The ‘big mo’ is now with devolution and bus regulation

Close-up of a bus

An unstoppable momentum appears to be building around devolution and bus regulation.

What a difference a week makes. It’s not clear yet whether this is quite a Berlin Wall moment on buses and devolution – but at the very least it’s the equivalent of mass demonstrations in Leipzig. And we all know where that led to. This is how it happens – the pressure builds and builds and then with dizzying speed ‘all that is solid melts into the air’ and a new paradigm forms itself.  They don’t happen often but I’ve been through these moments before.  Most notably when the roads programme suddenly collapsed (after years of political, community and intellectual pressure) in the nineties, and transport policy shifted towards seeing public transport as a solution rather than a problem. A shift in thinking that has not been reversed. With big developments almost by the day there’s a risk that this column will be out of date before it’s published, but here goes… Continue reading

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.

A critical moment for regional rail

pteg has recently published ‘Options for Regional Rail – a review of ways to improve Britain’s regional rail services’ by Transport for Quality of Life (TQL). The report aims to  widen the scope of debate about regional rail by considering whether alternatives to conventional franchising of regional rail services might offer greater benefits and whether these benefits are worth the potential risks and costs associated with deep reform. In this special guest post, the report’s author, Ian Taylor, Director at TQL, sets out the report’s findings. 

Two Transpennine trains at Leeds station

Transpennine’s profits in one year are twice the amount that Merseytravel spent to completely refurbish its entire train fleet when it took over Merseyrail.

How could we end up here? Britain’s regional railways are the most highly subsidised portions of the railway network yet their operations are structured in a way that means large amounts of money flow out of them as profit. In its last reported year of operations Transpennine, the most extreme example amongst the train operating companies, took a profit of 24% – £68 million. Significantly, these kinds of sums of money are on the same scale as the amounts of investment that are urgently required for improvements to regional railways. So, for example, Transpennine’s profits in one year are twice the amount that Merseytravel spent to completely refurbish its entire train fleet when it took over Merseyrail.

A further irony is that, whilst UK rail legislation in the form of the 1993 Railways Act prevents the UK Government or any regional public body from operating a railway company, a substantial proportion of the profit is extracted by the commercial arms of state-owned railway companies from other countries. So, for example, Transpennine is a joint venture with Keolis, a subsidiary of state-owned operator of French railways, SNCF and Arriva Trains Wales is a subsidiary of the state-owned operator of German railways, Deutsche Bahn. Even Britain’s Royal Train is hauled by German state railways – DB Schenker, a subsidiary of Deutsche Bahn. These public companies repatriate the profits for investment in their own railway networks.

Too daft to be true? Sadly not.

So our new report Options for Regional Rail attempts to stand back from the situation that we have arrived at twenty years after rail privatisation and draw up a sensible range of choices for the transport authorities in Britain’s regions and devolved nations, all of whom are faced with difficult but vital decisions as the political debate looks set to swing increasing responsibility for rail services in their direction.

A key part of our work on the report has been to quantify the benefits that could accrue from changing the way regional rail is governed, considering the widest possible span of options. These range from modifications to the present system already underway in some regions and devolved nations right through to radical changes that would bring to Britain some of the high-performing features of railways elsewhere in Europe. The report looks at three key types of potential savings, related to governance of passenger train services, procurement of rolling stock, and efficiencies available from de-fragmentation of the railway.

Passengers boarding a Northern Rail train

Direct purchasing of required renewed rolling stock by local authorities could bring an extra £184 million per year to regional railways

The figures that pop out of the analysis are big numbers. Foremost amongst these is a calculation that looks at the increasingly urgent need to replace and increase the aging and inadequate rolling stock on regional lines. This calculation considers the scenario where public authorities in the regions and devolved nations would use their competitive advantage of access to low interest rates to buy new rolling stock directly, rather than leasing it from private rolling stock companies who pay much higher interest rates and who take a substantial profit margin. For example, eight year averages for the three dominant rolling stock companies stand at 34%, 31% and 12%, including some years of the current economic downturn. The report calculates that if all the required stock to renew over-age regional trains in Britain was bought directly by public authorities rather than hired from rolling stock companies regional railways would benefit to the tune of an extra £184 million per year.

To put this into context the report provides an explanatory hypothetical example of a small regional railway that is in need of a new train fleet, taking a system on the scale of Merseyrail, a network which is in dire need of new trains and actively investigating its procurement options. The example presumes that the regional transport authority cuts out both the private rolling stock companies and the private train operators by setting up its own train operator (or by contracting its train services from a nation-wide public sector rail operator, should one be available). The resulting annual saving comes out at 30% of the annual turnover of the operation – an astounding figure.

These kind of numbers leave no question that it is important to bring consideration of radical changes in railway governance into the debate about regional rail reform. The amounts in question are at a level that can make a fundamental difference to whether a region’s train services appear affordable and financially sustainable or whether they become vulnerable to calls for cutbacks and higher fares, imperilling revenue growth and leading to the sort of downward spiral that has plagued Britain’s regional railway in the past.

To back up our financial analysis we have also considered a range of examples from the UK and continental Europe. These come as quite a challenge to normal preconceptions because the dominant economic ‘narrative’ has so strongly presumed that efficiencies must necessarily stem from private competition that counter-examples have not received the attention they deserve.

Close up of East Coast train

Britain’s only publicly owned railway has bought in considerable earnings for its Government owner

The British examples include bus companies that are quietly earning large sums of money for their local authority owners. Third sector not-for-profit transport organisations turning over many millions or even billions are also described. And then there is Britain’s least-subsidised train operator – the only one in public ownership (a result of emergency public takeover after failure by its private sector predecessor) – that has recently been proving itself a political embarrassment by earning so much for its Government owner.

The continental case studies highlight the surprising fact, up until the Eurozone crisis, regional rail use in France under the much-maligned publicly-owned SNCF grew faster than regional rail use in Britain. Moreover, the French regions have been equipped with regional powers that have enabled them to hold level or even slightly drive down the unit costs of train services that they commission from SNCF.

Conversely, Sweden which was the first country in Europe to experiment with rail privatisation, even before Britain, is shown to have experienced huge cost rises and other kinds of problems that mirror those in Britain.

The Options for Rail report concludes by looking at a series of questions of immediate relevance to decisions facing regional transport authorities and devolved governments, considering exactly how excess costs can be driven out of the regional rail system. It shows that if there were appropriate changes to railway legislation, these authorities could realise huge savings for regional rail by running train services and buying rolling stock directly through a company within their ownership or alternatively using a third sector not-for-profit train operator.

Some savings however, would still lie beyond the reach of regional transport authorities because they involve cutting out inefficiencies and excess costs that result from fragmentation of the railway network across many different companies. These inefficiencies apply to both train operations and rolling stock purchases. A national ‘guiding mind’ in the shape of a publicly-owned national train operator could therefore offer even greater savings to regional railways. Our report concludes that this could be entirely compatible with transport authorities in regions and devolved nations taking a much stronger role in how rail services are provided for their regions, the advantages of which are abundantly clear from where it has happened in Europe and areas of Britain. The key factor in making such a system work for the regions would be a set of powers that ensured that regions held the whip hand with the monopoly national operator, and the report lays out what these need to be, building on the recent experience of the French regions.

It is a critical moment for Britain’s regional rail networks. As the regions rise to the challenge of improving their rail systems they are faced with finding significant efficiency improvements. This appears a daunting prospect if consideration of potential improvements is limited to further modifications to the present system of railway governance. This system, despite multiple alterations over a twenty year period, has seen real-terms costs increase at a rate that has far outstripped the growth in rail services. However, the prospect appears much brighter if the discussion can be widened to include the more radical options that the Options for Regional Rail report shows can offer substantially greater opportunities to reduce the cost of running regional rail.

Ian Taylor

Director, Transport for Quality of Life.