09.09.16
Sell Network Rail and scrap HS2?
Controversial reforms are needed to Britain’s rail network, including selling nearly half of Network Rail and an end to the HS2 project, according to a right-wing think-tank.
The new paper from the Adam Smith Institute shows the increasingly radical solutions to the rail industry’s problems being floated.
Network Rail has overspent by £1.7bn so far in CP5, and is considering selling off 18 major stations to meet a debt which is rapidly reaching £50bn, leading to fears from campaigners that it will be privatised.
The Adam Smith Institute said that the government should sell a 49.9% stake in Network Rail at a value of £8bn, although this might involve writing off some of its debts. This would allow it to operate as a financial company and expand its involvement in rail services to overseas. However, this feels a little too extreme.
The paper says: “On the financial front, there is a powerful case for selling part - or all - of Network Rail, despite the infamous collapse of its predecessor, Railtrack, back in 2001.”
It also argues that HS2 is over-budget and will not deliver significantly increased capacity or reduced journey times. The high-speed rail project is currently under review from civil service head Sir Jeremy Heywood to try to keep it within its £55bn budget. The Institute said resources should be re-directed towards modernising services in the north instead, especially around Manchester. This suggestion may be welcomed by some, but definitely not all.
Unsurprisingly, the paper says that the existing rail franchising system should remain, but with more vigorous financial modelling to avoid failures such as the collapse of a deal for FirstGroup to take over the West Coast Main Line in 2012. It also backs calls for more open access operations, especially to Sunderland, Hull and York.
However, a spokesperson for the Rail Delivery Group rejected the paper’s proposals, saying “The report’s comments on HS2 are somewhat surprising given HS2’s crucial role in ensuring the country has the railway it needs in the long term.”
They added: “However we organise ourselves in the railway, to transform the experience of customers we need teams that are managed effectively, working together towards the same objectives, and with access to finance for much needed investment.”
Whether you agree or disagree with the Institute’s report and recommendations, it is interesting to see how extreme the views are becoming on these controversial topics.
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