CAN RAIL BENEFIT FROM THE LOCALISM AGENDA?

Paul Salveson, January 2012

Dr. Paul Salveson, a stalwart of the rail industry, initiated the concept of Community Rail in the early 1990s and subsequently oversaw the establishment of many Community Rail Partnerships. He now runs The Rail Doctor Consultancy and is a visiting professor at the University of Huddersfield. He wrote the article below as an opinion piece for New Transit last month (Issue 26, December 19, 2011). We reproduce it here with his and the editor's permission.

The 'localism' agenda is gathering momentum in several Government departments, and the Localism Bill received Royal Assent recently. There's nothing in there about transport, but that's not the point. There's a growing commitment to a culture of 'localism' which stretches well beyond the Coalition Government and is influencing the wider policy agenda. And transport - including rail - is not innoculated from the debate. Reform is once again in the air. The Government has indicated its intention of publishing a 'command paper' early next year [2012] which will set out a range of options which will determine how far 'localism' could go with rail services. The paper will be followed by a period of consultation, after which the future direction of local and regional will be decided. It should be said that the intention is not to introduce new primary legislation, but to work within the current framework we've got. Even so, that allows a fair bit of scope.

So what are the options? If we interpret 'localism' in a very broad sense, to mean anything which takes responsibilities away from the Department for Transport, there are several options which could be explored. Bear in mind that the 'Scottish ministers', through Transport Scotland, already have responsibilities for the domestic 'ScotRail' network. Transport for London manages the London Overground and Merseyside PTE is the franchising authority for the Merseyrail network. So it's already happening, and all the signs are that it's working well. Expect the Welsh Government to be putting in a strong bid for similar rail franchising powers to its Scottish cousins.

The key players in England are the PTEs, overseen by the Integrated Transport Authorities in the major conurbations of, Merseyside, West and South Yorkshire, Greater Manchester, West Midlands and Tyne and Wear. They are already co-signatories to rail franchises. The large, sprawling 'Northern franchise' has all the PTEs signed up as signatories to the franchise agreement and they're major investors in the rail network. Their federal body, the PTE Group, has been pushing the Government for stronger powers to allow the PTEs to take control over the local and regional rail network. In addition to their powers flowing from being co-signatories, with the DfT, of the franchise agreement, the PTEs also have the 'increment/decrement' powers which came out of the 2005 Transport Act. This basically allows them to withdraw a supported service and use the cash saved to invest in other, perhaps better value-for-money, services. It has to be remembered that this was in the context of the DfT's idea that local rail was expensive and one way to get rid of the irritant was to let PTEs do it for them, by withdrawing rail services and then using the money on replacement buses. It hasn't happened and is unlikely to happen in the future.

But there are other options. If you take the Northern franchise - due to expire in September 2013 but likely to be extended into the following year- there's quite a bit of scope. Could the PTEs take on a greater role within the franchise, specifying particular 'bundles' of relatively self-contained services? That keeps DfT in the driving seat for the franchise as a whole but allows the PTEs (and their political masters in the ITAs) to try out different approaches at the sub-regional level. A further variant on that approach is to 'microfranchise' some of the most peripheral lines, giving them their own management and possibly running them on different standards to the 'main-line' multi-operator, high-speed railway. The Government's Community Rail Development Strategy, and the process of designating routes as 'community railways' could be taken a step further to accommodate that approach. However, for a microfranchise to work you need more than just a couple of trains trundling up and down a branch line. A small network, such as the Tees Valley (Saltburn - Bishop Auckland) and Whitby lines, could be the right sort of size. It would also be an option for the Devon and Cornwall branches, within the Great Western franchise.

Perhaps the most radical option currently being looked at is for the PTEs to take over complete responsibility for the 'Northern' franchise (and possibly TransPennine Express which sits largely within the contours of the Northern Rail franchise, with the exception of its Scottish extension). Anyone with an understanding of the political geography of the North would point out that whilst the PTEs cover the main centres of population, it leaves out several large county and unitary authorities; the likes of Lancashire, Cumbria and North Yorkshire country councils and unitaries such as Hull, Durham, Northumberland, Blackpool and many more. All of these have strong interests in their local rail services but most are much too small, on their own, to take on greater responsibilities. Equally, trying to get all of them together to agree on how to let - and manage - a 'Northern' franchise would be challenging and you'd need a large room. As one colleague commented, it would be like herding cats. But I'm convinced it would be possible. The PTEs have got many years' of expertise in rail and have substantial resources behind them. An intelligent way forward would be for the PTEs to form the core of a consortium which brings in the county and unitary authorities, with the creation of tight executive group, based in a 'lead PTE' which could act as the franchise manager.

The PTEs are savvy enough to understand that taking on local rail networks has got to be accompanied by a fair funding settlement. As PTEG has argued in 'Rail Cities in the 21st Century: the case for devolution': "Taking on greater responsibility for local rail is not without risks. As part of negotiating for more power, we want a full understanding of the costs, risks and liabilities associated with increased responsibility . At present the system for allocating costs lacks transparency and is relatively unaccountable to local partners. Our ambitions can only be realised if we get a fair deal for funding on the railways". Quite. And there will be plenty of behind-the-scenes before the PTEs make that decisive leap.

One option which isn't on the Government's agenda but may well be on some of the Labour-controlled ITA's minds, is the opportunity, in the longer term, for their PTEs to take on station management responsibilities. They are already major investors in station improvements, with major schemes recently completed at locations including Sunderland, Rotherham, Bolton, Barnsley and elsewhere. The PTEs have been involved in a total of 75 schemes to either re-open or substantially improve local stations. Whilst the DfT is suggesting giving train operators a 99-year lease on stations, PTEs could rightly argue that it's them, and not train operators on a short-term franchise, who are there for the long term. And again you don't need to be all that perceptive to see the problems arising from a train operator running stations on a franchise it no longer owns. Options for the PTEs include taking full ownership of stations, becoming leaseholders, or having a greater involvement with stations through a wider role in local rail franchises.

It's all good stuff and the consultation over the command paper on railway reform will afford plenty of scope for a bit of head scratching. The Railway Doctor's prescription would be to give the PTEs, in rude health and ready for new challenges, much greater responsibility. The 'consortium' approach could work for starters, though in the long-term, the North needs an over-arching devolved government with similar powers to the Scots. On that basis, some much more creative approaches could be developed, including a move away from franchising altogether. But this isn't just a 'Northern' and West Midlands agenda. Regional networks in other parts of the country, including East Midlands, east of England and the South-West, could take on greater responsibilities but current local government structures are too weak. At the very least it needs a new settlement giving PTE-style powers to sub-regional bodies covering large areas - much larger than the new LEPs which are proving to be not even 'paper' tigers of economic development.

Why not start to think the unthinkable? Regions in continental Europe have plenty of experience in running their own local rail networks. The Basque Government owns its own vertically-integrated railway company, Euskotren, which also operates a network of its own feeder bus services. It could work here. An alternative to direct ownership could be arms-length social enterprises running services on a long-term concession to the PTEs or region. There's plenty more examples of good practice on the continent which are well worth studying.

It could be that after the DfT and its Coalition political masters have let the 'localism' genie out of the bottle it starts to play some tricks which had not been intended. But that's the problem for politicians with centralist instincts. Genuine localism is about trusting people at the right level - the Europeans call it 'subsidiarity' - to get on with the jobs that they're best suited to do. And local and regional rail, integrated at the local end with bus and tram and at the strategic end with InterCity, high-speed rail and aviation, needs regional control, as most of our European transport colleagues will tell us. Interesting times ahead!

PAUL SALVESON - the Railway Doctor