Dr Bill Emery, Chief Executive of the UK's Office of Rail Regulation, was our guest at a Power Lunch this week. At present the rail regulator is much absorbed by the next 'five year plan' for the railways. The view from the whole industry that such long-term planning is necessary if people are to invest in new track, equipment and rolling stock. But to me, that sounds like engineers talking. People in free markets (which rail isn't) also have to make long-term plans – but be prepared to change them when the market changes, as it does day by day. These long-term regulatory planning periods just make the stakes high all round, and make mistakes inevitable.
One of the odd things about UK rail is that it has become almost too successful since privatization. Whatever you think of the old Railtrack, the fact is that privatization gave the railways an enormous boost as operators looked to get people travelling again. Sure, the regulatory regime encouraged them to cram more people into the same trains rather than running extra services, but that has now changed and the system is still booming. Experts forecast a whopping 30% growth in rail travel over the next five years, and more freight is being carried too. At the same time, rail users are demanding higher and higher service standards. It's quite a challenge.
But is the present structure up to it? The infrastructure company, Network Rail, is entirely a child of government, with a board that supposedly represents everyone but in reality represents no-one. It has certainly spent hugely on safety and got a grip on the major projects, though it has been rightly condemned (and fined) for cost and time overruns. Its costs are about 30% higher than those of other comparable bodies in Europe, so these are things it ought to get right.
Some chance. The fact is that Network Rail's money comes mostly from the government. That's why it seems to have scant regard for the interests of the travelling public. If politicians are determined to subsidize rail travel, they should subsidize the customers, not the producers – then the producers would be scrambling to please their customers rather than their political masters.