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The Guardian view on Network Rail: the Great Northern power cut The Guardian view on Network Rail: the Great Northern power cut
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At the heart of the Conservative promise for the 2015 election was its commitment to rebalance the economy by investing in infrastructure. The model was to be the Northern Powerhouse, where Whitehall collaborated with combined local authorities in the north to send economic revival rippling across the region. For the whole of the campaign, the prime minister and the chancellor seemed to put on their hard hats and hi-vis jackets at breakfast and wear them until they went to bed, in a relentless message of investment and renewal.At the heart of the Conservative promise for the 2015 election was its commitment to rebalance the economy by investing in infrastructure. The model was to be the Northern Powerhouse, where Whitehall collaborated with combined local authorities in the north to send economic revival rippling across the region. For the whole of the campaign, the prime minister and the chancellor seemed to put on their hard hats and hi-vis jackets at breakfast and wear them until they went to bed, in a relentless message of investment and renewal.
Less than two months on from election day, reality has returned with humbling force. The government regrets that your rail modernisation has been delayed. Please listen for further announcements. The electrification of the London to Sheffield line has had to be shelved, the trans-Pennine upgrade branded as HS3 is to be delayed. The 2014-19 five-year plan has effectively been torn up. Richard Parry-Jones, the chairman of the troubled organisation, is out, replaced by London’s transport commissioner, Sir Peter Hendy. HS2 sceptics will not forget this moment. It should also make ministers think again about the structure of the rail industry, and the way its modernisation is funded.Less than two months on from election day, reality has returned with humbling force. The government regrets that your rail modernisation has been delayed. Please listen for further announcements. The electrification of the London to Sheffield line has had to be shelved, the trans-Pennine upgrade branded as HS3 is to be delayed. The 2014-19 five-year plan has effectively been torn up. Richard Parry-Jones, the chairman of the troubled organisation, is out, replaced by London’s transport commissioner, Sir Peter Hendy. HS2 sceptics will not forget this moment. It should also make ministers think again about the structure of the rail industry, and the way its modernisation is funded.
These are big and complex challenges. Network Rail’s woes illustrate the shortcomings of an industrial economy where scarce engineering knowhow and a shortage of skilled labour drive up costs. Embarrassingly, investment in the north is on hold pending completion of the electrification of the London to Swansea line – which involves raising bridges, lowering parts of the track and rebuilding tunnels originally constructed by Isambard Kingdom Brunel – and is already overdue and currently running at nearly triple the original budget. This is now to be give priority over the even larger projects that are supposed to be part of the engine of recovery driving the Northern Powerhouse. Related: Rail finance and the ‘northern powerhouse’ | Letters from Michael Roberts, Rail Delivery Group; Martin Brayford; Andrew Jones MP, transport minister
These are big and complex challenges. Network Rail’s woes illustrate the shortcomings of an industrial economy where scarce engineering knowhow and a shortage of skilled labour drive up costs. Embarrassingly, investment in the north is on hold pending completion of the electrification of the London to Swansea line – which involves raising bridges, lowering parts of the track and rebuilding tunnels originally constructed by Isambard Kingdom Brunel – and is already overdue and currently running at nearly triple the original budget. This is now to be give priority over the even larger projects that are supposed to be part of the engine of recovery driving the Northern Powerhouse.
The first charge the government needs to answer is how long ministers have known of the magnitude of the problems Network Rail is facing. Piecemeal evidence abounds of warnings ignored in the pre-election drive to big up the idea of the Northern Powerhouse. In the Commons, where the transport secretary, Patrick McLoughlin, confirmed the delays on Thursday, Labour claimed a report prepared last September warning of cost overruns was suppressed. Last February, in a rarely deployed procedure, Mr McLoughlin was required to overrule the formal reservations of his permanent secretary about the affordability of his commitment to replace the north of England’s aging Pacer rolling stock. The following month, in what many imagined would be a valedictory appearance, he admitted to MPs on the transport select committee that the electrification of the trans-Pennine route no longer had a completion date because “more work was needed than was previously planned”. The warning signs were there, but there was not a hint of them in the election pledges that followed.The first charge the government needs to answer is how long ministers have known of the magnitude of the problems Network Rail is facing. Piecemeal evidence abounds of warnings ignored in the pre-election drive to big up the idea of the Northern Powerhouse. In the Commons, where the transport secretary, Patrick McLoughlin, confirmed the delays on Thursday, Labour claimed a report prepared last September warning of cost overruns was suppressed. Last February, in a rarely deployed procedure, Mr McLoughlin was required to overrule the formal reservations of his permanent secretary about the affordability of his commitment to replace the north of England’s aging Pacer rolling stock. The following month, in what many imagined would be a valedictory appearance, he admitted to MPs on the transport select committee that the electrification of the trans-Pennine route no longer had a completion date because “more work was needed than was previously planned”. The warning signs were there, but there was not a hint of them in the election pledges that followed.
Mr McLoughlin blames Network Rail’s management for failing to foresee the crisis. It cannot escape responsibility for some earlier spectacular failures, such as the track work overrun at Christmas which stranded thousands of passengers on the streets of north London. But the real explanation is that last autumn the Office for National Statistics, following new accounting rules, insisted that Network Rail could no longer be treated as a private company. If it borrowed at the cheap rates open to a publicly owned company, then its debts must sit on the national books.Mr McLoughlin blames Network Rail’s management for failing to foresee the crisis. It cannot escape responsibility for some earlier spectacular failures, such as the track work overrun at Christmas which stranded thousands of passengers on the streets of north London. But the real explanation is that last autumn the Office for National Statistics, following new accounting rules, insisted that Network Rail could no longer be treated as a private company. If it borrowed at the cheap rates open to a publicly owned company, then its debts must sit on the national books.
After this tweak, Network Rail’s borrowing needs suddenly commanded much closer scrutiny. As with PFI, accounting conventions began to set the rhythm of policy – in this case slowing the beat right down. As with PFI, too, public funds move through complex channels, and major beneficiaries include the shareholders of private companies. The significant public funds invested in trains are not just a necessary precondition for economic growth: they also help Virgin Trains and Arriva and other train operators make easy money. It is time these firms contributed to the improvements that make them rich. It might not help with the management problems at Network Rail, but at least it would be fairer to the taxpayer.After this tweak, Network Rail’s borrowing needs suddenly commanded much closer scrutiny. As with PFI, accounting conventions began to set the rhythm of policy – in this case slowing the beat right down. As with PFI, too, public funds move through complex channels, and major beneficiaries include the shareholders of private companies. The significant public funds invested in trains are not just a necessary precondition for economic growth: they also help Virgin Trains and Arriva and other train operators make easy money. It is time these firms contributed to the improvements that make them rich. It might not help with the management problems at Network Rail, but at least it would be fairer to the taxpayer.