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In praise of Pacers

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It’s the common currency of the rail debate in Britain that regional networks require high subsidies, according to metropolitan transport authorities group Pteg (July 2014).

[A heavy load to bear – towards a fairer allocation of rail industry costs for regional rail, Pteg]

[…] A quick look at the Office of Rail Regulation’s public subsidy league table couldn’t be clearer in its inference. Running regional railways is expensive for the taxpayer whereas Inter-city and London commuter services are not. Indeed, the two latter can make money for the taxpayer. Rail freight too pays its way. Case closed.

However, these subsidy figures are, to some extent, a construct. The railway, as a whole, costs £15.3 billion a year and requires £6.3 billion in government-supported funding. How this overall cost is allocated to particular users is a decision that could be taken in different ways. This paper shows how the current allocation methodology unfairly attributes a disproportionate share of the railways’ overall costs to regional networks. This, in turn, makes regional services look expensive to the taxpayer in a way that distorts the debate about their wider economic, social and environmental benefits. Our analysis also illustrates how what appear to be objective subsidy levels are in fact a construct based on a series of debateable assumptions.

There are four key ways in which the current cost allocation methodology loads the dice against regional rail:

* Light weight regional trains are allocated track maintenance and renewal costs as if they caused equivalent impact as Inter-city trains, when, in reality, a typical inter-city train causes twenty times the infrastructure damage per mile as the most basic regional train.

* In order to (rightly) keep freight off the roads, the substantial damage that freight trains cause to infrastructure (up to sixty times that of the most basic regional train) are largely ignored. However, the knock on effect is that many of these costs are (wrongly) allocated to regional rail.

* Regional rail gets a small share of investment but a disproportionately high share of investment costs. In 2012/13, regional operators contributed 30% of fixed track access charges and were allocated 32% of Network Rail’s overall financing costs but only received 20% of investment.

* Rail network overheads (such as head office functions, signalling, ICT and so on) are allocated in proportion to train mileage. Economic theory suggests it makes more sense to allocate such costs in proportion to commercial revenue, which is current practice in many countries. Prior to privatisation, British Rail went further and allocated the majority of these costs to what was deemed to be the prime user (typically Inter-city services).

We propose a fairer and more defensible approach to cost allocation, which addresses the sources of bias highlighted above. This approach would create a more level playing field for regional rail and ensure that the national debate and key decisions are informed by robust evidence.

Our fairer allocation of costs suggests that, in 2012/13, infrastructure subsidy for the Inter-city network was, in fact, over double the figure suggested by the Office of Rail Regulation’s estimates. In contrast, infrastructure subsidy for regional rail was half the ORR estimate. Taking infrastructure and operating subsidy together, our figures show that regional rail networks go from receiving an estimated 58% of total government support to a considerably smaller share of 28%.

Rail cost allocation on mixed traffic lines is somewhat arbitrary, and all parts of the railway do receive subsidy, as Pteg stated. Regional trains may well “tend to cause less infrastructure damage” than heavier, longer and faster InterCity and London and South East trains, and heavier freight trains, on a per-movement basis.

However, that does not mean that Pteg’s alternative view of cost allocation is particularly better than the one that is currently used. For example, Pteg’s emphasis on wheel-on-rail costs, and on comparing the wear and tear costs of “the most basic regional train” (Pacer railbuses), is misleading, because the large (and increasing) majority of regional services are operated by carriages of similar weight (and axle weight) to LSE and long distance.

When the small number of Pacers are retired, their replacements are likely to have higher lease costs, and increased real infrastructure wear costs. Furthermore, expenses such as signalling, and driver’s wages, are in general unlikely to be much different whether the train is an InterCity 125, 1,000 tonnes of coal, or a single carriage.

Pteg is a big supporter of the HS2 rail project, which is a competitor for funds against regional railways. But moving long distance high speed services onto HS2, and away from lines shared with regional trains (e.g. Leeds to Doncaster) would mean that the whole maintenance cost of those classic lines would be chargeable to local services.

The HS2 project is, in many ways, more of a threat to the continued existence of regional railways, than an opportunity.

Pteg memo on train overcrowding, 2002

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Written by beleben

July 11, 2014 at 10:46 am

Posted in Centro, Politics, Public transport

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