INFORMED SOURCES e-Preview December 2011
This month I start yet another long-term war of attrition. Yet again the target is the Department for Transport. The effects of the current perverse policy won’t be felt for another five years or more. So brace yourself for a long haul
Departmental dogma presages 2020 disability meltdown
DDA compliance – pragmatism rules
Greater Western will test franchising policy
Eye-watering backloading wins
West Coast Extension – a tough deal for Virgin
A key section of the 2005 Disability Discrimination Act (DDA) required all passenger rail vehicles to be accessible after
In October this year DfT launched a new website, giving a class-by-class breakdown of the modifications required for individual fleets to remain in service beyond the deadline.
Each class is covered by a commentary, plus a spreadsheet containing a ‘targeted compliance matrix’. This shows the current status and modifications required.
As you can read below, the good news is that the change from the old Rail Vehicle Accessibility Regulations (RVAR) to the European Persons with Reduced Mobility Technical Specification for Interoperability (
Application
So now DfT has listed in great detail what needs to be done, the ROSCOs can get on with the job? As a hardened reader of Informed Sources I’m sure you’ll know better than that.
Where’s the mammoth in the tar sands this time? Well, the ROSCOs have been pressing DfT to authorise a
To minimise downtime and cost, PRM TSI modifications will need to be implemented as part of an extended C6 Examination which comes around every 6-8 years. Every affected fleet is scheduled for a C6 between now and 2020.
But the last replacement franchise won’t be let until 2018, which means that many units will miss the next C6 during the current franchise.
Backlog
If you started a
Now, assume that under DfT’s barking dogmatism
Franchises let in 2014 operate 880 units and have five years to make them compliant, adding a further 176 units a year and so-on. This ends up with 450 units to modify in 2019.
One estimate reckons that 2,000 vehicles will remain unmodified by the 2020 deadline. In that event the only solution will be a mass derogation from the DDA.
Originally it was assumed that a refusal to compromise would force the replacement of the older stock. But that would mean buying around £8 billion of new trains.
Given that the iceberg is in plain site, why is DfT steadfastly holding course? Well, mainly, I suspect, to avoid the pain or re-writing existing franchise agreements.
And procrastination has some short term upsides. First the additional rentals which the TOCs would pay to cover the investment would have been deferred. Second, assuming overcrowding is still an issue, TOCs would not lose capacity, typically 14 seats for an accessible toilet and wheelchair spaces. Nor would units be out of service for longer than planned while the work was carried out during the extended Exams.
There is another downside from DfT’s viewpoint. Committing to PRM TSI modification would be an implicit acceptance of Continued Service Operation (CSO) beyond 2020. This will require life extension work ranging in scope from replacement of obsolete components to repowering of EMUs.
In other words, DfT would be accepting – shock! horror! - a rolling stock plan Actually, the fitment plan for the European Train Control System already assumes that many of the non-compliant fleets will still be in service post 2020.
Informed Sources reckon that CSO will cost about the same again as
This is one of those blindingly obvious nonsenses to which DfT seems especially prone. And Informed Sources suggest that some in DfT think it is all a cunning plan for the ROSCOs to make more money for their fat-cat owners.
Meanwhile, the disability lobby has yet to be alerted to the emerging crisis. Expect fireworks when they get the December Modern Railways
As usual, Transport
A pragmatic approach
What makes the above so depressing is that, compared with the heated climate when the DDA and the RVAR was being debated, disabled access to trains is no longer a big issue. European legislation has provided some relief, The
But the real difference, as ever, is down to people, in this case John Bengough, DfT’s long-term disability official and Anne Bates OBE, who as Chairwoman of the Disabled Passengers Transport Advisory Group’s Rail Working Party for nearly nine years, was always prepared to be pragmatic, focusing on what really mattered.
As reported above, it was John’s notification to the ROSCOs which set this new hare running. You can see his pragmatic approach when he talks of identifying ‘those features of rail vehicles that have the greatest negative impact on the ability of disabled and older passengers to use certain vehicles, and avoid unnecessary expenditure on works that result in little or no benefit to users’.
Each class has a spreadsheet, called a ‘targeted compliance matrix’, which is colour coded to indicate DfT’s assessment of current and required compliance. When the requirements in the checklist have been met, vehicle owners or operators will seek a formal determination or dispensation from DfT under the Railways (Interoperability) Regulations (RIR) for any remaining non-compliances which need not be rectified.
What a shame that this pragmatic, professional and cost effective outcome to what was at the time a heated clash, is being betrayed by myopic ministers and officials elsewhere in the Department.
Who will take on the franchise from hell?
No one should have been surprised when, back in May First Group announced that it had made a ‘commercial decision’ not to take up the optional three year extension to its Great Western franchise. As with other bids around that time, the winning strategy had been to assume perpetual compound annual revenue growth of 8-10%, with Cap & collar revenue support giving some protection against the evil day.
But even with revenue support coming in two years earlier than usual, the massive backloading of the premium, profile meant that the extension was never going to be financially viable once the economy faltered. Because, while franchise owners talk glibly of being in receipt of 80% revenue support, the graduated structure of Cap & Collar means that in practice it makes up for 65-70% of lost revenue. And when you are talking in terms of hundred of millions even low percentages represent lots of millions.
Practical
But I suspect that there was also a practical reason for turning down the extension. In the column I have a time-line pulling together all the schemes under the Great Western Route Modernisation, from electrification and resignalling to Reading remodelling and Crossrail.
One Informed Source has likened the GWRM to twice the work of the West Coast Route Modernisation in half the length and half the time. The growing disruption would have added to FGW’s costs and hit revenue, just as the back-loaded premium profile was taking its revenge.
If the replacement franchise starts in 2013, the first seven years will be a case of operating a service through a building site, with added complications such as training drivers on the switch to the European Train Control System and new, and complex, traction if the Intercity Express Programme survives.
A 15 year replacement franchise would have the advantage that the team managing the franchise through the complexities of the first seven years (or probably longer) would be motivated to make the right decisions for the long term, when they would be benefitting from a modernised railway.
One solution could be a two stage premium profile. This would be shallow during the first seven years then rise sharply from 2020, onwards in expectation of a ridership boom, similar to that on the WCML from 1966 and 2009.
But who would you invite to bid? The ideal franchisee has to have recent experience of managing through a major total railway upgrades in the
Hmm. And then there’s the new rolling stock. This is what Transport Minster Theresa Villiers said recently. ‘The current Great Western franchise will terminate in April 2013, and as part of the specification of the new franchise, we will consult on the level of services the new franchise should offer. This is likely to include opportunities for franchise bidders to deploy new trains’.
Could the new franchisee choose his own trains, then? Questioned at a function a couple of evenings later Theresa reiterated that Great Western was getting IEP. But the latest news is that that the business case for IEP on the Great Western is so thin that £40 million on stabling costs threatens to sink it.
Bidding should be very interesting.
Heavy backloading wins Greater Anglia
For some days before the formal announcement, Abellio was understood to have won the interim Greater Anglia franchise. National Express will hand over the franchise on 5 February next year and the next long-term franchise is expected to start in July 2014
My colleague Tony Miles revealed Abellio’s cunning plan to cut costs by taking nine Class 317 EMUs off lease. I focused on the premium profile.
With a bit of work I reconstructed the premium profile for the remaining years of the National Express franchise, allowing for inflation and changes to track access charges. I also scaled up the premia for Abellio’s two part years to give full year equivalents.
Mobilisation costs mean that Abellio is under National Express in the opening part year. And in the first full year (2012-13) the premia are about the same, around £150-160 million. In the second full year it looks as if Abellio is paying about £30 million more. ]
But the final part year (April-July 2014) represents a full year equivalent of £250 million – roughly double the first part-year equivalent. You have to admire such aggressive back-loading.
Challenging deal on the West Coast
On 27 October Virgin Rail Group and the Department for Transport finally concluded the interminable negotiations to extend the existing Intercity West Coast franchise from 1 April to
Virgin describes the deal as ‘extremely challenging’. I don’t think this is window dressing.
In the year to
In the final year of the West Coast franchise, subsidy was due to fall to around £7 million. So the eight month extension should be subsidy free.
Given last year’s 11% ridership and revenue growth, where’s the challenge? First of all, growth is softening – down to 8.7% in the 24 weeks to 16 October. Second, there are historical precedents.
In 1966, completion of the London-Manchester electrification generated the ‘sparks effect’ sending ridership and revenue soaring. But after three to four years growth tailed off. Virgin’s franchise extension comes after the fourth anniversary of the introduction of the High Frequency timetable in December 2008.
Add in the unknown impact of the London Olympics halfway through the franchise extension and I reckon DfT has struck a good deal.
Roger’s Blog.
As soon as I finish this, it will be time to get out the spray-paint and start preparing the spanners for the Awards Ceremony at the Fourth Friday Club meeting on 25 November.
Since last month’s blog I have had to change the basis of the silver spanners to spread the trophies around. The silver now goes to the fleet in each category with the lowest Delay Minutes per Technical Incident – in other words, the fleet which when a train does fall down, recovers the fastest. This is a function of the fault finding and rectification skills of the train crew whose expertise can make the difference between a 5 minute hold up and half an hour.
For me, October ended with the Railway Industry Association
On 8 November I went to the launch of Rail Research
And last week I escaped from the desk and railway politics for a depot visit which always lifts the spirits. Look for an update on the first rolling stock Private finance Initiative – which could well be the last as Thameslink struggles to raise funding at an affordable cost and IEP is under pressure from credible alternatives.
Talking of rolling stock, unless DfT extracts the digit on the extra Siemens Desiros for LM and
December is always busy, with deadlines brought forward for Christmas. So I will need to get ahead of myself if I am to cover the IMechE Railway Division’s response to McNulty on 6 December and get to the Rail Freight Group Christmas Lunch the next day. Whether I shall be up to the IRSE’s paper on Crossrail signalling after the lunch is another matter
But the late breaking good news is that the Government’s Command Paper – one step down from a White Paper – responding to the McNulty recommendations has been put back to the New Year. It had been expected in November.
So that means plenty of time to analyse and write my annual fleet reliability review for the January 2012 issue. And it’s going to be a lively one.
Now for those spanners.
Roger