Omega Airlines

WHAT FUTURE FOR RAIL

IN THE

TEN YEAR PLAN FOR TRANSPORT?

Peter North

Report to the All Party Parliamentary Rail Group

November 2003

What future for Rail in the Ten Year Plan for Transport?

Preface by All Party Parliamentary Rail Group

The All Party Parliamentary Rail Group (APPRG) comprises over 300 parliamentarians from both Houses who are interested in rail issues. It meets regularly in Westminster and arranges visits both in the UK and abroad. Lawrie Quinn MP and Nick Hawkins MP are the joint chairmen of the APPRG.

This Report was commissioned by the APPRG as a contribution to the current debate on transport policy. It is timely in that the Government is currently undertaking a review of the Ten Year Plan and the next Comprehensive Spending Review is under way.

The 10 Year Plan for Transport published in 2000 provided an innovatory framework, particularly for investment. The principles lying behind the plan commanded a wide degree of all-party support. Events have however now challenged the assumptions of the Plan, both for road and rail, and the APPRG concluded that a new and independent systematic analysis would be of value.

That is why we decided to commission this report by Professor Phil Goodwin of University College London, a widely acknowledged expert authority on transport economics. We are grateful for the financial support from The Railway Forum, which made this possible. Having agreed outline terms of reference with us, the approach and responsibility for the report lies totally with Professor Goodwin.

The All Party Group now welcomes this report; we are very satisfied with the quality of the analysis and therefore commend it for wider study. We believe that the report adds very powerfully to our understanding of the issues and have noted Professor Goodwin's conclusion on the continuing economic rationale of strong programmes of both road and rail investment, along with modification to the prices and charges regimes for both modes.

Professor Goodwin has helped to raise the level of public understanding and debate, and this is central to our purpose. With some reshaping, a 10-year (and longer) planning framework clearly remains an essential tool of public policy.

Road user charging is now on the political agenda, as is the financing of the railways with the publication of the Rail Regulator's draft Final Conclusions of his Interim Review of Network Rail's Access Charges.

The APPRG intends to facilitate a number of meetings at different levels to disseminate the report's analysis both within Parliament and Government, the rail industry and the wider community of business, both freight and passengers, and thus promote a lively and well informed public debate and, hopefully, engender some degree of common ground on the way forward.

November 2003

Contacts: Lawrie Quinn MP, Nick Hawkins MP, joint Chairmen, APPRG House of Commons ,

l,

Adrian Lyons, Secretariat APPRG and Director Genera The Railway Forum - 020 7259 6543

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SUMMARY

A key feature of the present period is the collapse of a policy consensus, which had slowly emerged in UK transport planning over several decades, that the role of railways should, can, and will increase in importance and scale.

The Government's 1998 White Paper A New Deal for Transport had announced a 'railway renaissance'. In July 2000, the Ten Year Plan for Transport, proposed a programme of investment in which, for the first time, rail would have as much funding as roads. Given that rail had a substantially smaller market share at the national level, this meant a very high priority indeed, although actually the majority of investment for public transport would be private, while the majority of investment for private transport would be public, which was problematic. Successful completion of this investment programme was forecast to produce rapid, unprecedented growth of 50% in passenger traffic and 80% in rail freight. With other policies, it was hoped that road congestion and pollution could be reduced without the need to restrict traffic.

Within months of publication of the Ten Year Plan, the rail plans were in serious trouble, triggered but not entirely caused by the Hatfield accident. The Government's hope that the greater share of investment would be privately funded came under pressure, with higher costs, higher required rates of return, and mounting capital debt: all this made for much greater difficulty in funding improvements than had been expected. The technical difficulty of implementing major improvements without causing excessive operational difficulties also mounted. Although the SRA and the operating companies report continuing success in parts of their programme of improvements - and point especially at evidence that the demand for rail has remained buoyant and growing even through great difficulties - these arguments have been outweighed in public discussion by a growing dissatisfaction with progress.

In December 2002, the DfT concluded that the Ten Year Plan would not be able to deliver some of its most important targets - not only for rail, but for road also. In particular, the Government accepted (as many had argued in the preceding year) that the prospect of reducing road congestion without any restraint on traffic growth would not be successful: congestion was expected to increase during the period of the Ten Year Plan, even if all its planned investment was fully delivered.

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In July 2003 there was a major crux in transport policy, which has been interpreted in two ways. On one side, there were arguments for a U-turn: cut rail spending, expand the road programme. Some newspapers, academics, and interest groups have advocated a 'new Beeching', cutting public funding, size of the rail network, and scale of services operated. On the other side - and this seems to be the current Government view - the case for demand management, traffic restraint, and much more serious attention to the use of road pricing is reinforced as a necessary condition for traffic improvements. Yet, the effect of this on the strategy for rail has not been stated or considered: this is an important fault-line in the present transport debate.

In the long term there will be higher user prices for road use in those markets where rail is,