ATOC claims 99% of railway spend is waste!

This from the Archer...

Further to Eye's earlier piece on RAIL's expose of the doomed nature of railway financing, did anyone else hear Michael Roberts of ATOC on Radio 5 this morning?

He rolled out the following amazing statistic:

"For every pound that is spent on services by the government just one penny is spent on running the railways."

To Listen Again click here and go to 1:51.51 into the programme.

The canny journalist obviously wasn’t going to be caught out by what he must have thought was an All Fools' day wind-up.

If only this were so!

UPDATE: This just in from @EdwardWelsh, not via Twitter...

I am delighted to see that it wasn't just Michael and I who were up at the crack of dawn this morning.

I am confused, however, why you think that "services" applies only to train services?

When talking to a national audience, I think you can safely assume that they would know he was referring to all government services and not just train services.

Happy All Fools' Day.

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?

Fantasy funding

Telegrammed by the General Manager
NR piles on £1.1m of debt each day across CP4

As the bosses of Network Rail passed round the celebratory steaming mugs of Horlicks (avoided) on Monday when WCML got off to a reasonably good start their collective attention doubtless turned to fighting the CP 4 settlement and thinking who is going to lend them money over the next few years.

ORR's figures show that NR's position over the next few years is dire and getting worse.

Expenditure exceeds income in all but 2013/14 and interest payments just get bigger each year, in fact they almost exactly match the total TOC premium - assuming this can be sustained.

ORR Assumptions of Network Rail’s net debt in Control Period 4
(£M 2006/7 prices)	2009/10	2010/11	2011/12	2012/13	2013/14	Total
Opening debt	21,267	23,841	26,638	28,585	30,230	21,267
Total income	-5,921	-6,138	-6,345	-6,491	-6,647	-31,542
Total expenditure	7,304	7,556	6,780	6,502	6,235	34,337
Net interest costs	1,188	1,379	1,512	1,619	1,711	7,410
Tax	2	0	0	14	10	26
Total movement in debt	2,574	2,797	1,947	1,645	1,309	10,271
Closing debt	23,841	26,638	28,585	30,230	31,538	31,538
Source: ORR Doc 329167.02 dated 4 November2008

Bold statements by NR that commercial lenders are gagging to pile cash onto this debt mountain without a government guarantee seems self-delusional.

There is no way, other than doubling fares, or even more improbably NR becoming a really efficient world-class business, that any inroads can be made into this ever-growing debt mountain.

Also the oft repeated statement that commercial lenders will be a lever for achieving better governance seems a little cart before the horse.

Any commercial lender will insist that NR changes its governance well before it antes up the cash and it may well be that the NR board won't like the messages they get told.

Meanwhile its back to bashing ORR in the hope they will hand out more dosh and postpone the need to take difficult decisions.