Osborne takes knife to Network Rail budget

[The Border Reiver]

http://www.thesundaytimes.co.uk/sto/business/Industry/article1596945.ece

 

I wonder which projects will be cut/cancelled?

[woodenhead]

So much for arms length government control - this is 'Straight Outta Whitehall"

[leopardml2341]

http://www.thesundaytimes.co.uk/sto/business/Industry/article1596945.ece

 

I wonder which projects will be cut/cancelled?

And how many new roads built instead?

 

Not read the article, just inbuilt cynicism on my part

['CHARD]

Midland Main Line and Trans Pennine electrification are caped.  That's pretty widely acknowledged.  CP5 commitments are in tatters.

 

But for me it's not the Cap Ex headline-grabbers that will be most important here, it is the smaller AC infill schemes, chords, double-tracking and investment supporting station reopenings (signalling mods etc) plus - crucially - maintenance.  These will be just as crucial in the development and resilience of the system over the next twenty years.

 

I'm also left raising an eyebrow to how this plays out in Wales, compared to Scotland.

[PhilJ W]

Softening up for re-privatisation?

[Kenton]

 

And how many new roads built instead?

 

None - hopefully the savings will go into paying down the national debt his predecessors got us into.

 

To me, there appears to have been no shortage of investment recently in our railways with all the large new projects under way, nearly completed and in advanced planning. I also remain unconvinced that many of them are worth the proposed waste of tax payer's money and are not simply pipe dreams of planners who given an unlimited budget would design anything to justify their existence. But someone has to control the purse strings and make a decision on what can and cannot be done to improve the lives of everyone within the constraints of having only one pot of gold to cover everything. Osbourne may not be the one to make that decision (and probably isn't) but someone has to. Just be thankful it isn't me

[JohnR]

He cant - the only way Network Rail's agreed budget can be changed is via an interim review by the regulator. As far as I know, he hasnt asked ORR to do that. 

[Mike Storey]

Midland Main Line and Trans Pennine electrification are caped.  That's pretty widely acknowledged.  CP5 commitments are in tatters.

 

But for me it's not the Cap Ex headline-grabbers that will be most important here, it is the smaller AC infill schemes, chords, double-tracking and investment supporting station reopenings (signalling mods etc) plus - crucially - maintenance.  These will be just as crucial in the development and resilience of the system over the next twenty years.

 

I'm also left raising an eyebrow to how this plays out in Wales, compared to Scotland.

 

They are not cancelled, only delayed into CP6, so it is not widely acknowledged. Given the delays to GW and NW electrification, it doesn't take a genius to realise that not all of these can be done in CP5. Electorally, this government would not dare cancel these widely touted schemes. The key problem will become the rolling stock strategy.

 

The cuts implied in the article suggest £500m per year savings (if these are indeed legal) which is not terribly different to the savings required by the ORR already, and potential savings from the deferred schemes (although the GW scheme in particular may use a lot of that up). So this may just be a bit of political spin.

 

I rarely trust Sunday Times reporting these days (having been aware of several made-up stories in the past, including one in which I was personally involved) and can see no reference to this in any other media outlet.

 

The main problem for NR and the govt is that NR's large capital debt is now on the PSBR. When it was not counted in govt borrowing, Osborne didn't give a fig. NR have been seeking separate borrowing powers for some time now, to shift the cost away from the Treasury's books, or have the same debt relief as Highways. You don't see Highways being asked to repay the cost of their capital schemes (unless under PFI), so why does rail have to?

[Mike Storey]

He cant - the only way Network Rail's agreed budget can be changed is via an interim review by the regulator. As far as I know, he hasnt asked ORR to do that. 

 

Not so sure it is as black and white as that now - who would sue whom? There is no Tom Winsor to slap a gauntlet across the Govt's face these days.

 

And, by the way, it is a "she" now, or strictly "them" for there is no "Regulator" now, just the Office of Rail and Road, managed by a Chief Exec, with regulatory powers subject to an affordability test. If the Govt state that there is no more, or even less, money, and that NR has breached the ORR's own efficiency targets, there is little I believe the ORR could do.

[jjb1970]

There was never any secret that the next five years were going to see more austerity and it is not just about railways. All three main UK wide parties were going to maintain austerity and the differences were degrees rather than whether or not spending would remain tight. I think it is worth remembering that we are still running a large budget deficit which is unsustainable. Some of that will be corrected as the economy grows (hopefully the strong-ish growth of the last couple of years will continue) and the government has been increasing taxes but some of it will have to come from spending. In some ways NR would have been better served bif the changes to its accounting status which brought its debts onto the main public accounts had not been made I think.

[phil-b259]

In some ways NR would have been better served bif the changes to its accounting status which brought its debts onto the main public accounts had not been made I think.

The Government didn't want to - it was an EU accounting regulation that forced the Governments had (and before people start picking on the EU, the regulation was actually probably more likely to be designed to the French and the Greeks to try and end the hidden subsidies / undeclared state involvement in what are obstensably private enterprises that abound in such countries).

 

However that is a side show - one of the biggest problems with railway costs is that thanks to previous Government meddling / inaction they have, and will continue to remain high for a good while yet. Long franchises (e.g. the 20 years given to Chiltern Railways plus a consistent rolling programme of electrification and other infrastructure projects will keep the necessary skills and bring costs down over time. Short term stop start decision making and only focusing on the current parliamentary term only makes things more expensive - as is being demonstrated on the GWML where the culmination of years of neglect with regard to key skills is coming home to roost.

 

People should also remember that NRs pay deal only covers up to 2017 - so expect another brusing battle with the Government in the foresable future

[Edwin_m]

As I understand it all non-protected departments are being asked to examine options for deep cuts in spending and I presume this comes from DfT applying the same test to NR which is one of their largest budget items.  It could just be softening people up so when the actual cuts come it will be seen as less bad than what was expected. 

 

Rail programmes play out over several years and unless existing contracts are to be cancelled (involving substantial penalty payments) it's hard to see how significant savings can be made in the current Control Period without leading to a hiatus of work in the next one - this stop-go policy being one of the main reasons why rail costs are so high in the first place.  The only way of doing this reasonably efficiently is to defer or cancel some of the schemes that were committed by the previous government but haven't actually progressed far enough to place contracts and probably were never deliverable within the Control Period anyway.  This is also likely to be the main focus of the Hendy review. 

[jjb1970]

Over the last few years the government have actually been very good at managing expectations on cuts, feeding lobby correspondents etc with tales that the cuts will be swinging and very severe so that people have breathed a sigh of relief when the actual cuts have been less severe than expected.

[Dava]

So what price 'Northern Powerhouse' any time soon?

 

Will this stop Osborne poncing about wearing a hard hat and HVV on tv at every opportunity on rail infrastructure projects to look like he knows what he's doing at the sharp end?

 

I wasn't in the UK at the time but the cynicism with which the rail electrification projects were promised then promptly canned was a complete con.

 

Dava

[skipepsi]

I would like to comment on jjb1970's comment but he clearly lives in another land where they see differently.

[APOLLO]

Anyway, nowt we can do for five years !!

 

Time for a joke. I'm stuck for a caption for this (strange for me !!) - over to you,

 

 

Brit15

[Southernman46]

It's Osbourne

 

Derrrrrrr ??? will suffice

[Ramblin Rich]

"This has no bearing on the situation"

[Trog]

The roads must be worse than I thought if you can get a flat tire on that,

[Downendian]

None - hopefully the savings will go into paying down the national debt his predecessors got us into.

 

You mean deficit not debt

 

 

This thread unfortunately heading the way of politics. I'm apolitical but I hope our railways continue to be invested in as we need to catch up with Europe.

Neil

[RANGERS]

My prediction :

 

Cancellation of the current plans for trans-pennine and MML electrification.

 

Incorporation of the East Mids/ South Yorks/ Trans-Pennine schemes into HS2 to save some cash and boost the business case for that one, leaning on the merits of a new high speed link for the Northern Powerhouse.

 

A pretty brutal reduction of the minor schemes from which only a minority of the more politically advantageous ones will survive.

 

Transfer of lines South of London and quite possibly all of the original NSE Network to TfL control on grounds of efficiency and recovering the situation that London Bridge has become.

 

Going forward, the cuts in will inevitably lead to a reduction in the spend which has oiled the maintenence of the network in recent years. Lets not forget that without the massive investment of the past couple of decades, the network would still be struggling with an infrastructure which was largely Victorian over the vast majority of its mileage. The railway has been playing catch up down to the underinvestment by Governments of all persuasions since the 1950s, and arguably longer than that. The capital investment in the network is one aspect but reducing the spend for day to day maintenance will lead to decline and a return to the position the railway was in up to more recent times.

 

Patrick McLoughlin will be able to trumpet to his constituents that they are to be included in the benefits of HS2 but overall the prospects for the network as a whole don't look great.

[JohnR]

Not so sure it is as black and white as that now - who would sue whom? There is no Tom Winsor to slap a gauntlet across the Govt's face these days.

 

And, by the way, it is a "she" now, or strictly "them" for there is no "Regulator" now, just the Office of Rail and Road, managed by a Chief Exec, with regulatory powers subject to an affordability test. If the Govt state that there is no more, or even less, money, and that NR has breached the ORR's own efficiency targets, there is little I believe the ORR could do.

the ORR IS the regulator. The "he" I referred to was Osborne. 

[62613]

  None - hopefully the savings will go into paying down the national debt his predecessors got us into

 

So I just imagined that the National Debt hasn't doubled over the last five years. The man is economically illiterate.

[phil-b259]

 

Transfer of lines South of London and quite possibly all of the original NSE Network to TfL control on grounds of efficiency and recovering the situation that London Bridge has become.

Slight problem with that TfL is a body run by the GLA whose members are SOLELY ELECTED BY THOSE LIVING WITHIN GRATER LONDON. Residents of Surrey, Hampshire, Essex, etc WILL NOT put up with having their services transferred to the control of a body they have no chance of influencing. Please remember that the transfer of SE inner London suburban services was vehemently opposed by Kent residents, MPs and councils who feared their train services would be reduced so the Mayor could have his 'turn up and go' frequency within London (though many have subsequently said it was more the Mayors enthusiasm for an island airport in the Thames estuary that made them so determined to oppose the takeover)

 

Also those services which TfL have responsibility for are actually more EXPENSIVE to run, because of all the 'extras' in terms of service frequency, station staffing and new rolling stock leasing costs that London taxpayers have to cough up for through their extra council tax surcharge.

 

My prediction is that the Government will use the cost increases as the perfect excuse to break up Network Rail with the aim of smashing the power of the unions and handing responsibility for the network to franchises, thus creating their much beloved 'internal market' in railway infrastructure maintenance which we are told is a sure fire way to slash costs. Responsibility for enhancements can be done along the Chiltern 'Evergreen enhancements' model - thus in theory promoting competition and getting rid of all those 'incompetent' (from a Government point of view) project managers who annoy the voters with London Bridge screw ups.  After all HS1 is owned by some pension consortium and you can be sure as eggs as eggs that HS2 will be flogged off to someone else.

 

I suggest people dig out the McNaulty report that was produced in the last parliament because that is what we are going to get as a minimum.

[RANGERS]

Slight problem with that TfL is a body run by the GLA whose members are SOLELY ELECTED BY THOSE LIVING WITHIN GRATER LONDON. Residents of Surrey, Hampshire, Essex, etc WILL NOT put up with having their services transferred to the control of a body they have no chance of influencing. Please remember that the transfer of SE inner London suburban services was vehemently opposed by Kent residents, MPs and councils who feared their train services would be reduced so the Mayor could have his 'turn up and go' frequency within London (though many have subsequently said it was more the Mayors enthusiasm for an island airport in the Thames estuary that made them so determined to oppose the takeover)

 

Also those services which TfL have responsibility for are actually more EXPENSIVE to run, because of all the 'extras' in terms of service frequency, station staffing and new rolling stock leasing costs that London taxpayers have to cough up for through their extra council tax surcharge.

 

My prediction is that the Government will use the cost increases as the perfect excuse to break up Network Rail with the aim of smashing the power of the unions and handing responsibility for the network to franchises, thus creating their much beloved 'internal market' in railway infrastructure maintenance which we are told is a sure fire way to slash costs. Responsibility for enhancements can be done along the Chiltern 'Evergreen enhancements' model - thus in theory promoting competition and getting rid of all those 'incompetent' (from a Government point of view) project managers who annoy the voters with London Bridge screw ups.  After all HS1 is owned by some pension consortium and you can be sure as eggs as eggs that HS2 will be flogged off to someone else.

 

I suggest people dig out the McNaulty report that was produced in the last parliament because that is what we are going to get as a minimum.

 I'd agree with every point you make, particularly the one about the cost of TfL services costing more than those outside London, but TfL do have a record of delivering on budget, they just had a much bigger budget to start with!

 

The basis for transferring control of the former NSE routes to London will be that these routes are strategically critical to London, the London Bridge situation has added fuel to the fire of this argument. TfL already have control of some minor services covering routes outside the GLA area so there is a precedent. The reporting structure for those territories outside London, and probably the name as well, will take some sorting but don't underestimate the power the Chancellor seems to have assumed and if there's an outcry, expect the flag of NRs failures at London Bridge to be waved as justification for it. And yes, this probably will be the initial stage of a break up of Network Rail.