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Big plans; but no promises

Railtrack's Network Management Statement promises to boost rail industry order books and transform rail travel in the UK. But are the plans realistic, asks Matthew Jones?

Railtrack describes its latest Network Management Statement as setting out 'the largest rail investment plans since the railways were first built'. On first inspection it certainly appears impressive.

This year's statement is 50% bigger than the 1998 document, running to 350 pages. Its telephone directory proportions combined with its garish design have already earned it the nickname 'Yellow Pages.'

The numbers also look pretty exciting. With a headline figure of £27bn investment over the next 10 years to meet a 30% increase in passenger numbers, it will certainly make more interesting reading for rail engineers than the real Yellow Pages.

However, some in the rail industry are sceptical about whether all the plans will come off. Last year Railtrack chairman Sir Bob Horton described the 1998 NMS, which outlined a mere £17bn of spending, as 'one of the most important documents the railway industry has seen for many years.' But not all of the apparent commitments have been made good.

Last year Railtrack claimed to be 'taking the lead' in developing a high gauge freight route which would be capable of carrying 'piggyback' trailers. It went so far as publishing a proposal for the West Coast Main Line which would take 400,000 lorries off the road a year by 2005 between Scotland and the Channel Tunnel.

Yet this year its favoured proposal for freight has been considerably downgraded. It now says it will only upgrade the route to the smaller W10 gauge which the freight industry believes will serve only a niche market for white goods.

Further criticism has been levelled at Railtrack for delays awarding work on the WCML and the re-scoping of contracts.

And if Railtrack has backtracked on its promises before, why should the industry believe the apparent good news in this year's NMS?

Railtrack commercial director Richard Middleton now admits that 'there wasn't much that we committed to in last year's document.' But he stresses: 'That is the difference with this year's NMS - we are much more committed.'

Middleton claims Railtrack now has a much better understanding of the costs of upgrading and maintaining the network. But he warns that the NMS 'is not a workbook', and should be viewed only as 'a useful guide to contractors which should enable them to put some beef on their own plans.'

The NMS was put together by asking train operators, passengers and freight companies what they would like to see to upgrade the network, he explains. The work must still be debated with the Rail Regulator and train operating companies.

Railtrack has proposed three funding mechanisms for capacity enhancement schemes. On projects which it sees as commercially viable, such as upgrading the main lines, it wants to take more demand risk in return for a higher reward.

It would upgrade the track infrastructure based purely on forecasts of future growth and would expect to recover the additional costs through increased access charges.

In most cases this would be done on a revenue sharing basis such as the deal set up between Railtrack and Virgin to upgrade the WCML for 225km/h tilting trains.

For commercially unviable schemes, such as upgrades to rural routes, Railtrack would finance 'most of the cost' but would expect to receive additional grants as pump priming from a 'funding partner'. This could come via existing grant mechanisms from local authorities and passenger transport executives, or from new sources such as congestion charging or workplace parking levies.

The third funding proposal would see Railtrack taking only the construction risks on projects like station enhancements. For this type of work it would expect to recover its costs and get a standard rate of return through access charges.

Railtrack claims this model of funding is in response to the regulator's challenge last year for it to take a higher risk, more innovative approach to network management. It has got on relatively well with Chris Bolt, the acting regulator who laid down that challenge in December.

But the incoming regulator Tom Winsor, who was appointed last week (NCE last week) and will take up his post in July, could be an altogether different prospect.

Winsor, a Scottish solicitor who heads up the railways group of legal firm Denton Hall and writes a forthright monthly legal column in Modern Railways magazine, is expected to take a tougher line with Railtrack.

Whether he will be willing to offer higher rewards to a monopoly company which makes £1M profit a day is still anybody's guess, but Railtrack's assumptions and costings will certainly come under close scrutiny.

Much will also depend on the new Shadow Strategic Rail Authority's assessment of the type and level of service that the network should provide. That job is in the hands of another hard hitter, Sir Alastair Morton.

He will conduct a wider, independent survey of rail users to see how they would like the railways to develop. This will in turn be fed into the regulatory review.

In the end it really all comes down to political posturing and is likely to end in something of a fudge. Railtrack still has its trump card to lay on the Government of whether or not to proceed with Section 2 of the Channel Tunnel Rail Link, but Deputy Prime Minister John Prescott will not want to be seen as a soft touch.

However, despite all the continuing uncertainties, senior industry figures do seem to be genuinely encouraged by Railtrack's plans. ICE chief executive and former managing director of GT Railway Maintenance Mike Casebourne sums up the feeling.

'Confidence and capacity in the rail engineering industry are not things that can be switched on and off like a light,' he says. 'But every ultimate commitment has to start out with a statement of good intention. And even if that is all this NMS turns out to be, it is still better than we have ever had before.'

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