been backed by the local transport authorities over the years – are not really commensurate with the needs of those areas, and not assisting as they might in the economic potential. Or look at Settle and Carlisle, a classic example: that’s been so important in tourism economy and providing a spine for the wider public transport network.”

All talk?

Bray concluded: “One danger is potentially getting the same powers we have now – because we have got powers of increment and decrement, and franchise co-signatory powers – and having those re-packaged and resold as devolution. I think we can do a lot better than that, but there’s a lot of hard work to do.”

Bray, whose background is in transport campaigning and who was adamantly opposed to rail privatisation, also made a wider attack on the current franchising system. He noted that many expensive aspects of the set-up seem “off-limits” for discussion when it comes to cost-cutting and efficiencies, notably the huge numbers of delay attribution officers, lawyers, job duplication and so on.

He said: “In my view, if we’re talking about efficiencies, these kind of things should not be off-limits.”

Frances Duffy, transport director at the Welsh Assembly Government, also spoke at the conference: see page 53 for a full report. The ‘Devolving Rail’ event was organised by Landor LINKS Ltd and sponsored by Abellio and Serco.

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