Privatisation… nationalisation… or regionalisation?

Bold reform. That’s the call from Paul Plummer at the top of the Rail Delivery Group for the review by Keith Williams, the former chief executive of British Airways.
Yet Transport Secretary Chris Grayling has already clipped his wings by pledging that Network Rail will remain nationalised. He told the Transport Select Committee last July: “I do not envisage us seeking to sell off the infrastructure. I do not see Network Rail ceasing to be the owner of the infrastructure and the state being the owner of the infrastructure.”
Or has he? For he also said: “The devolution of Network Rail from a centralised organisation to an organisation of devolved route-based businesses is the essential next step to paving the way for them to create the kind of partnerships the railway needs for the future.
While it would be truly bold to sell Network Rail back to the private sector in which infrastructure sat for most of the railway’s first century, such as sale is unlikely to find much support from inside or outside the rail industry. At privatisation in the early 1990s, ministers hoped that by selling track, signalling and structures there would be no need for government to spend money on them. The private sector would invest and receive a return over a long period, matching the life of steel and concrete is was paying for. History shows that this hope quickly perished with past years of government underfunding demanding more money than anyone expected.
Grayling wants closer links between track and train. He wants NR to devolve. This points towards regional rail companies running both. Just as government franchises rail services to private companies so it could lease tracks to private companies. They could be grouped regionally to give a railway like that envisaged by John Major when, as prime minister, he privatised rail. Alternatively, they could be grouped by user which would replicate the structure of British Rail’s final days. This saw, for example, InterCity responsible for main lines into London on which it was the main long-distance user.
With Grayling talking about an East Coast Partnership based on LNER’s operation from King’s Cross, this could see the partnership running LNER’s trains while operating and maintaining the East Coast Main Line. Train operators already have experience of operating and maintaining assets owned by and leased from a third party because they do this with rolling stock. Some stock leases include responsibility for heavy overhauls, others just cover maintenance. I suspect train operators will shy away from track renewals, leaving this for NR as the owner, but some will welcome the chance to become more involved with operations and maintenance because these areas directly affect the punctuality of their trains.
Of course, just as InterCity was not the sole user of the ECML’s tracks in BR days, so today the partnership operator will be required to share them with other operators. Some may be franchises – Thameslink for the southern end of the East Coast, for example – while others might be open access operators such as Grand Central or Hull Trains. Any change to leased tracks would need to put these other operators at no disadvantage but that’s the same today under current arrangements.
CrossCountry might never become a integrated track-train partnership. It might always use tracks leased to other operators and will need careful protection if its passengers are not to lose.
In particular, there would need to be close attention paid to freight operators and their needs as well as the needs of tracks used only by their trains. In BR days, its freight arm held responsibility for freight-only lines but I can’t see a freight operator taking this on today. It may be left with NR.
A future LNER might just operate and maintain the ECML leaving most of the rest of today’s NR London North Eastern Route to other operators. There’s sense, for example, in the northern part of it being packaged into the Northern franchise as a vertically integrated track and train operator running local services. TransPennine might lease the Huddersfield route across the Pennines on which it is principal operator. This could remove NR’s route boundary at Standege Tunnel to give TPE closer control of the whole line through Manchester Victoria to Liverpool.
The line is slated to see a major upgrade. Precisely what this will do isn’t known but there’s the prospect of faster journeys and more capacity. Government is committing £3 billion and is well-placed to decide how much of this investment it should recoup from passengers through the tickets the operator sells and how much should fall to wider benefits across taxpayers. With a vertically integrated operator covering track and trains, there’s more chance of agreeing an upgrade that balances the extra maintenance an upgraded railway might need with the services needed to pay for the upgrade.
If it’s to consider leasing tracks to integrated operators, government should also consider longer deals. Chiltern Railways has exemplified this approach with a series of track upgrades delivered over the life of the deal it won in 2002. The East Coast Main Line has several upgrade projects looming, such as Werrington dive-under, King’s Cross remodelling and installation of ETCS cab signalling, and there’s work to do to deliver improved power supplies north of Newcastle. Granting a longer deal gives a better chance for a track-train LNER to tie daily work into these longer upgrades. It might provide a basis for creating a partnership that includes responsibility for delivering these upgrades, perhaps by contracting NR’s Infrastructure Projects division to deliver some or all of them.
However the government chooses to reorganise England’s railways, it will need to look closely at the interfaces and boundaries between organisations. Leasing tracks to operator, whether by geography or line, cannot lead to stretches becoming orphaned with nobody responsible for them. Reorganisation cannot lead to track-train operators discriminating against companies that merely run trains. There will remain a need for system co-ordination to timetable over boundaries and a need for strategic oversight to deliver capacity over the longer-term.
But giving train operators responsibility for operating and maintaining tracks under lease deals will put the customer much closer to decisions that today are taken by Network Rail one step removed from those they most affect.

This articles first appeared in RAIL 863, published on October 10 2018.