Thursday, July 23, 2009

Railroad to nowhere

Kerry McCarthy is very happy, it seems...
According to the BBC—and who are we to doubt them?—the Government is going to announce the electrification of the Great Western line later today. Those who hang on to my every word in Parliament and on this blog—and if not, why not?—will know I've been calling for this for some time. Last time I asked Geoff Hoon about this in the Chamber, I thought he'd been distinctly encouraging, but it's good to have confirmation. The only downside is that it will take eight years in total, but still at least it's been given the green light. Or should that be the green signal?

Actually, the eight years to completion is very far from being the only downside.

According to the BBC article, electrification carries significant benefits.
A £1bn plan to electrify the main rail route between London and Swansea has been announced by the government.

A second line between Liverpool and Manchester will also be converted from diesel to electric.

Ministers say electric trains are lighter and more energy efficient, cutting the running cost and environmental impact of train services.

OK, so these are all benefits to the train operator, right? It will make the train services cheaper to run, yes?

So why the fuck is the taxpayer footing the £1 billion bill?
Shadow transport secretary Theresa Villiers said: "Yet again Labour are maxing out Network Rail's credit card, leaving the taxpayer to foot the bill."

Good point.
Transport Secretary Lord Adonis told the BBC the massive investment involved would be worth it.

"With the electric trains you get a quieter, cleaner, more reliable and much cheaper train which benefits passengers and it also benefits the taxpayers because it's much cheaper to keep an electric railway going," he said.

Good, that's excellent. So we'll be seeing a corresponding drop in the massive taxpayer subsidy to the train operator, will we? If the taxpayer is stumping up £1 billion to electrify the line for which all of the benefits will accrue to the train operator, then we will, presumably, be cutting their subsidy, will we?

Anyone? Bueller? Bueller...?

16 comments:

Friday Night Smoke said...

Interesting.
You know, Mr. Devil, I've been wondering as to your point of view about something.
Where do you stand regarding the building and maintenance of roads? Do you consider that they should be planned, built and operated by the private sector, by the government or some hybrid of the two (often the case in the UK nowadays). What do you think of the use of compulsory purchase in the building of roads, or indeed any other infrastructure?

John B said...

No, you're wrong here, DK.

The benefits will accrue to the train operator in the next franchise period, which begins in 2013 after the current First Great Western franchise expires.

The franchise (and hence the value of the train operator's premium payments to the DfT - most TOCs pay a premium rather than receiving a subsidy) will be competitively tendered based on expected revenues and expected costs.

...and with lower expected costs, the level of premium payments will be higher than it otherwise would be, because that's how tenders work (you bid revenues minus costs plus enough of a margin to make money but not so much margin that you lose out to another bidder).

So the taxpayer *will* see the benefits from this money, and the train operator won't.

Blue Eyes said...

That is interesting John B.

How does this interfere with FGW's plan mooted a few years(?) ago to build an entirely new London to Bristol line? I wonder if perhaps HMG doesn't like the idea of private companies building private lines and so has sopped them a billion to undermine the project?

John B said...

I don't remember that plan, and it sounds like a bit of an odd one (as the GWML was built on a pretty decent alignment - it's the trains and the signalling that keep it down to 125mph, unlike the pre-Brunel railways that wiggle about).

But even if it was considered, the disappearance of cheap private sector financing in 2007 will have been what killed it - there's no possibility that anyone (or at least, anyone without tens of billions of concrete assets of their own) could borrow enough money to build that kind of link, and there won't be fore some years.

On my original comment - someone has also pointed out to me that Network Rail charges train operators a specific fee per mile, which varies based on various criteria. So it's possible that they'll jack up the mileage rate paid by FGW and its successors to cover the electrification cost... although either way, the net result is that the company pays the taxpayer the money back.

Rab C. Nesbitt said...

I was wondering why the BBC were spouting all the 'green' and 'cheap' bullshit this morning on diesel Vs electric.

Makes sense now.

Anonymous said...

Forgive me if I'm being daft, but I thought there was some worry about an energy crisis or such like, with the leccy possibly going off at some point in the not so distant future. So more of it is to be used on trains? Am I wrong?

Submariner said...

Anon 6.38pm: yes, you're being daft. There's no real likelihood of the leccy going off - we will just have to import more from the French nuclear generators, because our government has been too stupid and cowardly to get cracking on a new generation of nuclear power stations here. In the longer term, electric trains are a better idea than diesel trains, because diesel fuel is not going to be around at today's low prices for much longer, and it is unrealistic to assume world demand can be met by making it from food. Whereas you can make electricity from all manner of sources, some renewable, some conventional.

Submariner said...

DK, John B is quite correct here. The train operators don't own the tranck infrastructure, they rent it at exorbitant rates from state-owned Network Rail. The state owns the railway, so obviously it is the state that invests in upgrading it.

Anonymous said...

Any government project that is budgeted to repay itself over a period of 40 years should be dismissed without further consideration.

This project cannot be afforded at the moment and if you can't see that, return to your economics books and look through the chapter on inflation again.

And if you think this is a load of bollocks then just heve the government print a one billion pound bank-note and pay for the project in cash.

Trouble with politicians is they can't be trusted to tie up their fucking shoe laces in the morning, which would account for so many slip-ons in The House

Chalcedon said...

Will the fares go down then if it's a cheaper service? Bloody hell, that pig was doing mach 3!!

Rob said...

I'm surprised at the comment that electric lines are cheaper to maintain than 'diesel' ones. That's bollocks.

'Diesel' lines are just the lines, nothing else. Electric lines, especially those with overhead power lines, require a lot more maintenance. I know that trains on the Thameslink line pull down the power lines once or twice a year, and strong winds can do the same.

The trains themselves are more efficient, of course.

John B said...

@Anonymous the government has to make a decision *now* on whether to spend a billion quid on high-speed electric trains or high-speed diesel trains, to replace the 30-year-old trains that currently make up most of the intercity fleet. Private investors are willing to underwrite electric stock, because it's re-usable. They aren't willing to underwrite diesel stock, because they think it'll be obsolete well before its theoretical end-of-life.

So we have three options:

1) the government spends a billion quid of cash-money on electrification and the new trains are privately procured

2) the government spends a billion quid of cash-money on new diesel trains that nobody else wants

3) we stop having inter-city rail services on non-electrified lines.

Option 1 looks like the best one there, even given the less-than-brilliant financial situation.

@Rob strawman-tastic: nobody's claimed that electrified tracks are cheaper to maintain than non-electrified tracks, because that would obviously be insane. The point is, the combination of electric trains and electric lines is cheaper to maintain than the combination of diesel trains and diesel lines.

Henry Crun said...

I look forward to the installation of several million windmills to power the electric trains.

Wossat? said...

Sounds to me like the Nu-Fascists are making promises they expect someone else to keep. And since there ain't no loot in the public coffers and we are facing swingeing cuts in public spending, who is going to pay for all of this?

Anorak said...

One for the technically minded here - those of us in the old Southern Railways/region have electrified lines using the third rail.

As a layman, I would have thought this was cheaper to lay and maintain than overhead lines. Since we're footing the bill for the financing costs, I'm interested.

(OK, so third rail isn't so safe for the average single-brain-celled yob trespassing on the line, but that's Darwin for you, though no fun for the poor sods who have to clear it up, I accept.)

John B said...

It's not appreciably cheaper (although there's less civil engineering, the higher currents mean that you need more substations, high-voltage cables between them, etc), and it doesn't support linespeeds above 100mph.