SCOTLAND – INDEPENDENCE OR ‘DEVO-MAX’ – WHAT MIGHT IT MEAN FOR RAILWAYS?

READERS of my Long View columns in Railnews, and of some of my recent blogs on this website, may have detected an increasing concern about how our railways are to be developed unless this country’s governance system, both at national and regional level, is changed from its present London-centric control.  Now the biggest challenge to the present system will be on 18 September, when voters registered in Scotland answer the question: ‘Should Scotland be an independent country?’

But whichever way the referendum goes, it seems to me there are serious implications for our railway’s organisation and structure.

If the vote is ‘yes’ for independence, I cannot detect that any serious consideration has been undertaken of the implications for the existing (already complex) structure.

And even if the vote is finally ‘no’, against Scottish independence, the additional powers to be devolved to the Scottish government and parliament – which the three main political parties have belatedly said would be quickly implemented – have big implications for the railways, too.

What if the vote is ‘yes’?

HERE are some considerations about the consequences of a ‘yes’ vote.

Firstly, I cannot see how the Westminster government could press ahead with its plan to re-let the Intercity East Coast franchise before next May’s general election. No bidder will want to submit an offer without knowing the longer-term consequences and implications of running a passenger service crossing what will become an international boundary – and, possibly, involving two currencies, and border controls similar to Eurostar’s operations.

Indeed, in the short-term, and because of the uncertainties, it may prove an advantage if East Coast continues to be operated by the Department for Transport’s subsidiary company, Directly Operated Railways (DOR).

The same concerns will relate to the Intercity West Coast franchise, currently operated by Virgin and Stagecoach, when it becomes due for renewal in 2016-17.

The difficulties will even extend to the up-coming renewal of the Northern and TransPennine franchises, as both include cross-border services between England and Scotland (which, after a ‘yes’ vote, would become foreign countries, with all the attendant complications including, again, two currencies and border controls).

As for possible border controls, it really is an irony that no such problems exist in rail operations between Ulster and the Irish Republic – because the latter, like the UK, is not a signatory to the Schengen Agreement that enables passport-free movement across European borders.  But if Scotland were to be accepted as a new member of the EU, it would be obliged under EU rules as a new member to sign the Schengen Agreement!

Then there are the political implications following a ‘yes’ vote of passenger train operating company ownerships.

The present Westminster government has been often criticised for allowing TOC franchises to be awarded to foreign-owned companies, or companies with significant involvement with foreign-owned partners.

But if Scotland votes for independence, by my reckoning the only current franchises that will remain operated by wholly British-based operators will be c2c (the London-Southend service run by National Express) and East Coast (DOR, a subsidiary of the DfT).

All the other TOCs will be owned by companies that are either wholly foreign-based (such as Abellio or DB – to be joined after a Scottish ‘yes’ vote by FirstGroup and Stagecoach), or have partial foreign ownership (such as G0via).

Indeed, even if the DfT somehow managed after a ‘yes’ vote to get East Coast re-franchised before the next general election, the TOC would inevitably move into foreign ownership . . . as the short-listed preferred bidders are FirstGroup (Scottish), Stagecoach (Scottish) and Keolis/Eurostar (largely French).

‘Devo-Max’ – Scotland

THERE are also many questions about what will happen to the rail organisational structure if Scotland votes ‘no’ to independence but is then granted additional devolved powers – known as ‘Devo-Max’ – as promised in the last few days by all three main Westminster political parties.

So far there are few details, and the only announcement I have heard about the sort of additional powers that would be devolved came from former Labour Prime Minister Gordon Brown.  Significantly, his remarks included the possibility of Scotland having its own publicly-owned railway.

That has considerable implications for the present system.

Can it be accommodated within the present Network Rail structure? Perhaps NR’s recent re-nationalistion may help if the United Kingdom continues, and a Scottish subsidiary can be set up.

What would be the relationship between a Scottish nationalised railway and an England and Wales disaggregated, partially-privatised one, operated by ‘franchised’ TOCs and privately-owned freight operating companies?

Who would own the rolling stock? What would be the role of the rolling stock leasing companies in Scotland?

(These same questions may also be asked in the event of a vote for independence.)

‘Devo-Max’ – England and Wales

MOREOVER, what are to be the consequences after 18 September 2014 on the railway organisational structure in England and Wales of either Scottish independence or ‘Devo-Max’?

Thus far, the Westminster government has made much noise about devolving more responsibilities to city regions and local authorities for train services in the North and the West Midlands.

In Wales the situation is less clear, despite having a devolved Welsh Assembly Government – for example, the argument continues between Cardiff and Westminster about who is to pay for electrifying the Cardiff Valley lines!

And in England the reality so far is that, sadly, little has actually changed.

Indeed, in the North of England the dead-hand of central government control has continued to manifest itself only this week with the withdrawal of off-peak day return ticket validity during the evening peak period on many services operated by Northern. I have much sympathy with the management at Northern (currently half foreign owned by Dutch Abellio, together with British Serco) who have taken a big hit in bad publicity for the new restrictions – but the reality is that raising more fare box revenue was a condition of its masters (i.e., the London-centric DfT and Treasury) extending the franchise.

So much for any proof of real intent to devolve responsibility away from London!

In the Midlands, even less has happened – partly because of an unbalanced local government structure. Birmingham, England’s second city, dominates the West Midlands and this greatly worries even the surrounding metropolitan authorities, let alone the nearby non-metropolitan ones.

Nevertheless, with its partner metropolitan authorities, Birmingham is now central to a new integrated transport authority – but there is no such structure for the East Midlands, despite the size and economic significance of Derby, Leicester and Nottingham. Nor are there any ‘city region’ structures – in the West Midlands because it is feared Birmingham will dominate, and in the East because Derby, Leicester and Nottingham were never recognised as ‘metropolitan’ areas.  (The same is true of areas such as Bristol/North Somerset, and Southampton and Portsmouth, for example.)

This muddle is all a consequence of the local government structure bequeathed to us by Edward Heath’s Conservative government 40 years ago, in 1974. In my view, this structure was wrong then (I was a councillor in an all-purpose county borough council at that time and I campaigned against it) and it is even more inappropriate in the 21st Century – complicated now by the creation and addition of Local Enterprise Partnerships in England.

In the North of England there is steadily-growing and widespread demand, apparently supported by the Chancellor George Osborne, himself a Northern MP, for much more devolved power over transport – both infrastructure and services – accentuated by the recent ‘One North’ proposals for a £15 billion boost to east-west transport links, mainly rail-based, over the next 15 years.

And concerns are growing in the Midlands, too – with a major conference to take place next month on the need for the West and East Midlands to draw closer together, including improving east-west transport links to serve and help develop an economy (which includes England principal manufacturing centres) that is already equal to Denmark’s . . . and greater than Scotland’s!

Whether Scotland votes ‘yes’ or ‘no’ on 18 September, there are surely going to be major changes to the way the United (or Disunited) Kingdom is henceforth structured and governed – and the railways will be part of this.

What a shame that no one seems to have been preparing for either possibility!

One thought on “SCOTLAND – INDEPENDENCE OR ‘DEVO-MAX’ – WHAT MIGHT IT MEAN FOR RAILWAYS?

  1. A thought provoking piece.

    We must remember that, although the two kingdoms joined together in 1707, separate legal systems were retained; consequently, statute relevant to railways emanating from the European Union will probably already be enshrined in Scottish Law. The elements of European law I am familiar with have been adopted into English Law by Statutory Instruments, and separate Scottish Statutory Instruments have been adopted to make such European law applicable in Scotland; consequently, no action may be necessary in this area.

    Transfer of the rail infrastructure to Scottish government ownership should be easy; a process similar to that used at privatisation of British Rail could be adopted, and provisions comprised within the 1993 Railways Act may be sufficient. Firstly, a separate division of Network Rail could be created (let’s call it Network Rail (Scotland)), and staff based in Scotland would be transferred to it; this could then become a separate legal entity, and ownership of the infrastructure would be transferred to it. A statutory transfer scheme could then be established to transfer all of the rights, obligations, responsibilities of Network Rail to the separate legal entity (which could, I believe, still be a subsidiary of Network Rail at this time); the final stage would be for this separate legal entity to be transferred from Westminster to Holyrood. Staff involved would, of course, be TUPE protected.

    They’re the “easy” bits.

    If Scotland votes for independence, it will be necessary for an ORR equivalent to be established; and this must be done as a matter of urgency for it will be necessary for the rail freight companies and the TOCs which operate north of the border to be licensed so that they can continue to operate as if nothing had happened when separation actually occurs. Of less urgency – but still vitally important – is to determine how railways will be policed in Scotland (will Police Scotland take over the role of the BT Police north of the border?), and how will accidents be investigated? Will Scotland have a separate equivalent to the RAIB, or will RAIB continue to investigate north of the border, under contract to the Scottish government? Mechanisms will also have to be put in place for cross-border timetabling.

    Ownership of rolling stock operating in Scotland isn’t an issue in the short term; existing contracts for the lease of the rolling stock will just continue as if nothing has happened. But what happens when the leases expire? Will the English based ROSCOs want to continue leasing their rolling stock to train operators in another country? That will, of course, be a commercial decision for the ROSCOs; but they might decide that bringing all of the class 156/158/170 vehicles back south of the border is a way of eliminating the “Pacer problem”!

    I believe Alan is correct to argue that DOR should continue to operate East Coast if Scotland votes for independence; moreover, I suggest DOR should take over service presently operated by TPE as soon as the present franchise expires. This will give Westminster greater control over these two franchises which both operate Anglo-Scottish services, and will make changes much easier. The situation with Virgin, XC, and Northern is more difficult as the present contractual arrangements still have time to run, but major changes will be needed if Scotland votes to separate; it also has to be remembered that some ScotRail services come south of the border, and changes to these are also inevitable.

    Nick Clegg has today (12th September) launched a “radical” plan for power to be devolved to English regions, Labour has already promised devolution if it is elected next year, and Nigel Farage has also called for a “federal UK”; so whatever happens in the Scottish referendum vote, major changes to the way our country is run seem to be on the way. Therefore, I believe Alan is also correct to call for the privatisation of East Coast to be stopped, whatever happens next week; there seem to be so many administrative changes under consideration that to continue with the process is madness – the only conceivable reason for it to continue is dogmatic, and surely our political “masters” must have realised that it is the actions of successive London-centric governments which have resulted in us being were we are today, contemplating the break-up of our 300 year old union.

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