The three days following the UK’s referendum on whether to remain in the European Union has seen Sterling plummet, the resignation of the Prime Minister, a coup against the Labour leader, the distinct possibility of a second Scottish independence referendum, calls for a poll on Irish reunification and 3.5 million people signing a petition for a second Brexit referendum. It’s hardly surprising that the railway was never mentioned by the media.

While all of the above are very important matters, Railfuture (which was and remains agnostic on the referendum) exists to promote a bigger and better railway in Britain, one that puts the interests of the passenger and freight customer first.

It’s highly likely that there will be economic consequences for Britain’s railway arising from the vote in favour of ‘Brexit’.  However, macro-economic issues such as being plunged into recession, investment being put on hold by many firms, the imposition of tariffs and regulation affecting the supply chain, restrictions on movement of people across Europe are unpredictable at the initial stage. An economic downturn may reduce rail travel demand and potentially reduce the funding which the government makes available for rail investment. Railfuture will review its position on rail investment priorities as events unfold.

Rail passengers and freight customers care about what may happen to the rail services they use. They want to know what will happen to fares, passengers’ rights and whether promised investment will go ahead, especially where EU funding had been provided.

Whilst it is too early to know the answers it is worth stressing that:
 
 

  • When people are given freedom or independence they do not necessarily use it
  • Much of what the EU has been responsible for is non-controversial and there is no desire to change it

 



Railfuture director Jerry Alderson takes the view that simply being outside of the EU would change little on Britain’s railway, although the economic and political fall-out could see major changes to investment priorities under a new Prime Minister. He gives below a few examples of how the EU has shaped Britain’s railway.

Passenger Experience

Actually the EU has played virtually no part in the railway that the passenger directly experiences (apart from helping to fund passenger facilities, renovated buildings and car parks at station); it is mainly behind the scenes factors such as regulations.

There is EU legislation to cater for people of restricted mobility (e.g. wheelchair users) but it’s the UK that has chosen to implement the tight deadline of 1st January 2020, not the EU. A huge number of brand new trains will be introduced in the next few years – they are already on order, not just to meet the PRM needs but also to provide capacity for the constantly growing demand.

One of the few EU-inspired visible changes to have been implemented in the last 20 years is the harmonised timetable changes, which are intended to make cross-border rail travel easier. For more than a decade Britain has had one main timetable change a year in December that coincides with other EU countries (apart from Ireland).

Unlike many other European countries VAT is not charged on rail fares, so the EU has played no role in setting fares. Interrail tickets allow travel in multiple countries. This includes Britain where the railway is used by both incoming visitors and also outgoing travellers who can also use it on the first and last day on the trip. However, it is a commercial offering and has nothing to do with the EU.

Passenger Compensation

The EU introduced Rail Passenger Rights, which came into force in 2009. There were a number of areas of derogation (temporary opt-out) for up to five years, and the UK has made progress in removing almost all of these derogations. These rights are generally covered by the Railway Conditions of Carriage, which apply across all operators in Britain. These need an overhaul – especially in the light of recent changes to consumer legislation – and Railfuture has met the Association of Train Operating Companies (ATOC) to raise some concerns.

In terms of simple refunds for delayed trains Britain is leading Europe with its Delay Repay system that has been operating for more than a decade. Recent improvements have seen cash payments introduced in addition to vouchers and also automatic refunds without applying where the ticket was valid only on a specific train. The main issue with Delay Repay is that the terms vary depending on the operator as the system has become more generous as later franchises have been signed. In contrast the EU rights apply across the network. A complication in Britain is that the multiplicity of train operators can make a claim different if the journey involved trains from different operators. These issues need to be addressed within Britain so leaving the EU should have no impact.

EU Investment

There has been quite a lot of EU funding for rail projects in Britain. Whilst the government has focused on schemes with the best benefit-to-cost ratio and those that help grow the nation’s economy, the EU has concentrated on areas of deprivation (e.g. £400m for the East London Line and contributions for reopening branch lines such as Maesteg, Aberdare and Ebbw Vale in Wales). Since the UK is a net contributor to the EU it implies that the money no longer given to the EU would still be available to spend on railway, but with other priorities such as the NHS would it do so, and even if it did would they be the same schemes?

Environmental Standards

The EU has set emissions standards that Britain’s railway has followed. A good example is new diesel locomotives, which must now meet very stringent standards and this reduces the number of different locomotives and suppliers to choose from. Leaving the EU would allow the UK to lower its standards but would it want to? The UK has signed up to climate change limit. Moreover, it would be highly criticised by environmentalists at home and abroad.

Railway Liberalisation

The EU aim of seamless cross-border travel allowing trains from one country to travel in another has been used as the excuse for the way that Britain’s railway was privatised in the 1990s. In fact Britain went way beyond what the EU proposed and the EU has been playing catch-up, with the most recent latest liberalisation moves enshrined in the EU’s Fourth Railway Package.

Whilst the Department for Transport is happy to outsource the services it wants to buy, it is rarely happy when an uninvited independent operator (such as Grand Central and Hull Trains) applies for access to the railway network to run its own services. The EU allows ‘open access’ operators but Britain’s Office of Rail and Road has found plenty of excuses to deny them access over the years and so they only represent about 0.14% of all passenger services. Once outside the EU it is possible that the government may in future prevent any new applications. Whilst denying a small number of passengers a new service it would allow better allocation of scarce track capacity.

Potentially being outside the EU may make it easier to renationalise the parts of Britain’s railway that have not already been renationalised under Network Rail. However, to date there has been no British government willing to go back to running the trains itself.

Procurement Process

Any public sector procurement in the UK must be open to any supplier in the single market and therefore must be tendered in the Official Journal of the EU. On Britain’s railway this means that most trains are built by foreign companies such as Siemens, Bombardier and CAF – all from Europe – plus Japan’s Hitachi. In fact two of these have train assembly plants in Britain. Given that the government wants the best trains at the lowest price it is likely that it would continue to encourage bids from other European countries, but where the price was laying off UK staff through a shortage of orders one might well expect UK companies to win the business even if they didn’t have the best product. Passengers naturally want the best trains and don’t really care about the price or where it was built. However, the government is not always good at procurement: the Class 700 trains being introduced by Govia Thameslink Railway from 2016 will face passenger criticism because the government chose not to include WiFi, power pints and seat-back tables.

The EU limits passenger franchises to a maximum of 15 years. The removal of this limit will be irrelevant. The Department for Transport is very cautious of franchises above 12 years because of the inability to predict revenue beyond the next few years, and it would rather re-tender than pay the higher prices that arise when the supplier takes a substantial risk.

Technical standards plus shared research and development

Britain’s railway has always been at a disadvantage to most railways around the world. The penalty for inventing the railway is that it much of it was initially built to the standards for moving coal around rather than passengers. Bridges were low and narrow, tunnels were smaller, curves were tighter and so on. Whilst train carriages on the European mainland can travel almost anywhere (except into certain countries that have a different track gauge i.e. a different distance between the two rails). To allow this there needed to be standards for carriage design. There has been a history of ‘interoperability’ and in recent years this has broadened to include signalling as well. There is a swathe of Technical Standards for Interoperability (TSI) that the EU has promoted that Britain’s railway has adopted.

The advantage of standardisation is that the research and development costs are shared and using common components reduces the unit price of each. A disadvantage is that an ‘over the top’ one-size-fits-all solution may be used rather than a pragmatic one.

Network Rail has implemented the GSM-R driver-to-signaller radio system across the network and is gradually rolling out the EU’s traffic management (ERTMS) and train control (ETCS) systems. Standardisation is a world-wide phenomenon, although there is more than one standard. Countries outside the EU, such as Australia and India, have chosen to adopt the European systems.

It is highly likely that Britain will continue implementing the European traffic management system and all of its components, but perhaps not at such a pace.

Summary

Whilst railway suppliers will have concerns about Brexit the railway’s end customers (passengers and those wishing to move freight) should see very little change. One thing that may cause inadvertent side effects is the possibility that errors and unintended consequences may arise from legislation enacted during the rush to withdraw from the EU.

The biggest danger to Britain’s railway is the impact to future investment under a new government, especially major schemes. For example, the government has supported HS2 and Chancellor of the Exchequer has championed the Northern Powerhouse.


 


 


Read some of the previous articles by this writer: Railfuture Gives Evidence,  Prague Compared,  Hopping to Catch a Train, 20 Years Going in Circles, Mountain of Ideas, Sent to Coventry,  Fare Rises - RPI vs CPI,  New Year, Better Railway, Tube Usage Hits Record,  Passenger Growth Future?,  Passenger Priorities , Accessible Travel, Eurostar Snapshot Survey,  Stansted Experience, Widening the NET, Cheapest fares by law?, Bring Back BR?, Public Sector Franchises, Fare Increase Viewpoint and Tube Staffing.