Why break up Network Rail just for shareholder profit of train operators?

Lord Berkeley

The UK Rail Delivery Group minutes of a November meeting (Guardian 1 February) to discuss the future structure of the railways suggests that one option was to remove routes from Network Rail control, and privatise them in a manner similar to the privatised utilities. Some at the RDG favoured a full breakup, arguing that Network Rail’s plan to give more responsibilities to the routes whilst retaining central control could fail to “attract investors if the centre was still holding control”. Others are reported to believe in the importance of retaining the benefits of a single national network. Certainly, an overall system operator is an essential element of any network structure if we want trains to cross route boundaries efficiently.

It is odd that the Rail Delivery Group, comprising Network Rail, passenger franchised operators and open access operators, and freight operators, should see fit to suggest that ‘routes needed to be removed from Network Rail’s control’. Presumably this would mean that the new owners could provide ‘alternative source of finance and greater local focus on customers, clients and stakeholders as well as creating a truly independent comparator’. It is unclear how such balkanisation could help customers or clients, be they passenger or freight but no doubt would do wonders to the new owners’ balance sheets. This is certainly the case with many of the privatised utilities who put shareholders first and customers last, overseen by toothless regulators!

So what are the policies of the RDG in respect of the future of Network Rail? Considering that NR pays 50% of the revenue of the RDG, its views are given precious little coverage in the report, suggesting that this is, yet again, a rather blatant bid by some of the passenger train franchise owners to get control of tracks over which they run. They will say that they will bring in private investment; how much would this actually be? Their investment in passenger franchises is regularly hyped up, but most of it is effectively government guaranteed or actually part funding by Network Rail.

It is, in any event, easy for NR to provide comparator costs, efficiencies etc. for each of their routes and for the ORR to benchmark them. It is much more difficult to accept a situation where a private route company, no doubt led if not financed by one of these TOC owning companies, took control of the timetable, the route planning, standards, times for maintenance etc. on their ‘route’. It stretches credibility to the limit to think that this private route company would maintain and improve the network as any long term asset deserves. Is this not what launched and then sank that wonderful private sector infrastructure manager, Railtrack?

But is this not getting political? Here we have probably one group of RDG members suggesting that another, owned by the Government, should be broken up, no doubt for the first group’s financial benefit! Maybe they should remind themselves of the content of the Communications Strategy which they agreed with DfT, and contained in a letter from Philip Ruttnam, Permanent Secretary, to Lilian Greenwood MP, Shadow Secretary of State for Transport, questioning why Network Rail funding to the RDG should be used for political purposes. He states: ‘As Accounting Officer for the Department for Transport, I can assure you that I take any issues regarding the appropriate use of public money very seriously…RDG has decided to adopt a communications protocol which balances RDG’s critically important leadership role in providing a collective voice for the rail industry with ensuring political impartiality in its communications activity.’

Anything less like political impartiality, or even speaking for all its members, is hard to imagine in these meeting notes. Perhaps it is time for Philip Ruttnam to review this Communications Strategy.

In the case of fragmentation and sale, how could the network be managed consistently and in the financial interest of all? Each section will have its own signalling upgrading plan and hence little leverage on its suppliers. Likewise, lines will be run according to the discretion of its current owner (can be Asian today, Arab or hedge fund tomorrow), leaving constituencies of voters without say and influence about their transport. In the same vein, why not privatise government and regulation as well?