What the Conservative Manifesto Means for UK Rail

Aside from the gnashing of teeth of hairdressers up and down the country, what will a Conservative win mean in practical terms for UK rail?

At a macro level, the Conservative position is utterly tied to Brexit in a way that no other party has done - particularly as they appear to intend to stick to their fiscal rules (unlike Labour who have already managed to make a 'one time exception' for the ￡58bn debt of honour associated with the 2011 change in pensionable for age for women). This means that the Conservative commitment "We will not borrow to fund day-to-day spending... [and] that public sector net investment will not average more than 3 per cent of GDP, and that if debt interest reaches 6 per cent of revenue, we will reassess our plans to keep debt under control" will be shaped by the performance of the economy post Brexit.

While "The government estimated a free trade agreement Brexit could lead to GDP being 6.7% lower after 15 years than if the UK remained in the EU. That’s not the same as saying this form of Brexit will lead to a drop in GDP compared to now."(1) and short of having a crystal ball, it's impossible to say for sure what will happen to the economy - but as nobody these days seems to even think of any near term (<10 years) financial benefit from Brexit, I'm going to assume that we run with a flatlined economy, but one which (from an infrastructure perspective) becomes more accessible from the perspective of international capital investment.

After all, the repeated mantra of the Conservative Manifesto is "Get Brexit done - and we will see a pent-up tidal wave of investment into our country..." and that's something which is entirely possible if we relax our accounting rules and allow a new wave of off balance sheet accounting. Say goodbye to ESA10 and perhaps fiscal prudence in a manner far more subtle than that proposed by Labour?

Regardless of this, laws will take time to change, schemes will need to be developed to make them fit for international investment, capacity to deliver will need to grow in the rail industry. If you're looking for a bow wave of international investment, make sure you're still focusing 5 to7 years out and rather inconveniently into the next parliamentary term; like the other parties, that brings us rather prosaically back to what concrete schemes and changes are being promised for UK rail.

The Williams Review is nodded to (at least the blue version!), with a statement that "The railways need accountability, not nationalisation... we will end the complicated franchising model and create a simpler, more effective rail system, including giving metro mayors control over services in their areas" and it is from this platform that we see commitments to Northern Powerhouse Rail ("Northern Powerhouse Rail between Leeds and Manchester and [we shall] then focus on Liverpool, Tees Valley, Hull, Sheffield and Newcastle") and Midlands Hub continue.

There is a new promise to "invest ￡100 billion in additional infrastructure spending – on roads, rail and other responsible, productive investment..." but without any real detail as to where this is going to land. There's a nod to the Liberal Democrats commitment to expand light rail and trams with specific reference to the Leeds Supertram - a scheme that has struggled for as long as I can remember.

There are commitments to improve train lines to the South West and East Anglia, but no detail as to what these are, but without any key commitment to electrification, it doesn't look like we have a party committed to investment in the Green Peninsula. Journey times obviously aren't a vote winner for an area of the country that ended up being surprisingly pro-Brexit in the referendum.

But devolution continues to be on the agenda, withy the Conservatives stating that "We will give city regions the funding to upgrade their bus, tram and train services to make them as good as London’s..." - as someone who uses the central line daily, I would suggest that means providing the regions with a level of underfunding which has driven TfL 2019 tube performance to result in 3.0m average lost customer hours per period vs 2.1m lost hours in 2012 (2). TfL are working incredibly hard to manage a funding shortfall driven by 3 years of frozen funding (now to become a 4th) - constraining investment and network renewals. This is not the model which we should be rolling out to establish improved regional connectivity and shows a significant disconnect around the performance of the tube system in London from the customer experience.

The drive to regionalisation is emphasised in a commitment to "restore many of the Beeching lines, reconnecting smaller towns such as Fleetwood and Willenhall that have suffered permanent disadvantage since they were removed from the rail network in the 1960s" - this is something that should be welcomed, but the reality check needs to come around the fact that many of these lines are now gone; repurposed for public use as walkways or cycle paths - or even just built over. Even if we accept the premise that the lines remain in the right places for the needs of today rather than historical rose tinted spectacles (of which there is more than a little play in the Brexit rhetoric), then we must also accept these are not going to be cheap or coming to market in the next few years; planning as much as funding will be a major constraint.

It is through this cost lens that the Conservative Manifesto tells us that HS2 still remains in the balance, subject to the findings of the Oakervee review. ￡81bn is now cited as a minimum cost, timings are now 2040 for Leeds or Manchester and it unfortunately reads as a placeholder of a statement to get the past the election. It is now an only an 'ambition' in the Conservative Manifesto and is something those companies with significant exposure to contracts should now start considering in earnest.

Of all the three main parties, the Conservative Manifesto has by far the greatest wiggle room, though it may well be a case of under promise and over deliver. It clearly presents more risk for the industry thanks to some very loose wording on HS2 and is fundamentally concerning for that aspect alone, though promises to guarantee a minimum service during transport strikes is likely to resonate well with the general public - I'm guessing somewhat that this won't be done through guaranteeing union complicity through the reinstatement of train guards as proposed by the Labour manifesto.

The Conservative manifesto is not without value, although somewhat ironically for a government that has been repeatedly accused of losing sight of compassionate conservatism, it is the statement that "We have established a new Office for Veterans’ Affairs and we will introduce a Veterans’ Railcard" which gives me the greatest hope that this could still be a government that could be interested in how best to take the industry forward for the public, rather than one which just wants to get Brexit done at any price.

Chris Docker is the Managing Director of Symposium, a British rail and automotive consultancy that delivers customer-focused advice for business transformation, as well as political and commercial advisory services.

If you would like to discuss any of the topics covered in this article, feel free to message me on LinkedIn. www.symposium.gmbh

References

(1) Source: https://fullfact.org/europe/brexit-economic-impact/

(2) https://data.london.gov.uk/dataset/london-underground-performance-reports