The immediate agenda - Transport Policy and Planning in Great Britain - page 391

review of access charges and the cost of supported services had risen by almost 50%
between 2000/01 and 2004/05.) Under new arrangements the Government intended
to publish a 'High Level Output Statement' setting out its objectives for the network
and the amount it was prepared to pay to fulfil them. Alistair Darling maintained
that the Government was not about to mount a programme of line closures to reduce
costs. However the fact that clauses were inserted into the Railways Act transferring
decisions on closures to the Rail Regulator, and making them subject to assessments of
financial costs and benefits only, did nothing to allay fears (Grant 2006). Threatening
noises were also made about relatively lightly used rail services in the provincial
conurbations with the PTEs being offered the inducement of quality contract powers
for bus services to facilitate their replacement.
The Government appears to have undergone a change of heart from the hawkish
stance presented in 2005. The first signs were a renegotiation of the Great Western
franchise which had originally been invited on the basis of a cost-cutting specification
which would have greatly reduced services on the branch lines of Devon and Cornwall
(completely at odds with any notion of their retention and development as community
rail routes). The strategy later unveiled in the 2007 White Paper (DfT 2007b) also
gave unexpected respite by stating that in the period to 2014 there would be no closure
of regional or rural lines ('in order to retain flexibility for the future').
More generally the White Paper claims that
The railway is now in the most stable financial position in 50 years. Growth is
delivering significantly enhanced revenues, whilst industry cost control continues
to improve.
(ibid. para 12.17)
However this stability has been achieved only through massively expensive
Government intervention since 2000 and the large cumulative debt which Network
Rail (and hence indirectly customers and Government subsidies) will have to service
for many years hence. For the future the White Paper states that the elimination of
the renewals backlog and continuing improvements in cost efficiency 'will allow the
subsidy requirement to return closer to historic levels'. Essentially this will be achieved
by passengers contributing a greater share of total costs. (For an analysis of the Paper's
financial component see Ford 2007.)
Between 2009/10 and 2013/14 (known as Control Period 4) passenger revenue is
expected to increase at 4.8% a year in real terms with a 50/50 split between increased
ridership and higher fares. As a result the proportion of income for passenger services
represented by Government support will fall from 32% to 25% and in money terms
from £3.2bn to £3.0bn (see Table 23.2). This contribution is now referred to as
SoFA (Statement of Funds Available - as required under the 2005 Act). It is divided
between franchise payments to operators and grants to Network Rail of the kind made
since 2000 (excluding enhancements). The precise split between the two will however
depend on the access charges set by the Rail Regulator. The key point with the 2005
Act regime however is that the SoFA figure is fixed. If in CP4 operators are required
to pay higher access charges then the amount paid to them by the Government will
increase and the amount paid direct to Network Rail will be reduced accordingly.
The Government has acted to ensure that it will never again be 'bounced' as it was
previously into paying substantially more in total.