30 November 2017

Back to the future for Britain’s railways

By Dan Lewis

The publication of the Government’s Strategic Vision for Rail yesterday will prove to be a landmark moment in the often troubled history of Britain’s railways. The restoration of the lines cut by the now infamous Beeching cuts naturally made the headlines, but the real story is the drift back to the future and the dramatic rise in demand for trains.

It has been a long journey but, inch by inch, we are returning to the 1930s – when there was a fully privately-owned fully-used railway system with train operating companies running and owning the track and the stations. The alternatives, a hybrid public private partnership between Network Rail and the Train Operating Companies (TOCs), or even costly re-nationalisation, really aren’t options if our intention is to increase long-term investment in the railways, commensurate with rising usage and falling subsidies.

In a country that invented the train in the early 19th century, too many people’s historical knowledge about them starts far too late. The story tends to begin with nationalisation in 1948, fast forwards to the Beeching Cuts of 1964, then moves on to privatisation in 1994. The reality is that prior to nationalisation, there was tremendous investment and innovation culminating in the Big Four of the 1930s – the Great Western Railway; London, Midland and Scottish Railway; London and North Eastern Railway; and Southern Railway. At a stroke, nationalisation moved the costs of running a railway onto the Government’s books. And they soon found it to be very expensive. With the post-war rise of car ownership, it couldn’t have happened at a worse time. Falling passenger numbers made it harder and harder to afford the upkeep of such a large network and line closures started long before Beeching and his dreaded axe. Nationalisation of the railways was this country’s greatest industrial mistake.

The Government’s recent announcement, therefore, is all the more important because it outlines plans to bring the running of UK trains and track much closer together. TOCs have really struggled to work with Network Rail  so this has to be the way ahead. As is common with monopolies, TOCs found that the absence of competitive pressure on Network Rail led to higher costs and customer dissatisfaction with punctuality when upgrades invariably take longer than planned. The planned shift towards smaller franchises is also sensible. Like a portfolio of shares, a greater diversity of smaller franchises reduces the risk exposure while allowing more entrants to afford to compete for them.

But there’s so much more to be done.

It may shock you, but the UK actually still has some Victorian signal boxes. A faster upgrade to signalling through digitisation must be a priority. Digitisation means that tracks can carry up to 40 per cent more passengers and freight because you can run trains closer together and have more predictable journey times and platform selection. In London, we’ve already seen the results of digital signalling – ironically on the Victoria Line. It is now the second most frequent metro line in the world, with trains running every 100 seconds. That kind of frequency would actually induce additional demand for trains, because it transforms them into a turn-up-and-go service.

Wifi should also be a priority. At present, passengers lean on the nearest phone mast for connectivity. But with 40 per cent of the network in tunnels and in cuttings out of reach, and with many phone masts maxed out with capacity, only track-side telecom infrastructure can close these gaps.

The long-term vision must be to make the railways subsidy-free, regulation-light and a welcome home to entrepreneurial innovators. And this has to happen fast. The rise of the car and air travel sent train usage into a huge decline in the post-war period. Over the next two decades, this could happen again with self-driving cars, ultrafast internet and virtual reality constituting an existential threat to all forms of public transport. Losing more of the network again would be irreversible, with land prices higher than ever. The tragedy of Beeching was not that loss-making lines were closed. It was that the land was sold off piecemeal when much of it could have been converted to roads or even cycle lanes and would have been easier to convert back today. As demonstrated by HS2, land acquisition remains the greatest cost for any new railway line.

So it may be time to consider going back to the 1930s system of regional monopolies overseen by a 21st-century regulator. In exchange for auctioning, selling off or even giving away the track and stations of Network Rail to the train operators, the Government could write off the outstanding debt of Network Rail and reduce annual subsidies to zero. Only when the interests of the TOCs are fully aligned with the maintenance of the track and stations, can we deliver the rail service Britain deserves.

Dan Lewis is Senior Infrastructure Policy Advisor at the Institute of Directors