Pupils should consider the following two headlines and consider which one is more likely to be correct:
“Pendolinos are no longer Virgin’s!”
“Pendolinos are no longer Virgins!”
Pupils should also consider which of these two sets of facts would apply to each of the headlines above:
The Virgin Rail Group has lost the West Coast Franchise, marking the end of a long, hard and largely successful era for the London and North Western Railway.
Scientists have persuaded the Pendolino fleet to breed, destroying the world train building industry in one fell swoop and replacing it with train maternity wards, a new income stream for narrow-gauge railways as nursery grounds for baby trains learning how to follow the rails and questions over job protection, pensionable ages and how many votes an 11-car train is entitled to (and in which of the seven marginal constituencies through which its line passes).
Pupils may also wish to discuss the moral and legal implications of these sets of facts. More advanced pupils can be invited to consider if and in what circumstances announcement of headline 2 could be considered a breach of the Pendolinos’ right to privacy.
(A fuller obituary to Virgin Trains may follow in due course.)
Why are the private companies being allowed to increase fares again?
It’s not so much a case that they’re being allowed to as that they’re being told to. Any company simply transferring all the money that rail fares are claimed to have gone up by into increased profits would by now have bought out the Government and taken over the world.
Rather, the Government has a target to cut the cost of the rail industry to the taxpayer and transfer it to the farepayer, instead of spending taxes on services which some people aren’t using. (Since I haven’t voted for the Government for over two years, haven’t used a NHS hospital for five and haven’t been in fully state-funded education since 2006 I personally resent the idea that the Government is taking my money to spend on these things. However, for some reason there is less political consensus on transport to hospital being free at point of use than that the hospital giving you drugs that you’re allergic to and sending you home should be free at point of use.) This is a very easy target for the Government to meet, since it involves no effort on their part. They simply get the train operators to calculate what an inflation plus x% increase in their revenue amounts to and deduct that from the grants that the Government makes to train operators for them to pay their track access fees to Network Rail.
In short, your fare increase is an immediate saving to the Government and has no impact on the profits of any part of the rail industry. The fact that you do not notice any equivalent drop in your taxes is not a matter for train operators.
What’s the big aim of these increases?
In the long term the industry will be largely subsidy-free; once it is, on balance, self funding one hopes that the Government will stop interfering in fare policy. (It will probably actually impose fare caps which everyone will cheer about until the industry goes to the wall and the whole cycle starts again.)
Being subsidy-free is the easiest way to eliminate the risk of a future Government deciding to cut costs with line closures. What is not currently being acknowledged is that fitting an average of 34 more people onto every train in the country (average fare per mile is 20p and average Government cost per mile minus debt interest is £6.80) will be a tricky exercise to say the least. The cost to the Government is currently being pruned through other means, mostly by bringing things in house when the outside company’s profit margin exceeds the cost of employing staff to do the job.
There is also a widespread industry effort to avoid having to implement any more cost-cutting proposals suggested by outside parties, so McNulty is being delicately rubbished (his comparison railways, for example, don’t operate many unremunerative rural branchlines and so offer little expertise in that field other than in closing them) while other cost-cutting options are explored.
Why has this got worse since privatisation?
“Got worse” is debatable. The original idea after privatisation was an annual fare increase of the Retail Price Index minus 1%. This was sat on by the Labour Government, which reckoned that it was inhibiting efficient provision of services and effective cuts in subsidy. (Labour had other important things to spend the rail subsidy pot on, like wars and MPs’ expenses.)
However, rooting out a news report on railways from almost any time in the last 80-odd years is likely to produce some kind of complaint about rail fare increases.
Costs have risen since privatisation – and they have since fallen again – but fare increases have remained. This is largely because British Rail (BR) wasn’t covering its costs either, so fares have been steadily rising in a bid to cover costs as fast as politicians dare raise them.
Why can’t we renationalise the railways and run them as a public service?
If you find a political party with a history of doing this then I will refrain from writing you off as living in a utopian cloud cuckoo land.
Labour nationalised the railways largely on ideological grounds about the following points:
Anything the private sector could do, the public sector could do better.
The railways were a large industry capable of doing immense damage to industrial enterprise if handled incorrectly and so the Government should ensure that they were controlled.
Public sector ownership would allow profits to be shared out amongst the staff and any surplus passed to the Treasury rather than dished out amongst shareholders.
Unfortunately regulation laid down over the years to fulfil point 2 had become so successful that there hadn’t been any profits for the shareholders for over ten years, ensuring that there were also no profits for the staff. Nonetheless, the staff still got their pay rises and then discovered that the Treasury, anticipating profits, had made no provision to financially support the ruined industry.
To the bitter end, British Rail was expected to make a profit except where services were maintained at the minimum viable cost to provide social services. Accordingly, the network operated by the public for the public did so on the fatal assumption that the public did not actually use its services and therefore should not be expected to pay for them except on a one-off basis at point of use. This raises certain queries as to why the public should wish to own a network which they do not use, and indeed as to who uses all these overcrowded trains if not the public, but remains policy for the two parties likely to form a majority Government in this country.
Indeed, in the 1970s everyone’s favourite pro-public service railway, dear old Labour (then in Government, apparently for the last time to date if their rail pronouncements are anything to go by), told the West Midlands Passenger Transport Executive to stop offering its ludicrously cheap fares provided with public subsidy and instead charge something closer to what the market would bear – rather than viciously and unfairly undercutting the private car. The more marginal Labour voters appear to have responded by voting for Thatcher. Fares still rose, but the West Midlands also got its suburban trains replaced so it can be swings and roundabouts.
Why can’t we have more “not for profit” arrangements like Network Rail?
This is a very good question and it may be linked to the “not for profit” phrase connected with Government policy on subsidising unprofitable rail services.
Network Rail’s not for profit status is something of a not very funny joke, since the company is so laden under with debts associated with its creation and the tidying of maintenance backlogs left over from the days of BR that it is incapable of making any profits even if it wanted to.
The maintenance backlogs are now disappearing – West Coast Mainline modernisation helped enormously and the “slash and burn” policy of clearing linesides is beneficial as well – with the result that railway costs are falling naturally as the industry settles into its new form. Massive restructuring to “not for profit” set-ups would inflate costs again through uncertainty and loss of industry knowledge. The restructuring would be particularly severe if you decide to actually take a knife to the real money-eater and eliminate the “interfaces” between different companies in the industry. (If you renationalise you should logically restore the rolling stock to the train operators. Except the engineers with the skills to maintain this stock won’t necessarily come with it and you’ll spend ten years scrapping serviceable stock while you sort out how to cascade second-hand kit from one place to another again.)
Why can’t the Government offset these fare increases?
Mostly because it doesn’t have any money either. In this regard the rail industry and the Government are made for each other, except the rail industry has managed to work out how to let costs sedately fall without fussing or cutting services.
Currently, minus debt interest (mostly generated by Government-inspired panics and reorganisations anyway) the railway is costing the taxpayer £6.80 per train mile as opposed to £11.50 per train mile 30 years ago or £5 per train mile in 1990 (costs drawn from the July 2012 edition of Modern Railways and based on 2011 prices). If we simply extend the rising income line and the falling cost line, take into account that average rail fares per passenger mile actually fell last year and extrapolate we find that the privatised rail network is really heading straight for that glorious utopia where the network is self-funding (barring some interest payments) and everyone’s fares are lower than they are now. Certainly the winner of the West Coast franchise is promising big premiums and huge fare cuts so it must be true.
So where is all this money going?
Well, some will inevitably find its way into the hands of fat-cat shareholders. The fat-cats are very hard to hurt because they will have carefully hedged their shareholdings so that they win if you confiscate their shares. And they’ll sue you.
The remaining shareholders are predominantly employees of the offending companies, including rail staff, using the shares as a savings scheme. When Railtrack went down it wrote off a lot of its employees’ pension schemes in the process. Eliminate this structure and you end up renegotiating pay and pensions.
A fair chunk goes back to the Government, who then have to pay it to Network Rail so Network Rail can pay interest on debts run up while repairing infrastructure left to decay during Government idleness. (Intercity wanted to modernise the West Coast mainline in 1990; the Treasury got the start of the project put back to 2000. It cost the Treasury much more that way through an extra ten years of depreciation on crumbling buildings, ageing track and rolling stock pushed past its prime; whether the 1990 scheme was any better than the 2000 scheme is another matter.)
A goodish chunk goes on all the lawyers and consultants to manage interfaces between companies. Some of this is unnecessary. Some of the outsourcing is simply people choosing to be available to all rather than being employed by one firm, and charging extra for being good enough to be able to work like this. Some of it is just because BR used to send railtours down obscure branch lines when it felt like it and now operators have to get lawyers to draw up indemnity clauses, which wouldn’t necessarily go away because you eliminated the interfaces. (Don’t worry. The cost would invent a justification somehow.)
Quite a lot is spent on materials and maintenance. For some reason this is all very expensive these days, partly because of a “nothing but the best will do” approach which pervades in a bid to persuade the punter that this is better than the days of “what’s the cheapest thing we can get to move” approach of the BR era. People are also getting more picky about the quality of the trains that they get invited to unveil and be photographed in front of. In a bid to illuminate the Metropolitan Elite as to what BR could be like, I am all in favour of the new trains for the Gospel Oak to Barking line in North London (which Transport for London apparently urgently needs despite having had new trains within the last 30 years – they arrived 3 years ago, to be precise) being cascaded Class 144 units from Yorkshire. Pacers have never worked in the London area, which is an odd omission. Unfortunately the Metropolitan Elite would probably refuse to believe that BR could have bought anything so awful, and insist that they must be brand new.
The remainder is a result of privatisation having created a market for rail staff, which drove pay levels up. Rail staff are very level-headed people and telling them that they own their company – which they already do, having bought most of the shares – is unlikely to persuade them all to take an immediate 50% pay cut. Instead, you’re better of murmuring about the “trickle-down” effect of all these train drivers able to live the high life and observe that we don’t seem to have genuine large-scale rail strikes any more.
Why is this post so anti-Labour?
Mostly because the author is fed up with reading about how wonderful the industry could be if only it could be subjected to another ten years of distracting upheaval. Much of this seems to feature Labour ministers proclaiming that after 13 years in Government they have suddenly decided, now that their record-beating majority has vanished, that they have all the answers. Interestingly they had some rather similar answers before 1997 too…
The author is just old enough to remember the final days of BR and they were either much the same as now or no better. Enough “old railway” knowledge survives in the current structure to ensure that things the BR would like to have done are actually happening.
The current lot are marginally better – they don’t seem to resent so much a structure that they could change but aren’t going to – and we may get to look forward to another last-minute fare cut at the end of this year.
The August Seasonal Area has managed to find its way online, with some discussion over whether I can remember how to spell “Ise”. Ah well.
The first response to the August Seasonal Area was “At least you didn’t mention the MP for Corby”. She has apparently resigned. Well, that’s the end of that line of entertainment.
My personal bet is that Labour will buck the town’s trend in the ensuing by-election and for the first time in a considerable while Corby will not be represented by the governing party. The swing required to get the Labour candidate in is 1.9% which, when there is only one major opposition party and the Government is somewhat unpopular, should not be difficult to achieve in a by-election.
At the same time, Labour’s finances are in the red and there are several by-elections likely to be floating around by November, what with MPs walking out to become Police Commissioners and so forth, so Corby may manage to be held by the Tories. Particularly if they get the campaign to be handled by someone who is allowed to create a coherent message and run with it. (Still not very likely mind.)
The plus side for the Tories of keeping Corby is that it will provide the party with a much-needed morale boost. The downside is that if Ed Milliband can’t lead his party to victory in a key marginal against an unpopular Government in a by-election then he obviously can’t expect to lead them to victory anywhere much in a General Election and his party may start to have funny ideas about leadership elections. (The Tories have been known to reckon that Milliband should be their greatest electoral asset in 2015, though this didn’t do them terribly well when they said the same thing about Gordon Brown.)
Except they’re not the Tories and it’s the Tories who like to knife their leaders for the sake of something to do on long winter evenings, so he’ll probably survive to 2015 either way. That is assuming that the next election is in 2015. Who knows, at the current rate we may end up having a summer election.
In response to Louise Mensch deciding to head for pastures elsewhere, Michael White of the Guardian penned an article on how terrible this is for David Cameron. It’s a fun little article with one peeving comment in it:
Myself, I still take the view that anyone old enough to vote should nowadays be expected to hold a driving licence and own a mobile phone which is normally switched on. Mensch scored only 50% [the mobile phone bit] on that test.
Isn’t the Guardian supposed to be a progressive paper? Does he know how much it costs a child’s parents for them to learn to drive, even before they try to cover a car’s extortionate running costs? The amount of folding money my driving instructor wandered around with, one almost got an impression that it cost more than a university degree. (Actually, vaguely mentally totting up, parental contribution wise, it may work out as more per hour of contact time.)
And what sort of country does he think we should be living in? If everyone over 18 has driving licences, the road lobby will expect us to provide accordingly and our green and pleasant land will be covered with motorways blocking all the sensible routes for high-speed railway lines.
It’s not even like roads contribute to our economic well-being, so why the bananas should I want to have the means to use them?
(An attitude which I would encourage all people coming up to their 17th birthday to adopt, since it means that your parents may feel obliged on some level to buy you the lessons for your birthday in the knowledge that otherwise you’ll spend your life cycling around at night and whining about Dr Beeching’s rail policies.)
To back up this controversial comment about roads, I would like cite a not exceptionally scientific comparison between two attractive places that I have been ambling around lately in the South-west of England – Gunnislake and Okehampton.
Gunnislake is basically the name used to cover a collection of hamlets – Albaston, Drakewalls, the Dimsons, Hatches Green and Gunnislake itself. Located in the Tamar Valley north of Plymouth, it is not a very large place and its primary attractions are its insignificant mining museum, its collection of pubs (at least 6) and its scenery. Road access is by means of the A390 – a not very major road which doesn’t seem to start anywhere and doesn’t go anywhere much either.
Okehampton is a small but historic market town, located to the north of Exeter. It is one of the great Gateways to Dartmoor and is readily accessible by means of the A30, the main road from London to Penzance. It also has a castle, several hotels, a youth hostel and various other places to stay scattered around its centre and the surrounding area. Public transport is provided by an express bus to Exeter which then connects to various other places. (Gunnislake’s bus service links Tavistock with Callington and seems a trifle uncertain as to where else there is to go.)
Gunnislake has an economy, however. Walk into a pub on Sunday and you will find that inside there are a reasonable number of locals and possibly some other visitors. There are signs of extra-curricular activities like darts providing community enjoyment. And people will be seen bustling around with an air that there are things to do. You may even find that the odd shop is open.
Okehampton, by contrast, has little sign of such affairs. The football pitch is there but quiet. The main pub – actually a hotel, which Gunnislake doesn’t really have – contains three people who are uninterested in visitors (and stop talking when you walk in). Some children are wandering around, but the adolescents look bored and the adults are in hiding somewhere. The shops are shut, as is the discretely-placed tourist information centre. It should be noted that Okehampton was visited at the height of the tourist season and Gunnislake at a shoulder.
This is despite the fact that Okehampton’s splendid scenery is littered with public footpaths and predominantly open access, whereas Gunnislake’s less well-known scenery is scattered with minor roads and is relatively inaccessible on foot. Okehampton is a convenient point on a major cycle path (about halfway between the north end at Barnstaple and the south end at Plymouth), a form of transport much applauded for boosting the local economy, whereas Gunnislake is not.
Okehampton has a bypass and Gunnislake does not, but the Gunnislake traffic shows little enthusiasm for the two stops that it may have to make as it passes through (once at the traffic lights in the village centre and once to leave or enter Cornwall over the somewhat ancient New Bridge) and so does not appear to be contributing to the trade any more than the Okehampton traffic which bustles through on the A30 above the town.
On all of these popular points – history, accessible landscape, tourist attractions, sizeable places to stay and good road access – Okehampton should be booming. Based on this little round of anecdotal investigation, it is not.
The only other difference is that Gunnislake has a direct year-round rail link to Plymouth, taking about 45 minutes for the 12 miles. By contrast, Okehampton has a rail replacement bus and a Summer Sunday rail service – the train takes 40 minutes for the 20 roundabout miles and the bus takes 50 minutes for what one feels should be a more direct journey, seeing as it leaves Okehampton heading south to Exeter rather than heading north towards the great metropolis of Sampford Courtenay.
Gunnislake’s railway is not exactly criticised – more the subject of mockery for its sedate nature. It is the last of the nation’s light railways – a form of transport otherwise abandoned to make way for cyclepaths and major roads. The interesting thing is that if Gunnislake and neighbouring, prospering Calstock are anything to go by, that lightly served light railway from 1908 is doing a lot more for the area’s economy than anything brought to Okehampton since.
If you want a really simplistic approach, compare the quality of life and economic vigour in Calstock – which has a railway and very poor roads – with Okehampton – which great roads and an appalling rail service. You’ll probably find Calstock does rather well. (It certainly looks much more friendly.)
Anyone fancy some more light railways? It’s much cheaper to start using a light railway than it is to get a driving licence, you can chat to your friends on the move (I’ve tried, it’s great) and they really bring people into an area.
This post has been brought to you by a member of the rail lobby.