As I See It
Why it’s time to reunite track and train
What is to be done with the east coast main line? It was of little surprise to anyone that the UK Transport Secretary Chris Grayling announced the current franchise operator Virgin Trains East Coast, a joint venture between Stagecoach and Virgin Rail, is losing the contract.
It has been an open secret from the get-go in 2015 when Virgin Trains East Coast took over the franchise that the finances were going to be difficult, and so it has proved.
The discussion around the huge financial challenges of running Britain’s railways today suffers from two misunderstandings that need to be tackled head on. The first is the romantic notion that the cuts of Dr Beeching in 1963 were a mistake, when they actually saved the railways from financial collapse and were necessary for modernisation. The second is the persistent categorising of rail privatisation as being a failure that needs to be reversed, when it has in general been a success.
I know it is not popular to say this but attempting to reverse Doctor Beeching’s entirely justifiable cuts to the rail network by introducing new lines – be they high or slow speed rail – is not the answer. Beeching found 50% of railway stations contributed 2% of passenger revenues, while one third of the route network carried only 1% of the passenger numbers and 1% of tonne-miles. The annual losses being incurred then would be the equivalent of £2.5bn a year now.
Despite wielding the axe on route miles between 1963 and 1995 passenger numbers remained around 30 billion a year, even though personal car use was climbing, demonstrating Beeching had been right.
No matter what measure one chooses, the performance of rail privatisation after 1995 has been a success with passenger numbers ballooning to over 60 million. Rail freight was once on its knees but is now booming, attracting fresh investment in specialist rolling stock and new routes opening up.
All of this while car ownership increase and budget flights have become hugely popular. Yet despite this positive outcome the performance of the east coast main line – essentially taking in Aberdeen through Edinburgh to Newcastle, York and Leeds then on to London Kings Cross – has been less successful.
The franchise has had four operators but talk of the east coast line being privatised one year and nationalised disguises the reality. The first franchisee, GNER, was a success; anyone who, like myself used the service witnessed the huge improvement in customer service, innovation, rolling stock and pricing that made rail travel attractive again. Its contract was extended in 2003 and then renewed in 2005. The prime reason it lost the franchise was the failure of its parent company outside the UK.
The handover to National Express in 2007 showed the greedy side of both the bidder and the government; National Express was over-optimistic on the potential for profit while the Government was willing to go along with a larger income that in the end could not be realised.
The withdrawal of National Express in 2009 and handover to a state-owned contractor, East Coast, did not represent nationalisation along Jeremy Corbyn’ seventies model of the old British Rail. East Coast was effectively the contracting out to private management on private sector lines, as will be the new arrangement before a fresh contract is awarded.
It was in many respects a success as it met its licence payments to the Department of Transport of just over £1bn over six years, but it faced huge challenges about future investment the Government had no wish to be underwriting.
Unfortunately, awarding the contract to Virgin Trains East Coast again showed government at its most incompetent, for it was seduced by the promised income that everyone in railways except those from the winning tender said could not be realised. And the warnings were right.
The evidence suggests two problems – the first is that governments make poor choices and their involvement should be limited as much as possible. Letting governments run railway companies directly through ministers and departments, as before, would be a huge mistake.
The second appears to be something intrinsically wrong with the east coast main line business model that simply re-tendering for a new Train Operating Company (TOC) in the same manner as before does not solve. Virgin Trains East Coast blamed Network Rail for not delivering on rail infrastructure improvements saying this meant they could not maximise income from new services and timetabling.
There is no doubt that around the rest of the UK there is a great deal of dissatisfaction with the nationalised Network Rail’s performance in delivering upon its promises.
This suggests the failure of Virgin Trains East Coast should be seen as an opportunity. Rather than go back to the process of re-tendering for a private operator, the business relationships and overall structure should be reconsidered and a new contract where the operation and the infrastructure for that line only are brought together, removing responsibility from Network Rail on the east coast main line.
It has long been argued that separating the TOCs from the maintenance and development of the rail infrastructure they used was a mistake. This week’s announcement provides the possibility of a new business model, one where investment in rolling stock and facilities can go hand-in-hand with investment in track and signalling – to the benefit of market dynamics and customer service.
To establish union support for such a reform the tender could also be opened up to the temporary directly operated railway management and staff based in Derby to be involved in the tender if they can find private partners. The unions can call it nationalisation if they want, what’s in a name so long as the risk is born privately?
As something similar is already being done in reuniting train and track in Scotland through ScotRail Alliance, developing that separately on the east coast main line would not be not rocket science.
If that type of operation provides success then it could point to how our rail companies go forward.
Brian Monteith is a former member of the Scottish Parliament