A new deal for transport? - Transport Policy and Planning in Great Britain - page 129

The real Achilles' heel of privatised operations however was in the provisions
made for safety. Although the overall safety of the railways continued to improve, two
dramatic crashes involving heavily loaded passenger trains - at Southall and Ladbroke
Grove (near London Paddington) in 1997 and 1999 - brought to light examples of
practices on the railway where this was being compromised (Wolmar 2001). The grisly
juxtaposition of railway fatalities with Railtrack's 'fat cat' image of bloated profiteers
made railway operations the unusual subject of attention by film-maker Ken Loach
and playwright David Hare.
A third high-profile rail crash - at Hatfield in September 2000 - brought to light a
catalogue of errors and evidence of a neglectful maintenance regime. The crash took
the form of a derailment at high speed caused by a broken rail, although amazingly
only four people were killed. Railtrack responded by imposing severe speed limits on
hundreds of locations where a similar weakening of rails was feared until a detailed
inspection and some immediate remedial work could be done. During this period it
was impossible for trains to maintain their schedules, one disruption compounded
another and extensive delays ensued. Subsequently Railtrack embarked on an
accelerated programme of track renewals which had a continuing disruptive effect on
train operations and further damaged patronage.
Railtrack's financial resources were stretched to the limit coping with the
immediate consequences of the Hatfield crash (£733m, mostly in compensation
payments) and with colossal cost over-runs in its renewal of the West Coast Main
Line (WCML) from London to Glasgow. However experience with the WCML was
only the most extreme example of more general cost escalation gripping the industry
as contractors sought to protect themselves from risk. Excluding costs arising
from Hatfield, Railtrack's pre-tax profits for 2000/01 were halved. And yet whilst
declaring overall losses of £534m the company announced it would keep dividends
to shareholders at the same levels per share as the previous year 'to maintain access
to the capital markets'.
Taxpayers were paying dearly for that continued access - which was notional
anyway, given the wrecked state of Railtrack's finances - and virtually any other
way of funding the rail industry would have been cheaper.
(Wolmar 2001 p. 229)
With the 2001 general election campaign under way, a £1.5bn advance was paid
to Railtrack to keep it afloat, but with strings attached. Six months later Railtrack
returned requesting a further £2bn bail-out whereupon the new Secretary of State
Stephen Byers decided that enough was enough, refused the application and forced
the company into liquidation.
In Railtrack's place a 'not for profit' organisation called Network Rail was established.
Network Rail inherited a revised regime of access charges which increased its income
by 35% (though requiring a corresponding increase in subsidies for passenger services)
and altered the balance to give greater weight to variable costs. A further £100m pa
was received to enable freight access charges to be halved - to offset the competitive
disadvantage otherwise arising from the VED reduction given to road hauliers and an
increase in maximum lorry weights to 44 tonnes.
The circumstances surrounding Byer's dealings with Railtrack were highly
controversial and its shareholders subsequently mounted a legal challenge claiming
that he had deliberately engineered the company's downfall. To minimise continuing