Memorandum by The Railway Forum (TYP 9)
The Railway Forum, the industry-wide body with
a membership drawn from all constituent parts of the railways
has taken a close interest in Transport 2010: The 10 Year Plan
since its inception in July 2000. We believe that it represents
one of the key developments in the UK's policy, presenting a balanced
and integrated policy for the first time in many decades. Nevertheless
we believe that the White Paper did not adequately tackle the
growth projections made for rail, the assumptions that underpin
them and the targets that have been set as a result. Also the
mechanisms by which the outcomes of the plan are to be achieved,
specifically the mixture of both public and private finance that
is proposed for the railways requires, in our view, more rigorous
The Railway Forum believes that some of the
assumptions underpinning the 10 Year Plan figures require significant
review. For rail in particular:
The levels of growth assumed in the
Plan are unambitious. Work commissioned by The Railway Forum shows
that underlying demand is likely to be much higher than the basic
50/80 per cent figures for passenger and freight respectively,
and could be as much as 91 per cent under certain assumptions
such as the introduction of limited congestion charging and increase
in capacity. The DTLR estimates are based upon an annual (passenger)
growth rate of 4.2 per cent for the next 10 years, yet Railway
Forum work shows that underlying growth is much faster. Indeed,
prior to Hatfield growth was running at 6.3 per cent per year
and shows, despite the very considerable problems we face, every
prospect of reaching this level again. It should not be overlooked
that the railways start from a very low base compared with our
European neighbours. The 10 Year Plan's projections postulated,
in broad terms, one journey in forty moving to rail in the next
10 years. We believe it to be closer to one in 20. Even then
our railways will still be well behind the European average.
Similarly, the nature of rail traffic
growth within the Plan is assumed to be linear and one-dimensionalthe
figures do not incorporate any multi-modal effects. The growth
projections are relatively simplistic as a result. The Railway
Forum believes that there are significant growth externalities
from integrated transport measures. Their potential impact upon
passenger and freight traffic is not picked up in the 10 Year
The Railway Forum is of the opinion
that the 10 year time horizon envisaged in the Plan is too short.
Estimates made by the Forum show growth likely to continue well
past 2010. Furthermore, the emphasis upon 2010 as an "end
point" gives very little time for the rail industry to plan
large-scale projects aimed at capacity increases. This approach
could well result in short term and sub-optimal decisions. Major
projects often require long planning cycles and if the demand
for the future is to be achieved, we will need to begin planning
The 10 Year Plan assumes that that
there will be sufficient capacity and expertise within the rail
industry to deliver its stated objectives. However, in the current
climatewith specialist technical skills in short supplythere
is a danger that the industry could be constrained in this respect.
In addition, certainly in terms of capacity, there is a limit
to the industry's ability to accommodate major structural change.
In light of this, we believe that the assumptions
underpinning the Plan require revisiting. They are of central
importance to the outcomes the Plan envisages and only with a
realistic set of assumptions can achievable objectives be set.
In terms of remedial action therefore, we propose
Acceptance that underlying demand
for rail is likely to be higher than previous estimates.
Incorporation of congestion charging
and multi-modal effects upon rail traffic growth and a subsequent
revision of the figures.
Extension of the time horizon for
continuing rail traffic growth beyond 2010, ideally setting work
in a 20 year planning timeframe.
An indication of measures to buttress
the skill base within the rail industry.
The Railway Forum has long believed that the
mix of public and private finance contained within the 10 Year
Plan is unbalanced. We support in principle the use of private
finance and the use of public funds to lever the best deals from
the private markets. However, we have the following comments in
The 10 Year Plan does not incorporate
any realistic business model of the industry in support of the
borrowing figures and, as such, we are not convinced that this
structuring of railway finance is realistic.
The sheer size of private borrowing
contained within the figures for rail (£34 billion) is of
concern. We are not convinced that this level of borrowing is
sustainable, given an industry turnover of approximately £6-7
billion and a projected increase in fare revenue of at best £3
billion (from 50 per cent growth).
The ratio of private to public investment
in rail envisaged in the Plan is 2.3:1 compared with a figure
of 0.2:1 for roads. This figure will only be sustained by robust
Government support in the form of risk underwriting of major projects.
The Forum's work in this area leads us to believe that there are
a variety of mechanisms through which Government could successfully
leverage private finance packages for rail investment. However,
without explicit Government guarantees (that could take a number
of forms), we feel it is unlikely that this level of private finance
will be forthcoming. This is particularly important given the
current situation regarding Railtrack and the possibility of an
investment hiatus as a replacement network operator is found.
The phasing of rail investment contained
within the Plan needs to be revisited. Investment under the 10
Year Plan peaks during 2003-04 before falling away (particularly
so for public funding after 2006). Ultimately, by 2011, total
investment could be as little as 0.3 per cent of GDPless
than is spent today and a sum insufficient to ensure that capacity
is increased and growth maintained. As a consequence, we believe
that the sustainability of investment funding across the Plan's
horizons needs to be fundamentally reassessed within a longer
term, strategic framework.
Much of the early rail investment
spend in the Plan comprises a small number of large projects (e.g.
Channel Tunnel Rail Link, West Coast Route Modernisation etc).
The Railway Forum is concerned that there is some imbalance in
the investment earmarked for major projects as compared to smaller
network improvements. There are a number of ways to unlock capacity
through small schemes and these should not be overlooked.
The Railway Forum believes that there are a
number of issues surrounding the targets for rail and those for
congestion charging that require clarification. We have the following
comments in relation to these:
We believe that the two headline
targets for growth on raila 50 per cent increase in passenger
usage and an 80 per cent increase in freightare not ambitious
enough, given the underlying traffic growth trends noted above.
Similarly, the 10 Year time horizon is too short for many of the
schemes to be achieved.
The structure of the two main targets
for rail is such that they could be achieved (at least the target
for passenger patronage) by focussing investment solely upon heavily
used routes in the South East of England. Indeed, the recent Draft
Directions and Guidance to the SRA and Policy on Passenger Rail
Franchising emphasise the focus upon these two headline targets
(along with meeting the "Passengers In Excess of Capacity"
targets). It is quite possible, therefore, that regional schemes
will be squeezed as a result. A regional approach to target setting
could overcome this to some extent. However the Forum believes
that any targets should be aimed at developing the rail network
as a whole.
There are a number of issues relating to the
balance of the Plan in terms of investment in social and environmental
areas, particularly where much of this investment is unlikely
to be privately funded. The Railway Forum is very concerned that
there are a number of upcoming proposals to meet social, environmental
and safety standards that cannot be adequately funded from the
The Plan envisages bringing investment
in advanced train protection and control systems arising from
the Cullen and Uff Inquiries within its scope. This implies fitment
of ERTMS to high-speed lines by 2008 and trains by 2010. This
is likely to be an investment with little (if any) economic return
and as such will require public funding. We are not convinced
that ERTMS fitment can simply be added to the Plan without displacing
other schemes contained in it as a result.
Regarding wider social and environmental
issues, the Plan makes no mention of a whole range of impending
proposals including improved disability provision and European
noise and interoperability legislation. Costs are very difficult
to identify and there are, at present, a considerable number of
variables. However The Railway Forum currently estimates that
the combined cost of introducing the requirements of this legislation
could be in the order of £8bn. Again, this investment will
produce little discernable financial return and will most likely
need public support.
The recent European White Paper on
Transport also contains proposals aimed at establishing the European
Rail Safety Agency and developing European Interoperability standards.
These proposals must be looked at in the light of the arguments
we make above regarding cost. Safety is one consideration that
must be weighed against a number of competing policy objectives,
rather than one that overrides any other. In addition, any safety
proposals must incorporate the emerging UK structure as laid down
in the second Cullen report. If the 10 Year Plan truly does include
the recommendations from the latter then the measures contained
within the European White Paper will require careful scrutiny.
Overall, The Railway Forum is concerned that
there seems to have been insufficient analysis of these wider
issues, particularly in the 10 Year Plan's objectives for a sustainable,
integrated and safe transport system. There remain very large
costs associated with measures to improve social inclusion and
environmental and safety standards on rail. In this sense the
issue of "efficient" investment raises the likelihood
of public finance being requiredprivate markets will not
pay for "social" investment that generates no monetary
In making this submission, we are conscious
of the fact that the SRA's Strategic Plan is soon to be published
and will, hopefully, provide the long-awaited detailed framework
for the industry. However, we are also mindful of the fact that
Government must set out a realistic vision of how rail should
develop and, as such, we believe that the current 10 Year Plan
needs to be fundamentally reassessed in the light of the points
we have raised. We are therefore ready to provide further evidence
if required by the Sub-Committee.