Future of Transport

In November 2005 the Transport Secretary and the Chancellor asked airline chief Sir Rod Eddington, to advise on the "long-term impact of transport decisions on the UK's productivity, stability and growth".


Many transport observers have long been aware that the chief barrier to a balanced transport policy in the UK will not be possible until rail is placed on a level playing field with other modes, particularly roads.

This applies to both funding mechanisms and to due weight apportioned to road’s external costs and rail’s external benefits, in particular, reduced accidents, road congestion, energy consumption, climate change, regeneration and social inclusion benefits. It should be noted the cost of road accidents alone last year is put at £18 billion.

Currently, the bulk of road improvement schemes are funded from taxation while improvements to the rail network are largely dependent on interest bearing loans and input from the private sector which in itself pushes up the cost of new rail projects.

Of course, the Government will be quick to point to the large sums it is presently putting into the railways but this is principally being used to pay for the costly mistakes of a flawed privatisation structure and the consequential arrears of maintenance and renewals.

The present “money go round system, though recently simplified, itself inflates costs. For example, last year profitable Train Operating Companies paid some £218 million (Premium Payments) into the Treasury. It would have been better if this money had been kept in the industry and paid direct to Network Rail so that the need for borrowing would have been reduced as would financing costs.

There would be insufficient space in this submission to go into detail of much needed rail improvements that cannot be progressed due to funding inequalities but we would suggest the following points should be noted:—

1) MULTI MODAL STUDIES: There were many worthwhile rail schemes recommended in these studies but in the absence of a common “Pot” of money to implement both road and rail projects, only road schemes are seeing the light of day with the inevitable result that dependence on the car and road transport will intensify and so ultimately will congestion.

2) PORTS EXPANSION & LOADING GAUGE ENHANCEMENTS: Important proposals for port expansion will make little sense unless adequate rail access is provided for the ever more popular 9ft 6in containers to be carried on standard flat wagons.

The DfT position on this seems to be that it is up to the rail industry to fund the necessary gauge clearance work even though road access to ports (and airports) is largely publicly funded.

The cost of such loading gauge enhancements to the rail route from Southampton to the West Midlands and the North West (via Romsey) is less than £50m.
Meanwhile, delays due to accidents on the parallel A34 road over the last 3 years are estimated to have cost £41~5 million.

If the rail industry is forced to borrow money for this essential work, which would be in the best interest of the country, the additional costs would be reflected in rail freight charges and handicap essential transfer of long distance freight from road to rail and inflate pressure for more road space.

The same situation exists at the port of Felixstowe where upgrading the rail route to the North West via Ely and Nuneaton is urgently needed to avoid the lengthy detour via the congested North London line which will soon need extra capacity for more passenger trains and freight for the proposed new port at Shellhaven.

Even though the port authority have offered a significant contribution to improve rail access to Felixstowe, the WET remains silent on the issue.

3) ST PANCREAS THAMESLINK STATION BOX: Government imposed barriers to complete work necessary to fit out this station for passenger use can best be described as scandalous and highlights the present Government’s approach to provision of essential rail infrastructure.

The present Kings Cross Thameslink station is inconveniently sited and cramped and overcrowding is often dangerous. It would be unsuitable for use by Eurostar passengers with heavy luggage following transfer of these services from Waterloo in 2007, let alone hoards of Kent commuters in 2009.

Having commissioned this station box as part of the CTRL contract, the Governments refusal to expedite completion for passenger use is bizarre.

The DfT is now reported to have agreed a contract to enable London & Continental Railways to fit out the station rather than wait for the Thameslink 2000 project as work would be far more costly once work at St Pancras station was finished in 2007. Given that trains have already been running through this empty new station for over 7 months, this is a wasteful and time consuming way to procure new infrastructure.

4) ROAD/RAIL (X)STS & OPTIMISM BIAS: Rail costs were inflated by the 1993 Privatisation Act, resulting in complex contracts riddled with compensation, risk aversion, costly legal fees, a disintegrated structure with multiple profit centres together with excessive Health & Safety regulations, the Disability Discrimination Act and much higher insurance costs in consequence.

In spite of some recent initiatives by the present Government, this structure still needs more work to simplify it. Perhaps it would have been better to amalgamate the SRA with Network Rail rather than set up DfT Rail as yet another regulatory body. Longer franchises in the style of Chiltern Trains would incentivise private sector investment.

Most importantly, the Treasury needs to get away from the view that road traffic is good because it generates more tax revenue and rail traffic is bad because it sees rail investment as inevitably requiring subsidy.

The external costs of road transport are still largely ignored even though, taken together, they are likely to exceed apparent tax revenue surpluses.

There is now strong evidence that rail costs are coming down.

Network Rail is reported to have made efficiency savings last year worth over £400 million while SRA subsidies to TOCs (Train Operating Companies) fell from £1.486billion to £778million and the average subsidy per passenger km fell from 5p to 2.5p. As noted above, profitable TOCs premium payments to the Treasury amounted to £218million.

A growing number of rail projects are being completed on time and within or under budget.

Meanwhile, road costs are escalating as evidenced by an average 47% rise in costs of road schemes approved since 1997. Widening just 52 miles of the Ml between junctions 21 to 30 is now quoted at £2billion, that’s over £38m per mile and over 3 times the cost of the West Coast mainline upgrade and renewal.

Bus costs are also rising sharply with large numbers of services having been withdrawn or threatened with withdrawal. Bus contracts with local authorities cost over 11% more last year and more than 12% the year before.

However, the Government still seems to favour bus services as a cheaper alternative to rail services even though past experience shows “bustitution” usually results in greater use of the car and increased congestion as few rail passengers regard the bus as a suitable alternative.

Under present procurement procedures, light rail systems are expensive but, as made clear in its recent report, the All Party Transport Select Committee has identified significant benefits light rail systems can provide which are not possible with bus schemes and better procurement methods are available.

Even the promoters of the Luton—Dunstable guided busway only anticipate around 2% modal shift from the car compared to a typical 20 to 30% for tram schemes and at a time of record demand for rail and light rail services and overall declining bus use (outside London), it seems perverse that the Government should advocate a preference for bus schemes. Cheaper maybe, but is this real value for money?

There are also hidden costs incurred by bus services, particularly road maintenance and congestion issues that are not properly taken into account. A study by National Economic Research Associates suggests road maintenance and congestion costs attributable to bus operations exceeds bus tax revenue.

The money that has been wasted on rejected light rail schemes could have seen one of them completed. Cost inflation of the South Hants scheme was in any case, largely caused by another Government Department, Defence, in its demands for the tunnel under the Solent to be made deeper for larger ships it wanted to order.

The high cost of light rail schemes in Britain is in no small way caused by Parliamentary processes and consequential delays, and the funding mechanisms preferred by the same Government that complains about the cost!

As noted above, there are better ways to procure light rail schemes and these must be pursued using best practice from elsewhere without further delay.

Cost escalation is also apparent on the Cambridgeshire guided busway scheme, recently given approval in spite of overwhelming public objections, and is now understood to have increased from £73m to £86m excluding the cost of buses. By contrast, rail schemes include the cost of rolling stock.

By approving this scheme but without confirmation of funding, the Secretary of State has effectively delayed progress on both the busway and a viable privately promoted alternative rail scheme that has considerable public support.

Given the above, it seems perverse that Optimism Bias is still set at 57% for rail projects and just 32% for roads and guided busways. This factor alone makes rail projects appear to be poor value for money.
5) INTEGRATION: Current OFT rules obstruct integration of bus and rail
services and ticketing arrangements, wrongly seeing them as anti competitive and this encourages wasteful competition.

Public transport’s principal competition comes from the private car and it is widely acknowledged that a properly integrated public transport network is the most effective way to persuade the motorist to leave the car at home.

Integration should also include safer routes to stations for pedestrians and cyclists and, most importantly, adequate car parking at stations. Planning applications to develop car parks into housing or commercial uses should be resisted unless alternative station parking is available in the vicinity.
6) ENERGY SUPPLIES: More and more experts are predicting peak oil production
will be reached by the end of this decade and as we become more dependent on supplies from the Middle East, there will be security of supply and cost issues as well.

If new runways at Stansted and Heathrow are approved it is very likely the cost of fuel will have reduced demand for air travel before they have been completed as “cheap flights” to the sunshine, the main driver of aviation growth, could be a thing of the past. Rises in fuel costs are now inevitable.

Most short haul internal flights could be transferred to rail, particularly if a North-South high speed line is built. Some 71% of journeys between London and Paris and 64% between London and Brussels are now by rail. Air services between these points have been dramatically reduced and Air France no longer fly between Paris and Brussels, preferring to send their passengers by high speed train instead. Similar examples can be found wherever high speed railways have been built and significant emission savings can be achieved.

Meanwhile, better rail connections to airports would help. For example, most passengers presently flying between London and Manchester are making inter flight connections at Heathrow but a direct rail service from Manchester and Manchester airport to Heathrow and London Paddington would be feasible with only a short electrification infill around Acton required

Future energy supplies and costs will affect all modes of transport but rail will be best suited to tap into renewable energy sources which should include energy from rivers, wave and tidal, not just wind power.

Plans should be put in hand now for a strategic programme for railway electrification. Most importantly, HST2 should be designed for both electric and diesel powered versions and the diesel version should be made easily convertible to electric traction.

Cheaper and more reliable electrification systems should be evaluated, perhaps a side or bottom contact third rail AC system would be cheaper than both the present DC third rail and AC overhead systems.

Without electrified railways, we face a very serious transportation crisis in the foreseeable future.

7) AVIATION: Environmentally, aviation is arguably the most damaging transport mode while rail is one of the least damaging.

Perversely, the Chancellor of the Exchequer has raised duty on rail fuel in his last three budgets with another P22p per litre scheduled for 2006 while aviation fuel remains tax free and motor fuel duty had been frozen for 3 years.

This makes no environmental sense whatever and the folly of this policy can
be seen in the artificially induced growth in air travel. I

This situation should be remedied without delay and a start could be made by introduction of a carbon tax on aviation fuel for domestic flights without waiting for international agreement on the issue.

Furthermore, claims for economic benefits from aviation should be tempered by the economic disbenefits like the annual £l4billion tourism deficit facilitated by aviation.

8) 60 TONNE LORRIES: Although plans to introduce such lorries have recently been rejected, at least for the time being, the matter raises questions related to the level playing field referred to above.

For historical reasons, Network Rail has inherited responsibility for maintaining some 6,000 road bridges around the country. Bridge strengthening work for 44 tonne lorries has already cost the rail industry significant sums of money.

It would be wholly unacceptable for the rail industry to be required to pay for further work which would make it easier for its road haulage competitors to capture rail markets, particularly when we really need to transfer more freight from road to rail.

Before considering new applications, it should be made clear to road hauliers that they alone should pay for infrastructure strengthening work for heavier lorries in the same way that the rail industry has been told it should pay for loading gauge enhancements for larger containers by rail.

9) LEVEL CROSSINGS: We mention this since it raises another issue related to the unlevel playing field.

Railways currently pay the whole cost of operating, maintaining and renewing level crossings even though their purpose is to protect road users as well as rail passengers.

Accidents at level crossings are invariably caused by careless or risk taking road users and level crossings now present the greatest safety risk to rail passengers and cause significant delay and danger to road traffic. Wherever possible, they should be replaced by bridges or under passes but this work should not be the sole responsibility of the rail industry and the costs of replacing and operating level crossings should be shared on an equal basis with the appropriate highway authority.

10) ROAD USER CHARGING: The Government is right to pursue a policy for reform of the way we pay for road use and to introduce demand management.

However, road charges should not be limited to reducing congestion but should also address climate change and environmental objectives. This probably means road charging could not be revenue neutral but the case for such measures is overwhelming.

Revenue from road charging should be hypothecated for public transport improvements (including rail) and not confined to road schemes.

We would prefer to see a nation wide scheme rather than a piecemeal approach which would always be handicapped by local authority’s fear of loosing trade to neighbouring boroughs. This is already evident in many town centre parking policies.

Existing taxation mechanisms encourage choice of small fuel efficient cars and reduce marginal use through fuel duty.
We would strongly favour a national road charging scheme as a replacement for some existing motor taxes, but only if these objectives are incorporated in the charges.

This could be done by means of a banded system where small, fuel efficient cars were in the lowest band while “Gas Guzzling” SUV’s etc. were in the highest band.

Norwich Union are leading the way with a pay by the mile insurance scheme which could be the model for national road charging.

Parking restrictions also have an important part to play but cannot be used to full effect so long as out of town retail and business “parks” provide lavish free parking. Such sites are major generators of road traffic as they are difficult to serve by public transport and they are responsible for causing significant damage to town centre businesses and creating hardship and social exclusion for those without cars.

We suggest this situation could be addressed through the Uniform Business Rates system so that charges per square metre of floor space would be extended to cover the area of adjacent car parks, possibly at a premium rate in the same way that zone A rates apply to the area adjacent to shop windows.

In combination with rising fuel costs, road charging will intensify growth in demand for rail travel which is already growing faster than road traffic. However, as noted above, new road building and widening schemes are being implemented while, apart from completion of the CTRL works, extensions to London’s Docklands Light Railway, the West Coast main line upgrade and approval but no funding for Crossrail, there is little evidence of concurrent plans to grow capacity on the rail network for passengers and freight.

11) NAGLEV OR HIGH SPEED RAIL: Should the Government’s appraisal of high speed North-South surface transport ever see the light of day, the following points should be noted:

A maglev system could not easily access city centres and, for this reason, its promoters propose a network that would essentially link airports, in which case there would be little difference to flying.

It is also proposed the system would link with very large new park & ride sites outside main population centres and this would generate considerable extra road traffic (on the M25 for example).

A high speed rail system would serve a dual purpose, firstly to relieve congestion on the existing rail network thereby creating more capacity for freight and local/regional train services and secondly, city centre to centre access would be possible by using existing rail routes giving overall journey times that would match, or better, those of either maglev or airline alternatives.

It should be noted that, although operating the worlds first public maglev system (to Shanghai airport), the Chinese have recently rejected plans for an inter city maglev route in favour of conventional high speed rail.

As noted above, high speed rail services have achieved impressive modal shift from air to rail and there are numerous examples where air services have been withdrawn as seen between Paris and Brussels, producing environmental benefits.

12 COMMUNITY RAILWAYS: The creation of Community Railways is to be welcomed. Any attempt to reduce costs while improving services to better meet the needs of communities deserves support.
However, there concerns about ongoing funding to support them which could be curtailed before efforts had born fruit. What assurance against closure can be given should any of them fail to achieve the desired results in the initial period or against a downturn in the economy?

We would point out that if the same criteria for rail funding and support were applied to roads, thousands of miles of rural roads would be found to be uneconomic and threatened with closure.

CONCLUSION: There needs to be a radical rethink on the way we appraise transport needs and procurement mechanisms.

Road building and motorway widening will only increase traffic and congestion over time. Demand management and land use planning to reduce the need to travel should be at the forefront of future policy.

Climate change, environmental and safety issues should be accorded much greater importance and, coupled with a growing energy crisis, unconstrained aviation growth is unsustainable.

Government should not shy away from investing in public transport, cycling and walking facilities. Surveys have shown a large majority of public opinion sees improvements to public transport as a higher priority than road building.

Cost/benefit appraisal techniques need to be re-appraised with a high emphasis on safety and environment issues. A recent study by Scott Wilson Railways suggests the benefits of investment in rail projects are undervalued and over costed.

Rail and light rail schemes are very popular as evidenced by high modal switch rates from the car, typically 20 to 30% and even as high as 44% (Norwich to Cambridge train service).

By recently and controversially withdrawing support for light rail projects, the Government has lost an opportunity to make significant improvements to urban transport which would have made a significant contribution to providing regeneration, social inclusion and safety benefits.

Clearly, the DfT now needs urgently to focus attention on a strategic plan for railway electrification and capacity growth in order to head off a looming transportation and energy crisis and to meet the needs of planned new housing.

The Government should work towards integration of bus & rail services and not substitution of one for the other.

There are scores of small scale rail projects that could make a big difference to the capacity and usefulness of the rail network but amongst barriers to funding rail improvements, the exclusion of rail projects from the Regional Funding Allocations scheme by the Government seems all too familiar — this has to change.

Norman Bradbury
Secretary. Policy Lobby & Campaigns Committee 31/12/05

Rail User Express Rail Action