Thursday, 1 April 2010

Industry bust by 2020? Eye told you so!

Telegrammed by Bulldog Drummond
RAIL (issue 640) breathlessly reports a shock meeting on 14 March where Dr Mike Mitchell told railway chiefs that the industry faces economic meltdown by the start of CP6 (2020).

Of course this won't be news to Eye readers who were told this was going to happen wayback in December 2008.

The CP4 settlement exacerbated the problem and by 2014 leaves Network Rail with a £31.5bn debt mountain costing a cool £1.7bn to service.

If this goes on to 2020 DafT has come to the conclusion that NR's debts would cost £4.5bn a year to service and that 'urgent, radical reform is needed to slash costs generally.'

What was even more surprising is RAIL's description that eighty ashen-faced industry chiefs 'listened in shock' to this news.

What do these guys do all day?

They certainly don't read Bill Emery's vivid prose, look at what passes for Network Rail's company reports and, crucially, don't understand that even gravy trains can hit the buffers.

But Eye readers can relax.

RAIL reports these comforting words from a Network Rail spokesman: 'Our debt payment charges are more than manageable and only increase by affordable investment that's supported by a business case which delivers a positive return over time. By 2014 Network Rail will be amongst the most efficient rail infrastructure providers in the world, having cut 50% of its costs...'

So that's all right then.

UPDATE: This from Ithuriel...

But that doomsday debt scenario is dependent on DfT using the Network Rail credit card (aka the RAB) to the max and ORR letting them do it.

And ORR is already questioning Lord Adonis flashing the plastic on electrification.

So the real message from Mike Mitchell is 'things will get really nasty if my Secretary of State carries on spending money he hasn't got and ORR hasn't budgeted for'.

UPDATE: This from our man at 222 Marylebone Road...

It's all very well Bulldog calling RAIL's cover headline 'breathless', but if you had a scoop wouldn't you be a bit up front?

What is more interesting is that the meeting was held on 4 March, yet there was absolutely nothing about it in Informed Sources published three weeks later.

No doubt Captain Deltic will try to cover up being last with the news with a smokescreen of brain numbing analysis.

Whatever happened to boiling frogs?