Liberate us from the London-based elite

Houses of Parliament and London Underground roundel (c) Transport for London

The relationship between London and the rest of the country is the most important single factor in transport policy. Picture: TfL

Every time the London-based policy elite are taken out of decision-making on local transport, local transport gets better.

First of all a spoiler alert – this isn’t going to be a London bashing article or a piece about the different levels of spending between London and the regions. But it is about the relationship between London and the rest of the country. It matters because this relationship is the most important single factor in transport policy for the country as a whole.

As is well known, London sits dead centre of a uniquely centralised state and a uniquely lopsided economy. By global standards we are a strange nation in hosting one world city which is so economically and politically dominant over the rest of the country.

Of course that doesn’t mean that some of the core cities in the rest of the country haven’t recovered their swagger, but beam down on a Monday night into the centre of some of our regional secondary cities and it can be like being on the set of one of those sci fi films where human life has been wiped out. Listen to that silence. These are places which haven’t recovered from the major recession of 30 years ago, never mind the last one.

Meanwhile, in London, the restaurants, pubs and bars are buzzing seven nights a week. The irony is that although some inhabitants of the city of strangers want to be there for what a world city offers, it’s no secret that many don’t necessarily want to be there at all. They don’t want to be spending all their money in a frenzied competition to acquire a tiny living space, then squeezing onto eight-car trains, 12-car trains (and so on, exponentially) to get to work. They could be back in their home towns and cities. Towns and cities with a wonderful built heritage and fabulous countryside within easy reach. Places with growing space. They would be happy to go back home if only the career opportunities were anywhere near as abundant as in London.

It’s not healthy for a country to be this way. It’s not healthy in terms of attitudes either. It honestly sometimes feels like England outside London is the last part of the Raj. Or what Scotland used to be prior to devolution (remember where the Poll Tax was trialled). A tabula rasa, a terra nullius; where the London-based policy elite can indulge their creativity. What fun it must be to have the whole of England outside London to play with! And why would you want to give that up!?

I can say this from personal experience, and from year after year of meeting London-based government officials, think tanks and advisors. It’s a dispiriting experience when you are trying to explain an issue and you realise the person you are talking to doesn’t have a grasp of the basics of how things work now outside London on transport or governance. This of course makes it nigh on impossible to explain how things might change. I used to think, well, it’s complicated so perhaps it’s fair enough not to understand who does what. But then I began to realise that in London it is not cool to understand how the rest of the country works. Indeed a key characteristic of the London-based policy elite who decide what happens in the rest of the country is that often they spend no time in trying to understand how it works right now. They don’t know who is responsible for what in local government. They don’t understand the economic and social geography. And they don’t see why ignorance should be any impediment to determining what should happen. Indeed it is somehow seen as demeaning, uncool and trainspottery to spend time working it out. As if by doing so you could somehow be infected with the deadly virus of provincialism – and who knows, horror of horrors, be deported there.

A striking example of this is the confusion over mayors. Many London-based advocates of mayors (prior to the last wave of referenda on district mayors) genuinely had no understanding or concern that there might be a difference between a core city district council and the wider city region. For example, between the city of Manchester and Greater Manchester. This distinction matters when bus and rail networks work at a city region level but not at a district level. It’s taken around five years for the London-based policy elite to work it out – which is why they now talk about ‘Metro Mayors’ (ie. city region mayors). This is probably what they meant in the first place – if they could have been bothered to open an atlas of their own country.

It’s almost impossible to believe that national government in Germany, France or the US would make policy without feeling the necessity to know how the lander, departments or states work. It would also be like someone coming to London from the regions and saying ‘I understand you have some kind of train system that runs underground, and a mayor? Is that right?’. Unthinkable that anyone from the regions would display that level of ignorance about London. Absolutely normal the other way round.

Another key characteristic of the London-based policy elite is that they can only really cope with one idea at a time about the rest of England. That idea – in full – is that something has worked in London so surely to god you can make it work out in the sticks. This has found expression in two propositions in the last 10 years which have been: (a) London introduced congestion charging, therefore so should you, and (b) London has a mayor, therefore so should you.

Hebden Bridge

Hebden Bridge – capital of the North? Picture: Visit Calderdale

Another example of the effects of the beyond parody consequences of this approach are the various permutations of how the cities of the North need to be combined into one mega city, presumably because that would make them more like London (thus obeying the iron rule of London-based policy making). Various random combinations of Northern cities have been selected at various stages – all of which have failed to take to account of the considerable bogs, neighbouring large cities or mountains that divide them, or that a city on that geographical scale would be one of the largest cities in the world. So we have had Manpool; Leeds and Manchester; a triangular mega city of Manchester, Leeds and Sheffield; Hebden Bridge as capital of the North and so on and so forth to the very outer reaches of absurdity.

The recently launched ‘One North’ concept of better connected Northern cities is more like it – but then that was devised in the North not in Clapham or Notting Hill.

Paradoxically though, it is London that has been most effective in defying some of its own elites and showing that a great and growing city needs excellent public transport. Or to be more precise it was Ken Livingstone in his first mayorality who demonstrated it through pushing ahead with road user charging and transforming bus services – as a solid foundation for going on to transform the rest of the city’s public transport. And now that’s been seen to work for London it means that better public transport is now seen as a good thing (in principle) for other cities too. So this time the ‘if it works for London’ rule has been helpful!

Merseyrail train at station

Locally managed Merseyrail – more investment, energy, dynamism, ambition and common sense

The big lesson here is that devolution of transport powers works. Indeed every time the London-based policy elite are taken out of decision-making on local transport, local transport gets better: markedly and rapidly. You can clearly see it not just in London itself, but on ScotRail and on Merseyrail Electrics. More investment, more energy, more dynamism, more ambition, more common sense.

When the London-based policy elite let go and their ‘idée fixe’ are cast off, it’s like the curtains have been suddenly opened and the sunlight floods in. For public transport this would only be good news as there’s no doubt that there’s a greater will to improve local public transport in the regions and a better track record when powers are devolved. But it needs to be real devolution, not the usual version of devolution that England outside London gets – ‘we take all the strategic decisions and you can manage the consequences for us’. And if the consequences are too difficult or undesirable to manage (they usually are) then ‘well, what can we do minister? It just shows they are not up to it’.

In short, it’s time that the flag was solemnly lowered on the last part of the Raj.

Jonathan Bray

This article first appeared in Passenger Transport magazine.

What a way to cost a railway

The railway’s cost allocation system is dumping costs on the sector least able to afford them – regional rail. It must be changed.

And so it came to pass that the Office of Rail Regulation issued the subsidy figures  for the different parts of the railway which were engraved on tablets of stone. And a hush descended as the great multitude of executives, lawyers, consultants, officials and economists, and others of the vast and well renumerated tribes of the privatised railway, gazed upon them. Verily those regional railways look expensive they thought. Useful stats if we need to give them a good kicking later on.

I adopt an ersatz biblical tone because the way in which the subsidy figures for different parts of the railway are presented is often done as if they were written on tablets of stone. Absolute truths handed down by a greater intelligence. However as our recent report, ‘A heavy load to bear? Towards a fairer allocation of rail industry costs for regional rail’ shows the reality is that they are constructs based on choices on how costs are allocated to sectors. Choices which are often political. Choices which in the Beeching era were made to justify a frenzied application of the axe. Choices which in more modern times, during rail privatisation, were made to create a ‘profitable’ intercity network and a ‘how much do they cost!?’ regional rail network.

Once you summon up the courage and mental fortitude to cross the threshold of the intimidating edifice of the railway’s cost allocation system and into the cloistered world of railway economics that lies beyond it, the bias against regional railway which was built into the privatised system from the outset, becomes startlingly apparent.

Firstly, and obvious to the naked eye, is that by and large, cross subsidy within the passenger rail network was dismantled so that the regional railways that feed the intercity networks were separated out.  However, delving deeper this is compounded by a disproportionate and entirely unfair allocation to regional rail of both the overall costs of the railway, and of other rail sector’s costs.

This dumping of costs on the sector least able to afford them took place in a number of ways. Here are two of the most pernicious ways in which it was done. Inter-city trains are estimated to produce twenty times the track damage of a Pacer – yet they are allocated equal shares of maintenance and renewal costs. Infrastructure damage comparison diagram

Secondly, regional rail received only 18% of new investment by Network Rail but regional rail contributed 30% of fixed track access charges and was allocated of 32% of the financing costs. In other words regional rail is paying for track impacts and damages it didn’t cause, and paying for investment in the railways that it doesn’t benefit from.

And then there’s freight. I am all in favour of getting freight off the roads. I have no problem with railfreight not paying the full costs of its impact on rail infrastructure in order to achieve this end. I think the railfreight lobby has been determined and effective in fighting freight’s corner. A far better job than the regional rail lobby has done (though that in itself is not difficult as there isn’t one). Rail freight’s hard won status as a marginal user of the network is also another example of how cost allocation is less of a saintly practice of pure and spotless economic rationality than the consequence of politics and hard bargaining. I don’t have a problem with that either. But better to be honest about it.

If rail freight is a marginal user then there’s a strong, though slightly different, argument for regional rail to be a marginal user too. Regional rail takes traffic off the roads (benefitting remaining road users); gives commuters access to city centre jobs and opens up rural areas poorly served by road for inbound tourism and outbound access to opportunity. All of which benefit a host of wider Government objectives for growth, jobs and the environment. At the same time regional rail generally causes less damage to the infrastructure than other sectors, generates the least income, and requires the least fancy engineering. If it were to vanish tomorrow the majority of the bills of the railway would still need paying. Why on earth therefore should cash strapped regional rail be the one that always gets its, and other peoples’,  rounds in at the bar? And worse, ending up with the equivalent of a pint of dodgy mild whilst paying for others’ premium lagers and cocktails.

What happened to regional rail’s costs at the point of privatisation shows just how extreme the effect of this change in the way costs were allocated was – and what a construct are those cost per passenger kilometre, and subsidy figures by train operator or sector. Before privatisation the costs allocated to West Yorkshire’s rail network was £14 million, the minute after the new privatised cost allocation system came in (with the same trains and the same network) the costs increased to £43 million. For Centro the costs increased overnight from £33 million to £62 million.

All clever stuff then. All confirming London Government’s prejudices about the value of any service that doesn’t stop or start in London. All neatly positioning regional rail on the scaffold’s trapdoor whilst at the same time showing that rail privatisation created seemingly real inter city businesses that made real profits. All of this matters right now because these flawed subsidy figures are hanging over the re-franchising of the North’s railways. Right now the narrative feels like the future’s bright, the future’s rail. But really, just look at how much those regional railways cost and draw your own conclusions. We will do what we can for you but those figures speak for themselves.

But what would the figures look like under a fairer, more defensible and more rational system for allocating the railways costs?  If costs were allocated more in proportion to estimates of track wear and tear by different sectors? If overheads were allocated to prime users? If the track access charge payments that relate to infrastructure investment better reflected where that infrastructure investment was made?

Our report estimated that if that were the case then government support for regional networks would be more than a third lower than ORR currently states it is. Subsidy per passenger kilometre figures also change significantly. ORR’s figures of 22p per passenger kilometre for regional rail and 4p for InterCity becomes 17p for regional rail and 12p for intercity.Government funding estimates by market segment

 

What our figures show is that regional rail networks go from receiving more than half of all government funding to a share of just over a quarter. Regional rail passengers still receive the highest level of subsidy per passenger-km but it now becomes clear that this is driven by operating subsidy rather than infrastructure spending. Real subsidy levels are also shown to be much closer between Inter-City, London South East and Regional networks than previously thought.

The low level of infrastructure spending in regional networks also goes a long way towards explaining the high level of operating subsidy. Investment and the quality of infrastructure clearly play a key part in the ability of regional rail to attract passengers and thus generate additional revenue. Investment (or lack of it) is also a determining factor of train operating costs. For example, increasing train speeds can reduce costs, attract passengers while making future frequency enhancements cheaper to deliver. In that sense, it is not surprising that decades of underinvestment in regional rail infrastructure will lead to a widening gap in terms of subsidy requirements relative to other parts of the network.

It would take a relatively small increase in demand and yield (or, conversely, a fall in unit operating costs) to bring regional rail subsidy in line with subsidy on the rest of the network. This shouldn’t be hard to achieve given the relatively low mode share of rail in the regional market and the rampant growth observed following service improvements.

Overall the case for investing to save (rather than handwringing and penny pinching) on regional rail looks far stronger. More realistic numbers about where costs fall also tie in with the realities on the ground about regional rail which is that regional rail fits so well these days with how the North’s economy is developing. More people commuting longer distances to access high value jobs in city centres that can’t cope with much more road traffic; people taking to the train to avoid the hassle of driving and parking in the North’s many wondrous national parks and revitalised urban centres; and town and city economies that are starting to fuse and synergise. That’s why regional rail patronage has been soaring – even on routes where Whitehall lumbers is with Britain’s worst and oldest trains running at collective punishment frequencies.

A cost allocation system that is still playing out trace memories of Dr Beeching’s creative accounting, as part of a dusty Whitehall long game over regional rail now, looks as out of touch with what’s good for regional economies as communicating with tablets of stone.

Jonathan Bray