The Anonymous Widower

New Heathrow Rail Link To Lead The Way For Future Transport Funding Schemes

The title of this post, is the same as that of this Press Release on the Department of Transport web site.

This is the opening two paragraphs.

Private companies have been asked to come forward with ideas to deliver a new southern rail link to Heathrow Airport.

The link will be one of the first projects under government plans to invite third parties – such as local authorities and private sector companies – to invest in the rail network, over and above the £47 billion the government is already planning for the next 5 years.

In the past, I have talked about two privately-funded schemes for access from the South to Heathrow.

The Times is saying today, that it could be the second scheme.

But Heathrow can be such a money-earner, you do wonder if other schemes to serve the airport will be put forward.

How Would A Scheme Work In Practice?

A consortium consisting of engineering, financial and railway interests would put forward a scheme.

They would do the following.

  • Design the scheme and ensure it was acceptable to all stakeholders, including Network Rail, the Office of Rail and Road, local authorities, train operating companies, passengers, residents and in the case of Heathrow, the airport itself.
  • Raise the finance to build the scheme from appropriate institutions like insurance companies, banks and pension funds.
  • Build the scheme and get it approved by the appropriate companies, authorities and regulators.
  • Once the scheme is commissioned, trains using the scheme would pay appropriate track access charges, in the same way, that they do now, when they use Network Rail’s tracks.
  • Maintenance would be the responsibility of the consortium, that built the scheme.

In some ways the consortium functions like a mini-Network Rail, as it obeys all the same standards with regards to engineering and safety.

But.

  • The finance is not provided by taxpayers.
  • Any profits go to those, who conceived, built or financed the project.
  • Risks associated with the project are not borne by the Government or taxpayers.

If say in ten years time, the consortium goes bust, then I suspect that the assets would be bought on the cheap, by either Network Rail or another investor, who would learn from the original consortium’s mistakes.

Not that I think that will happen!

Has Anything Similar Been Done Before In The UK?

I think it is true to say, that various innovative ways have been found to fund railways in the UK.

The article from the Independent, which was written in 1992 is entitled Canary Wharf Banks Agree Funding For Jubilee Line.

This is a paragraph from the article.

The Government has always insisted that the scheme will not go ahead without private funding. In return for the financing, the banks are believed to be insisting that the Government chooses Canary Wharf as the site for the relocation of about 3,000 civil servants from the Department of Environment and the Department of Transport. It is also considering three other sites in the area.

So it looks like relocating three thousand civil servants got the Jubilee Line built!

Chiltern Railways have expanded by leaps and bounds over the years and some of their methods have been professional and innovative.

Project Evergreen with three phases has expanded and improved their passenger services.

This is an extract from the section of Wikipedia, that talks about the project.

Chiltern Railways former chairman Adrian Shooter said, “This is the biggest passenger rail project for several generations not to call on the taxpayer for support. Working closely with Network Rail, we are going to create a new main-line railway for the people of Oxfordshire and the Midlands. This deal demonstrates that real improvements to rail services can be paid for without public subsidy by attracting people out of their cars and on to trains.”

I don’t know whether this relates to all of Project Evergreen or just one part.

This is also said.

Network Rail provided the capital for the upgrade and will recover this through a facility charge over the subsequent 30 years, initially payable by Chiltern until its franchise expires, and then by the next franchisee. The infrastructure upgrade was carried out by main contractor BAM Nuttall, in partnership with Jarvis and WS Atkins.

It may all sound complicated, but Chiltern Railways is a train operating company that commuters don’t seem to complain about.

Could Any Other Schemes Be Funded Using The Department for Transport’s New Model?

Building the southern access into Heathrow Airport will be a large project costing more than a billion pounds.

But that doesn’t that all projects need to be that size!

I suspect, that the DfT’s model will be applied to some projects, as small as a hundred million pounds.

These are my thoughts on future projects, which I have split into various sections.

Airports

If a scheme like the Heathrow scheme  gets the go-ahead, then I think this could lead to other airport links being designed, funded and built using a similar model.

At present, Aberdeen, Bristol, Doncaster-Sheffield, East Midlands, Glasgow, Leeds and Liverpool airports are looking to improve rail access and the DfT’s model may be a way to build some, if the demand is there.

Network Extensions

The proposed Heathrow Southern Railway is effectively a well-thought out extension to three networks; Crossrail, Heathrow Express and South Western Railway to all of their mutual benefit.

I doubt there’ll be such big extensions, but there are some useful ones being planned.

  • Bramley Line -The track-bed of this route is still there and connecting March to Wisbech could create a new commuter route for Cambridge.
  • Fawley Branch Line – This would provide a passenger service and serve new housing developmemts in Hythe and Fawley.
  • Ivanhoe Line – Proposals to improve this service in Leicestershire with new stations.
  • Merseyrail Northern Line Extensions – The £300 million extension to Skelmersdale is being planned and another from Ormskirk to Preston is proposed using battery trains.
  • North Downs Line – This line could be updated to provide an improbred Reading- Gatwick. Would it make a freight route for Minis from Oxford to the Channel Tunnel?
  • Skipton To Colne Reinstatement – This  project of just a dozen miles is high profile amongst Conservative politicians and would provide another route across the Pennines.
  • West London Orbital – This £264 million extension to the London Overground would create two new lines in North West London.

This is by no means a complete list, but it shows how many routes could benefit with reinstatement or improvement.

Electrification

Why shouldn’t electrification be privately funded, with the builders and investors getting their returns, through an electrification access charge, which would be similar to a track access charge.

I discuss possible electrification schemes in Charting An Electric Freight Future.

The linked article is mainly about freight, but I suspect there are examples, where some shortish stretches of electrification could be privately-funded.

If electrification experts identified the problems of the past few years and how to solve them, there must be a case to formulate a business that merged engineering, finance and construction, that was able to install electrification on time and on budget.

Depots

Greater Anglia has commissioned a new depot at Brampton on a design, finance and build basis and it’s not the only depot built this way.

But that is more traditional financing.

Stations

The financing of some stations has been extraordinarily innovative.

I suspect that that some deals will get even more so.

Some will even charge for passengers per day.

Conclusion

One of the reasons, I like the DfT’s proposal of mixing design, finance and build with a good helping of innovation, is that this closely follows the model that we used with Metier Management Systems, when we started the company in the 1970s, to develop our Project Management system called Artemis.

  • We designed the systems.
  • We financed the systems.
  • We installed the systems
  • We maintained the systems.
  • The customers wanted the systems.
  • Customers paid so much a month.

The cream on top was the lashings of innovation.

There might be a lot of extra finance flowing into UK railways!

 

 

 

,

March 20, 2018 - Posted by | Finance, Travel | , , , , , ,

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s