Brief Railway Indulgence
With the Middle East in flames, Inspector Yates at the Downing Street gates and Hazel Blears being touted as a possible deputy Prime Minister, you'd think we'd have quite enough weighty, serious matters to deal with.
However, bollocks to that, I'm going to take a couple of fellow bloggers to task about a story that's 13 years old. Not sure why, except to illustrate (again) that kneejerk application of ideology is the bane of British politics.
Things started back on the 28th November when the journalist Neil Clark posted posted a fairly innocent question, aimed at Tim Worstall, samizdata and the Adam Smith Institute in relation to that day's news of above-inflation rail price rises:
I'd hazard a guess that Mr. Clark isn't a dyed-in-the-wool railway enthusiast (about 2% of his blog posts contain the word 'railway'). In fact, judging by his blog header he's more likely to think of Alycidon and Meld as racehorses than as English Electric Type 5 Co-Cos.
However, judging by his answer, Tim Worstall isn't much of an expert on the railway history of the last twenty years or so, as his reply consisted of some fairly unadventurous economics ending with:
OK, I'll tell him he's wrong there. It's a common Conservative myth that rail *privatisation* was forced on them by an EU directive, but this doesn't stand up. The requirement was, and is, a perfectly sensible first step to allowing cross-border and startup rail operations by making state railways separate accounting for operations and infrastructure, so they can charge Fred Bloggs Railway Company for the track capacity they use without being able to use the cash to cross-subsidise competing services. The fact that the French did this nine years ago with RFF and SNCF suggests that it wasn't exactly intended to promote pure Anglo-Saxon economic orthodoxy.
To be fair, Tim did get a good deal of informed comment back, particularly from dsquared and someone calling himself 'jimmy knapps ghost', plus a specious bit of fact-picking from 'john b'. However, this little question and answer session left me rather hungry for more, with a suspicion that neither side truly understands the matter, and in both cases it's due to ideology clouding diligent fact-gathering and reasoned judgment.
First, get your facts. Neil, judging by the 9 posts he's blogged containing the word 'railway', knows two facts - the railway costs 'four times as much' in subsidy and '75% of the public' support renationalisation.
Tim, on the other hand, knows that Stephen Byers bankrupted Railtrack and that's why the subsidy is so high, and that passenger numbers have increased. That's a total of four facts, three of which are highly debatable, as the basis for both sides of the argument. The rest is pure ideology - shouting 'nationalise' versus 'free enterprise'. There's a strong case for saying that both ideologies, applied alternately, have lead to the current state of the railway, and what we should be looking for is less ideology and more facts.
Where can we get more facts from? Well, the most trenchant and opinionated commentator on railway affairs over the last twenty years is, of course, Roger Ford of Modern Railways, who is not only an engineer by training, an excellent writer and a spreadsheet devil but is also something of an internet pioneer (though no great shakes in the web design stakes). He's also been forced to develop an interest in economics and, tellingly, in Freedom of Information requests, both skills required to get any reasonable picture of the modern British rail scene. Fortunately (for my Little Red Book piece, if nothing else) his Informed Sources column is online, which saves me going to the shed and digging out old copies.
Here you'll find any number of stat-rich articles and graphics which taken together gives a pretty good idea what happened. To give an example, john b in Tim's comments compares subsidy across 1982 and 2004 to try and argue that rail subsidy has remained constant as a % of GDP:
This is a dangerous assumption, equivalent to examining the history of the years 1911 and 1946 and concluding that the United Kingdom enjoyed unbroken peace throughout the first half of the 20th century. In truth, subsidy has always fluctuated, going up when the economy cools and going down as the economy grows, as this graph shows. Armed with this, it's clear that 'john b' is comparing the high spot of the 1981/2 recession with a point about halfway up an abnormal rise in recent years. For the majority of the time between 1982 and 2004 his % of GDP theory substantially overestimates public support for the railway, and is thus unreliable. As of now, it probably underestimates it.
What it also shows is two seismic events in Government support for the railways, first the huge injection of public money in 1993/94 as a sweetener by the Tories, desperate to sell it off. Then, dwarfing that, the rise in subsidy post-Hatfield (this, occuring in late 2000, and not Stephen Byers was the true kick-off point for the shift from the Tory free market zealotry to the Labour, well, mess. Byers became Transport Secretary in June 2001, some 9 months after Hatfield, plus the renationalisation of Railtrack was clearly a Treasury operation. Railtrack was doomed from the second the track shattered under the train.
What is clear is that from a reasonable steady state supported railway that went up and down with the economy up until the early 1990s, the time since under both main parties has been one damn thing after another. Unfortunately, railways are long-term businesses - trains last thirty, forty or even fifty years, ditto for signalling schemes and track life is measured in decades too. This puts a premium on continuity of knowledge and makes the railways a very bad place to try the kind of Year Zero managerialism and concomitant hatred of professional opinion beloved of Tory and particularly New Labour governments. Worse, knock it off balance and it's likely to take an even heftier shove to get things back on track, as you try and expand your capacity to repair the railway in a limited professional market. That's the true reason why Network Rail's costs are so high - they're trying to pack a decade of work into a few years, and have effectively been given a blank cheque to cover it.
So, Tim and Neil, by all means carry on fighting your ideological corners and I'll carry on reading, but please get some facts on board. Here are a few:
- Talking about the recent history of UK railways without reference to Hatfield is like talking about the Dissolution of the Monasteries without mentioning Henry VIII. It's the defining event and the ultimate example of managerialist failure as applied to rail
- Don't go overboard on comparison to foreign railways - France has an excellent high speed rail network and an abject conventional system, which is why local Mayors try so hard to get high-speed lines built
- Calling for renationalisation without definition is meaningless - the freight sector has been remarkably successful with four operators (three private, one publicly owned) proving that open competition and investment grows markets, and in this case there's absolutely no justification for returning to a single state operator
- Economists shouldn't ignore engineers - economists and engineers should get on well, both being disciplines grounded in mathematical analysis of real world processes and systems and applying them to forecast future situations. They each have evil twin (i.e. better paid) disciplines in accountancy and architecture
- No discussion of rail capacity should be undertaken without examining why network enhancement costs trebled when Railtrack took over
- Anyone suggesting double-deck trains shall automatically be considered to have lost the argument.
- Don't ignore Cecil Parkinson - it surprised me to find that the Tories finally got the point of public transport in 1989/90 and forgot it three years later.
- Railtrack was a private monopoly. Discuss
- The key question is how NR got the blank cheque from Government, and what Gordon Brown thought about that
Given all that, it would be nice to see Neil's original question answered with the facts at the fingertips. I might do that one day, but I'd be delighted if Tim put the salient facts into his giant brain and had a go.
You appear to be doing a
You appear to be doing a much better job than I am so I think I'll let you carry on.
One possibility about the rising subsidy (I'm aware of Hatfield but usually avoid mentioning it: I tend to think that the reaction to it was the most absurd overblown hype which led to a vast waste of money but that's for another day) and I stress this is more a question to be explored rather than a statement of fact.
Is it in fact possible for the railway network to ever actually be profitable (ie, not require subsidy)?
You normally think of financing a business as having (very simply) two parts. Fixed costs and variable ones. Railways have huge fixed costs...not only do you need to rails etc, you've also got to keep running all the trains across the network.
Your variable costs are quite possibly negative. Each extra passenger might well (on average)pay more for their cup of tea than it costs you to carry them, given that you've already got to run all those trains across the network.
Now for a business to be profitable obviously revenue must cover both fixed and variable costs. But is it possible that the railways can never do that? Might it be that the capacity of the network to carry passengers, at any prices that would still mean they travelled, can never cover those fixed costs?
I'd love to know whether this is actually true really.
If it were so then we'd find ourselves with an extremely large problem. Every time we improved the railway, by extending tracks, adding services, and thuis attracting more passengers, we'd actually be upping the subsidy required.
1/. I go with Roger Ford who
1/. I go with Roger Ford who has argued for years that privatization of the railways has been a disaster, with one exception...
2/. I agree with you that Freight has improved under privatization, but I can think of at least nine companies who are either now running freight traffic or are planning to enter the market very soon.
You raise some good points,
You raise some good points, Tom, and I agree with many of them. It would take too long to discuss them all, so let me try to take you up on a couple of them.
It would have been possible to obey the EU Directive without doing what the Tories did. It would have been possible to separate the train operations from the track management and allow some open access operators (freight or passenger) to open up some new markets, while maintaining British Rail as a train operator. This would have avoided the farce of franchising, which is costly and of limited benefit.
The Hatfield accident did happen, but there was an over-reaction and also the excuse of "Hatfield" has been used to cover up a multitude of other sins. Railtrack would probably have to have been closed down even if there had been no Hatfield accident. It was a private monopoly that had been goven control of a valuable national asset, but was not looking after it properly. Its management of the upgrade of the rail line out of Euston was disasterous. Under Railtrack, the costs of maintaining the railway soared because it had no effective control over the scores of subcontractors that it brought in.
Economics, unlike Physics,
Economics, unlike Physics, is primarily an ideological science. It deploys a series of doctrinal assumptions that render its theories immune to rational questioning.
Most of these assumptions are false - the classic case is the cherished theory of comparative advantage, which assumes capital is fixed and labour mobile. Remember, most of these theories were constructed in the 18th century when capital meant land. Nowadays the situation is reversed, but the same old models are trotted out by orthodox economists. The 'science' of economics was largely invented as a tool of class war.
Anyway, the point is that no mainstream economist, and no politician, will object to subsidising the private sector. The treasury does not calculate PFI or PPP as debits. Subsidising corporate interests is fine. It's just the welfare state they object to...
Excellent piece! Thank you.
Excellent piece! Thank you.
Oh, I meant to say, on a
Oh, I meant to say, on a PROFOUNDLY more trivial level, what really gets up my nose is why a privately owned railway, which most people don't or can't afford to use, have the right to close down the roads we do use, so that near-empty trains can eventually trundle over the level crossings? Sorry, local issue. 45 closures on our high street, causing huge traffic congestion and pollution, and ........... I'll stop now.
How come I have to stop at
How come I have to stop at red lights to wait for all those cars and trucks which I don't own and can't use to go past in the opposite direction?
"though no great shakes in
"though no great shakes in the web design stakes"
Seems a little harsh, especially as he's not the webmaster!
Having seen what professional designers can do, I found his pretty readable...
WRT privatisation, I'd always assumed it was driven that Thatcher's dislike of the railways.
WRT Hatfield, I think it was Potters Bar that finally nailed the private contractors, Jarvis having tried to claim that it was sabotage. IIRC, a railway worker travelling as a passenger on the same route shortly beforehand reported that he noticed a problem with the points and tried to flag it up but was, of course, ignored...
Your absolutely right about
Your absolutely right about this.
The irony is that (in an alternate world) a genuinely populist Labour govt could have dine this with great ease. Its yet another one of Labours 'easy failures'.
Another would of course have been the precedent that would have been set if Blair and Straw had the balls to extradite Pinochet. Of which more here: www.1820.org.uk
Christian Wolmar I'm sure
Christian Wolmar I'm sure could answer your question !
I found his site linked by Roger Ford . The archives are definitely worth a browse .
Finnish railways run
Finnish railways run double-decker trains, as far as I'm aware (Pendolinos, although, you know, cleaned more often). Their transport system is da bomb—cheap, frequent, frighteningly regular, fast, smooth, comfortable—so I'd be interested to know why they're such a bad idea. Is it simply all the low bridges on our network?
Is it simply all the low
Is it simply all the low bridges on our network?
It is the bridges, or more accurately the loading gauge (the 3D envelope your train design has to fit inside). It isn't *that* much smaller than European railways, but it makes a big difference.
The key point is that DD trains were tried just after the war, but to fit under the bridges they were particularly cramped even in those less comfortable times. The killer is that since then we've not only got fatter but also taller (I'm 5'11", my dad is 5'8", his dad wasn't a lot over 5'2" or so. My son is heading for about 6'5" at present, but that's his mother's side). Given that, it's clear that even before adding in things like station dwell times (already lengthened by having to use sliding doors with warning beepers) trying to cram more people into the same size carriage is a non-starter. That's why I use it was a touchstone for ignorance - no one with an idea worth listening to would propose it, except on High Speed 1 (as it's optimistically named) for all those people who need to get from Ebbsfleet to St. Pancras of a morning.
More later when I put the nipper to bed and can finally go through the comments.
"the 3D envelope your train
"the 3D envelope your train design has to fit inside"
Wasn't that what did for the (tilting) advanced Passenger train (APT)?
IIRC, the official explanation for its cancellation was that if two passed on a curve and one didn't tilt, they could make contact. It struck me at the time as a bit specious, as a) the tilting was part of the design and would have been difficult to prevent, and b) the operating envelopes must have been studied a lot earlier on. If so, it would be nice to know what did kill it off.
One of my saddest moments was looking at one in York Railway Museum and pondering what might have been.
(Funnily enough, it was next to one of Brunel's wide gauge locos, which seemed appropriate somehow.)
The train's sides were
The train's sides were angled inwards to avoid this - this is why subsequent trains like the (non-tilting but tilt profile) East Coast Mk 4s and the Virgin Pendolinos seem rather cramped. Oddly enough, they save a lot of cash in reduced air resistance with this.
I think one of the designed worst-case scenarios is two tilting trains tilting the wrong way past each other, and obviously they still have to miss.
The APT cancellation - well, the brakes were a bit iffy, it apparently made people queasy due to either the tilt compensating too much and confusing the inner ear, and/or all the journalists on board being drunk. Like most of these things it was just about got working when it was scrapped. It would still seem pretty avant-garde now. Despite Branson's best efforts it still holds the record for the fastest London-Glasgow time, mainly because they let it exceed the speed limits all the way. After £8.6bn of investment the Pendolino can just about do the same time inside the speed limit. Yay.
Excellent primer on APT from one of the original guys here.
Right, answering Tim's
Right, answering Tim's questions:
Is it in fact possible for the railway network to ever actually be profitable (ie, not require subsidy)?
It's certainly possible for freight and long-distance passenger services to be profitable - InterCity made a small profit under BR and presumably Freightliner and their ilk are doing OK these days. Outside that it's a fine call, but it's been axiomatic since 1968 that there will always be subsidy required, and this has survived every attempt to prove it wrong.
Fixed/variable costs - Railtrack managed to make the fixed costs variable, in the sense that their poor cost control inflated the cost of maintenance and renewal work. Previous to that the fixed costs were shrunk by either sacrificing capacity (singling lines, for instance) or investing in trackwork that required less maintenance, or allowed faster speeds, allowing you to put more trains on it, so you needed fewer lines for the same traffic.
Network Rail has definitely had an effect on its fixed costs when you look past the ballooning deficit - they have better knowledge of the condition of their assets and better monitoring of change in that condition, which obviously leads to more timely intervention, less delay (which NR has to pay TOCs for) and fewer unexpected costs.
A side-effect of this is that some TOCs are having financial difficulties because NR's performance is too good, and they'd budgeted for a higher cock-up rate.
So for railways, it seems that looking after your engineers pays off in lower fixed costs. Now, lowering those should mean lower subsidy, long term, particularly if you can keep it up. It also means a more reliable railway, which means more customers, better PR and less paying out of compensation. This leads to the next gotcha - capacity, which is where we don't have a solution. Increasing capacity is always high cost - the only way to reduce it is to have a rolling programme (as the French do with high-speed lines and the British did with electrification in the 1980s) so you can essentially use production line principles - keep a skilled workforce, get economies of scale from suppliers, optimise your processes. Stop the rolling programme or run it as a stop/start operation and costs rise (Railtrack found that when you need to restart capacity upgrades it costs a lot and you don't get much).
BR had a rolling programme called Total Route Modernisation going on (this I think was the result of the Tory 1989 conversion mentioned earlier, the timing is certainly right) where complete routes would be overhauled as a system, then the team would move on to the next one. This stopped at privatisation, then when it came time to do the West Coast the momentum had gone and basic mistakes were made.
One of the routes that did get TRM was the Chiltern line, which just happens to be the best private operator by a good distance - they also have a 20 year franchise and have a fine track record in capacity upgrades, although these are fairly small scale. What the railway can't seemingly do in its current state is any major infrastructure or capacity improvement, and the reasons for that are interesting, and probably trace back to the privatisation structure.
"Like most of these things
"Like most of these things it was just about got working when it was scrapped."
You're so right (deep sigh). Why do we have such a talent for designing stuff and such a deathwish when it comes to commercialising it? IIRC, around the time of the APT, there was a company called Tracked Hovercraft who needed a measly £4m to complete development of their project (which would also still be modern) but had it turned down by politicians who wouldn't know how to put up a shelf.
Successful aeroplanes are frowned upon, too. Our Harriers proved so effective in the Falklands that they've been axed, presumably so we now have to buy American kit, which was what the Harriers were so effective against!
TSR2 anyone?
I didn't realise the roads
I didn't realise the roads had been privatised - yet.
I didn't realise the roads
I didn't realise the roads and all the traffic on them had been privatised - yet.