Quick wins would put rail on a stronger financial footing

Over three years on from the start of the pandemic, it’s perhaps an appropriate time to take stock. 

One piece of good news is that passenger numbers have recovered surprisingly well, at least for leisure travel, despite the cost of living crisis. However, business travel and commuter volumes are still well down, probably permanently; apparently Britain leads Europe in working from home! The pre-pandemic trend of lower commuter volumes on Fridays has been exacerbated, with lower numbers on Mondays too; inevitably, this means that it’s difficult to reduce the commuter peak resource base to the same extent as overall volumes, and effectively a significant amount of commuter rolling stock is only now needed for one round trip on three days a week

The severe reduction in business travel has also reduced average yields, so overall passenger revenue is around £2 billion a year short of what it would have been if pre-pandemic trends had continued, despite total journeys largely recovering.

The Elizabeth Line has been a major success. The delays and cost over-runs are now in the past, and it’s clear that the route has become a vital part of London and the South East’s transport network, in particular transforming what were historically the lightly loaded Paddington suburban services into a major, high volume corridor, and delivering a major improvement to rail access to Heathrow.

The benefits of competition have also proved to be very positive, most notably Lumo in head-to-head competition with LNER between Edinburgh and London. I’ve seen the light on the road to Damascus on this – I’d always believed that open access on this sort of route would simply abstract from franchised services, pushing up the cost to the taxpayer. But the effect has been to grow the market and deliver modal shift from air. This mirrors what has been happening in Europe too, notably in Spain and Italy. Competition is proving to be a real benefit on long distance routes.

Overall, however, so much has gone wrong. The Government probably had no alternative to bailing out the passenger operators at the start of the pandemic, as the franchises would otherwise have all quickly defaulted. Given the continued revenue shortfall and the enormous uncertainty about the scale and pace of the recovery, there was probably no realistic alternative to government taking on the revenue risk – and the industry was to be restructured following the Williams-Shapps review in any case. But nothing has happened; the large Great British Railways Transition Team has toiled away but produced virtually no visible substantive output, and the Government has effectively abandoned any prospect of rail legislation before the next election.

So, rail policy is on hold. Worse than that, the Department for Transport is now micro-managing the train operating companies, looking for cost savings without apparently thinking about the impact on revenue or crowding, despite the rebound of passenger numbers. For example, CrossCountry is withdrawing its remaining High Speed Trains, despite systemic overcrowding on its network, with some services on its core Edinburgh – Plymouth route already being operated with only four car trains. The end-to-end journey time is nearly nine hours, so every train on the route hits a peak period somewhere on its journey, and further severe overcrowding is inevitable. Similarly, East Midlands is withdrawing its class 180 units, again resulting in overcrowding. 

Some of the economies DfT have been exploring are almost laughable, for example the suggestion that Wifi should be withdrawn, as it’s not seen as a priority for passengers. Yet Arriva, our local bus operator, provides Wifi on its town services, and clearly thinks this is important to retain and build its business, even though the average journey time is probably only around 10 minutes. And many modern trains have uncomfortable, ironing-board seats, and on many routes seats are crammed in, with 3 + 2 seating. Perhaps air conditioning should be taken off trains too? 

Despite the Conservatives clinging on at Uxbridge, it’s clear we now have a zombie government, with no likelihood of constructive action by DfT before the election. Looking to the future, what matters is Labour’s policy for the industry; to date the Opposition have said very little, but it’s clear that a wider key aim is to demonstrate the Party’s economic competence, and there will be few spending promises – there is no money. With that caveat, there are some things Labour could do which would potentially drive revenue, maximise modal shift, hence the environmental benefits of rail, and put the industry on a sounder footing going forward.

Firstly, capacity. The new units being delivered for Avanti will release Voyagers which should then be transferred to CrossCountry, substantially increasing capacity on the route and banishing most of the four or five car trains which have blighted its network for the past 20 years.

Secondly, fares. Ideally, Britain should follow Germany, Spain and Austria in providing monthly or annual tickets which encourage significant modal shift, but this may be a step too far initially, and also create major capacity challenges. However, reducing open, walk-on fares on InterCity routes would be presentationally powerful and could actually generate revenue by encouraging some passengers to trade-up to flexible fares, given the current dominant proportion of travel on advance tickets.

Thirdly, industry structure. Recent history shows that ownership is not a key issue; the priority is to manage revenue and costs together, and the currently proposed GBR structure of operating concessions, with GBR retaining revenue risk, manifestly fails to do this. The new structure should be based on business units with full cost and revenue responsibility, and with a high degree of involvement in England’s regions, as is already the case in Wales and Scotland.

Lastly, a rolling programme of electrification, starting with quick, small-scale schemes like the branches to London Gateway and Felixstowe, which would both deliver major operational and carbon benefits for freight.

As a precursor to all this, of course, somehow there needs to be a resolution to the current timeless industrial disputes, although even on this issue it’s unclear whether this can be achieved before the General Election.

I passionately believe that the country can have a vibrant and successful rail network, if the industry can be freed from the shackles that currently bind it.


Photo credit: Paul Bigland.

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