Rail reform struggles to keep momentum

Date: 30/01/1997

By Tim Jones

EUROPEAN industry hopes to wow the world by designing and building the 'train of the future'.

Magnet technology developed as part of Ronald Reagan's 'star wars' programme and intended for blasting satellites into orbit is being used to propel high-speed train prototypes.

Meanwhile, back on earth, European railways are struggling to maintain the train of the present.

“I would say that rail is an irreplaceable asset - if it were not for the fact of life that commercial and passenger customers are replacing rail in their transport choices,” said Transport Commissioner Neil Kinnock in a speech to rail executives only last week.

“I would say that rail is a priceless asset if it were not so clear that rail is carrying historic and current cost burdens which only too obviously have major price effects.”

The chasm between appearance and reality is more obvious in the rail industry than anywhere else in the transport sector.

At one end of the spectrum are the high-profile projects: the smooth and glistening Thalys running between Paris, Brussels and Amsterdam or - for all its recent calamities - the still amazing engineering feat which means Eurostar trains can travel under the English Channel to and from London everyday.

Yet, however impressive these advances, they are superficial.

The truth is that six years after EU transport ministers signed up to an 'open rails' directive, the railways are continuing to haemorrhage their potentially lucrative freight business on to the roads.

Between 1970 and 1994, freight traffic volume on the roads increased by 146&percent; while falling by 22&percent; on rail. Analysts expect cargo transport on the roads to grow by as much as 50&percent; over the coming decade.

The railway companies, labour unions and even governments have been given alarm call after alarm call to alert them to this coming crisis, but have failed to respond.

Intentions have been good. A 1991 directive guaranteed access to all the Union's rail networks for joint ventures between operators from more than one member state and any firm transporting goods by both rail and road.

Last year, the Commission proposed that these rights of access should be extended to all operators registered in any member state, and even advocated cabotage - allowing a national operator to offer domestic services in another country.

However, transposition of the six-year-old directive has been snail-like and the 1995 proposals have hardly been discussed. Kinnock, who has come to rail liberalisation with the zeal of the convert, can hardly suppress his frustration.

“Rail is and must increasingly be recognised to be an incomparable asset, the further reduction or loss of which would have huge and terrible economic, employment, environmental and social consequences for the whole Union,” he warned last week.

It was for this reason that he published a radical White Paper last summer calling for a shake-up of the railway industry.

Although rail workers would agree with his analysis, they certainly do not like his prescriptions.

In November, 15,000 railwaymen and women took to the streets of Brussels to express their anger at the proposals, claiming that the White Paper was ill thought-out and nonsensical.

Apart from advocating the creation of trans-European rail freeways to promote freight traffic, the proposals urged railway operators to become more commercially minded.

This would mean that integrated railway companies would have to put their infrastructure and operations arms into separate divisions to be managed individually. Instead of working as a group, operations companies would then tender for public service contracts from the manager of the line infrastructure.

New state aid guidelines would also be drafted to ensure that any subsidies were tied to company restructuring programmes, while payments made to compensate for the fulfilment of public service obligations would be exempt. Operational aid paid unconditionally could be investigated and even blocked.

Workers on the continental railways look fearfully across the Channel at the revolution which has taken place in the UK railways - a revolution once famously described by Kinnock as a “shambles”.

There, the old integrated British Rail has been broken into a maze of companies, including an infrastructure owner (Railtrack), rolling stock leasing companies and private sector operators working on time-limited franchises.

Kinnock will be loath to promote the UK as a good example - with its atomised rail structure and the promise of shrinking the workforce by 4,000 - but he knows that the old ways cannot survive the competition of road and air.

As he has said: “The harsh truth is that standing still means sinking.”