Fire and Steam (50 page)

That story encapsulates why the railways are so expensive to run today. Under the current system, no one would be able to make such a reasoned risk assessment. Instead, repairs and renewal which could possibly wait a year or more are carried out because the industry has become so risk averse and no one is taking decisions in the context of a tight annual budget. The railways need to be under the control of a single organization with its own budget and a decision-making process that balances all aspects of the railway, from the ballast and rails to the catering and rolling stock, when allocating funds and resources. With the fragmentation of the industry into over one hundred companies, each of which needs to make a profit and has complex contractual and legal relationships with the other companies, the ability to control expenditure has been lost. Decisions, often incompatible, are made by the various stakeholders, none of which has the overall interests of the railway in mind. The most obvious case of lack of coordination was the debacle over the Southern power supply when train operators found that there was not enough power to run the new trains they had ordered through the leasing companies. Nobody, it seems, had bothered to check whether the trains could run on the existing power supply and they had to sit in sidings awaiting the upgrade which eventually cost Network Rail and therefore taxpayers £700m.

Another pertinent example is the fact that train companies are paid millions of pounds annually in compensation because Network Rail
closes a line for track repairs or for other improvements. In other words, the operators receive money for not running trains whilst at the same time allowing their supplier, Network Rail, to provide them with a better service. The great railway barons of the nineteenth century would never have tolerated exercising so little control; they were genuine risk-taking capitalists. Under the present system, in contrast, a game of ‘pretend capitalism' is played, with the taxpayer always in the background to pick up the tab. Moreover, there has been a huge increase in staffing costs since all these companies have chief executives and finance directors on very high salaries, as well as other executives such as communication and human resource directors, in addition to the widespread use of lawyers and consultants.

Alistair Darling, the Transport Secretary between 2001 and 2005, realized that the railway was not efficient and launched a rail review in 2003 to look at the structure of the industry. It reported the following year but ducked the fundamental issue about reintegrating the railway, arguing that it was too complicated in an age of many rail companies as they would have to run over each other's tracks. In the past, of course, such arrangements were commonplace.

The Railways Act 2005 that resulted from the rail review abolished the Strategic Rail Authority after just five years of existence, dividing its functions between Network Rail and the Department of Transport. It also transferred the Railway Inspectorate from the Health & Safety Executive, which was thought to be imposing unnecessarily stringent safety requirements, to the Office of Rail Regulation, with the idea that there would be a better trade-off between improved safety and increased costs. Because the fundamental issue of reintegration was not addressed the high cost of the railways remains the industry's greatest threat, since it presents a barrier to improvements and keeps alive the fear that an economic crisis could precipitate a sharp round of cuts to railway services.

Strangely, while the railways remained ostensibly privatized, the running of the new system actually resulted in more interference and involvement of civil servants than at any time in the industry's history, as they were required to, for example, specify timetables, think about future strategy and rolling stock needs, such as a replacement for the
High Speed Train, and let the franchises out. Even the Tories who devised the system have admitted they made mistakes
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but oddly Labour has soldiered on and has made few changes of substance. The one success has been the vast numbers of extra passengers, a 40 per cent rise in a decade, but that has been largely a result of external factors such as the booming economy and congestion on the roads. The publicly-run London Underground has also seen a 25 per cent rise in the same period. Needless to say, this continued growth is putting a strain on the railway and, as punctuality finally returned to pre-Hatfield levels in 2006, overcrowding has become the most pressing problem facing the industry. Unfortunately, the harsh truth of railway economics – the golden rule as it were – is that any extra investment in the network has to be funded largely from the taxpayer as it rarely earns a sufficient return to pay for itself.

Privatization did somewhat better for freight. The Treasury insisted on breaking up BR's principal freight companies into three regional divisions – a daft idea since most journeys involved long distances – and all three were bought in 1996 by the same US railroad company anyway, Wisconsin Central, headed by Ed Burkhardt, a renowned railwayman with a good track record in buying up and improving small, financially stricken railways. The sale included not just locomotives and wagons but also vast tracts of railway land with the potential for significant development rights. The new company, called English Welsh and Scottish (EWS), invested substantially by buying 300 new locomotives to replace the failure-prone fleet inherited from BR. Privatization changed the rules of the game, getting rid of BR's old restrictive practices, which effectively prevented new operators entering the market. Railtrack was obliged to accept requests for track access from freight companies on the same basis as passenger operators, which encouraged new hauliers to enter the market. Therefore, several new smaller operators appeared, but the decline in the amount of freight carried was halted – mainly because coal is being transported for longer distances, a result of the government's energy policy. Drax Power Station, at Selby in North Yorkshire, for example, receives its coal from the port of Hunterston in Scotland and not from the local coalfield. But there are still severe constraints and bottlenecks, not least because of the extra passenger
trains crowding on to the tracks. The Beeching era and the mind-set it engendered reduced capacity so much that it is very difficult – if not impossible – to carve out many more paths for freight trains.

As virtually every page of this book demonstrates, the railways transformed Britain. They made possible journeys that a generation before would have seemed completely implausible. They boosted all kinds of trade, stimulated economic development, brought in their wake a whole host of social and political changes, and played a vital part when the country went to war. Yet we have taken the railways for granted and failed to realize what a very special invention they were.

There is a neat arithmetical pattern in the timeline of the railways. The purely private and fragmented system survived for nearly a hundred years from its creation until 1923, while the Big Four, created by amalgamation, lasted precisely a quarter of a century, and British Rail almost reached its golden jubilee. In the decade since the demise of British Rail, the railways have undergone more upheaval than at any time in their history and there is further change ahead. The railways, it seems, can never be allowed to stand still and arguments about their structure, with constant tinkering at the margins, continue to occur in between major politically inspired reorganizations.

At root there is the fraught relationship between railways and government – and it was rather inauspicious that at the opening of the first railway, a government minister was killed. Government cannot stop meddling with the railways because they are such an important part of the infrastructure and decisions cannot be left entirely to the private sector because the system always requires subsidy. Therefore privatization was always going to be partial and tightly regulated since the government was not going to let go of the reins entirely. The notion, enshrined in the Tories' initial privatization plan, that the private sector would be allowed complete freedom, was always going to be fanciful; now, with the collapse of Railtrack and the abolition of the SRA, the railways are in a strange limbo between the private and public sectors. But government interference has by no means always been negative and, indeed, it could be argued that there should have been more in the mid-nineteenth century when the railways were killing far too many of their passengers.
But it has been inconsistent and, most important, the railways have often been poorly treated, especially in relation to the roads which seem to be funded without any of the hand-wringing and parsimony that accompanies any investment in the railways.

While this relationship remains fraught as the privatized structure is still bedding down, rather more happily the railways are booming. The consistent economic growth, together with the crowded roads and growing environmental awareness, means that the railways are carrying more people than at almost any time in their history. The doubts about whether the railways have a role in the twenty-first century have long been buried, but the shape of that future remains shrouded in uncertainty. The railways were a quintessential nineteenth-century invention, reliant on heavy engineering and private capital. They seem ill-suited to the individualism of the twenty-first century where collective travelling on public transport was perceived as being for those who cannot afford better, as Mrs Thatcher suggested. In spite of this, the railways are not just enjoying a renaissance with the old network being revitalized with investment in both track and new rolling stock, but there is now a serious debate about expansion and new lines.

Across the world the railways are expanding, with metro and tram systems popping up in even quite modestly sized towns and cities, and high speed networks, first seen in France and Japan, now being built in countries as diverse as Spain and Italy, Taiwan and South Korea. Yet, here in Britain, we have just sixty-two miles of high speed line – the £5bn Channel Tunnel Rail Link between London St Pancras and the Channel Tunnel, which opened finally in the autumn of 2007 – and no firm plans to build any more. Moreover, in recent years, dozens of tram schemes that would have brought untold benefits to many provincial towns and cities have been scrapped, often after millions had been spent on preparatory work. Outside the densely populated areas of the Far East, railways are rarely able to pay their own running costs, let alone the investment needed to build them. They require subsidy for construction and often to keep running. They sit unhappily in the private sector because of this need for government support. But that does not mean they are a waste of money. They generate economic growth, enable
people to travel comfortably, and cause much less environmental damage than the alternatives. Those benefits cannot be captured by the fare box but they help make societies viable. It is sad that this seems to have been understood in so many parts of the world but not in the land of Stephenson, Hudson, Watkin, Gresley, Sir Bob Reid (the first of the two BR chairmen of that name) and so many other heroes of this history. The railways may be flourishing, but in Britain their development is still constrained by a refusal to recognize their value.

The opening of the Channel Tunnel Rail Link, which reduced journey times from London to Paris and Brussels to two hours fifteen minutes and two hours respectively, may prove crucial as a catalyst to inspire the government to support further high speed lines, especially as part of the line is being used to deliver spectators to the 2012 Olympics. The building of High Speed One, as the Link is now called, was an engineering success, with few problems despite the large proportion of the line that had to be placed in tunnels as a result of environmental protests. But at the same time it was a financial disaster, predicated as it was initially on being entirely privately funded through the profits from the Eurostar service. The project had to be rescued with a bit of financial wizardry in 1998 which turned it into a public sector project backed by government bonds. Despite these difficulties, it could open the way for further lines to be built to the north, but the Treasury-commissioned review of Britain's future transport infrastructure needs by Rod Eddington, the former head of British Airways, published in December 2006, was sceptical of the idea and the opportunity to build such lines may have been lost given the lack of space and the high cost.

The dilemma for the politicians, then, is that on the one hand, the railways eat up lots of taxpayers' money which could be spent on what they consider as more useful alternatives such as hospitals, schools and prisons; on the other, they provide a lot of benefits that cannot be captured through the fare box, ranging from relative environmental friendliness to economic regeneration. They have powerful supporters because, unlike buses, they are used by the affluent as well as the poor. Brian Souter, the boss of Stagecoach, once suggested that while dissatisfied bus passengers would throw bricks through the garage window, rail passengers would write to their MP.

But it is unclear whether the government will support the improvements that are necessary to cope with the ever-increasing numbers of passengers. There is, for example, no programme of electrification, even though Britain has a far lower percentage of electrified lines than other European countries. And while minor enhancements such as restoring sections of double track and improving junctions are being undertaken, there is no clear plan to deal with the overcrowding that is now making rail travel intolerable for many passengers. Progress has been painfully slow on initiatives such as double-decker trains and extended platforms to cope with demand. Plans for major schemes such as Crossrail, which involves building a tunnel under London between Liverpool Street and Paddington in order to relieve the overcrowded Underground system, have been repeatedly stalled through lack of money and, more importantly, political direction.

Despite the reluctance of governments to commit more resources, the railways are no longer seen as a dying industry: the days of Beeching and Serpell are long gone. The new focus on the environmental damage caused by road and air transport strengthens the case for investment.
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Indeed, there are powerful economic, social and environmental reasons for its continued expansion. A report into ways of reducing carbon emissions by the respected Tyndall Centre for Climate Change suggests that railways have a key role: ‘Trains are the cleanest form of mass transport, producing on average only a quarter of the carbon dioxide that cars emit for the same distance and just over 10 per cent compared to domestic aviation. Investments in train infrastructure, such as longer platforms for longer trains, could make an important contribution to meeting emissions targets as could investing in infrastructure for double-decker trains.'
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