Peer review: Chris Bolt
Former Rail Regulator and LU PPP Arbiter
Is rail investment really protected? There is general agreement that poor infrastructure can hinder economic growth. And there are undoubtedly pinch points on the railway network, where investment to increase capacity and to improve performance would pass the standard cost-benefit tests.
But this does not necessarily mean that investment in rail is the best use of the nation’s scarce resources. To take an obvious example, there is no point in investing in electrification schemes on the railway if electricity generation, or the electricity network, cannot meet the consequent demands.
And there are real concerns about energy security. Ensuring adequate supplies of energy for business and households, at the same time as meeting international commitments on carbon emissions, will require massive investment in energy networks and production.
All parties recognise that public expenditure cannot be open-ended. There is also an issue with affordability for consumers: higher energy prices (likely to be reinforced when oil prices start rising again) higher water charges (particularly for those served by Thames Water to reflect the costs of the Thames Tideway project), and higher telecom prices (to meet the cost of superfast broadband) all add to the pressure to contain tax-funded expenditure.
So it is surprising that only the Labour Party response to the questions about post-election policy for rail recognises that rail investment decisions need to be taken in the context of broader infrastructure policy. And it is ironic that it is a former chief executive of Network Rail, John Armitt, who has led work for the Labour Party in this area. His proposed Infrastructure Commission will force individual spending Departments to take account of overall needs and affordability in their planning. This can only add to the pressure on rail investment in the next five-year Control Period.
Indeed, any Chancellor is likely to turn the spotlight on rail investment and it’s not as if the sector has a particularly good story to tell - complaints about lack of investment in the last years of a franchise; delays and rising costs on major projects such as Great Western electrification and IEP; and a repeat of the ‘Christmas overrun’ problems (did NR learn nothing from the humiliating fiasco at Rugby in 2007?).
Unless these problems can be tackled quickly and effectively, there is a real risk that any future Chancellor will lose patience with the rail sector. But just as East Coast is returned to the private sector, increased control by DfT over Network Rail will (if anything) make this more difficult to achieve.
Many would agree that the IEP saga shows why Government departments should not be in control of procurement, or even have a significant influence on it. It would be another irony if the restructuring of the Highways Agency, with ORR as its ‘efficiency monitor’, made road investment look even better value compared with rail.
History is littered with broken pre-election promises. Will the protection of rail investment be one of them in 2015?
