Saturday, 3 October 2015

East Midlands Electrification ..... annual reduced investment will end up costing more

You might have read the headlines: Network Rail to restart electrification of train lines says the BBC or as the East Midlands Business Link had it: McLoughlin "un-pauses" Midland Mainline electrification.

BelperStuff looks at this in more detail and I apologise upfront to those who have busy lives and more important things to do than spending time trying to find any kind of logic in Tory transport policies.

Diesel trains up to 2023 - some by then 47 years old

An inside source in Network rail whispered to BelperStuff that McLoughlin's pause has already created an upfront £10 million in delay charges and stand down down costs and we can expect more costs in restarting the project that could add up to an extra 1% on the original estimated cost of £500 million. Looking at the East Midlands Business Link article I am disturbed to see them reporting the scheme as now costing £1.1 billion ......... over double the original estimate. Perhaps they are including the £200 million being mentioned as the amount pledged for line speed improvements following a campaign by Nottingham businesses and councils for faster trains to London. That still leaves a discrepancy .............. if you add up line speed improvements + electrification + pause costs and subtract them from the alleged £1.1 billion you end up with an unaccounted extra sum of nigh on £350 million. There are many in the industry who expected a cost overrun but a 50% increase over the line speed and electrification estimation is a bit steep. Perhaps the Minister would care to explain this in more detail to the House of Commons Transport select committee. Perhaps BelperStuff can help him out .......... spreading the project expenditure over 8 years instead of 5 adds 3 years of inflation. It's hard to say just how much this will be but compound interest calculations could come out at around 10% ......... or more. Add in the cost to the supply industry of increased finance costs and reduced margins (because plant and equipment will be less productive by a factor of at least 30%) and you start to see how costs escalate when you pause and then subsequently introduce an "a better plan".

But this is not the only concern. Electrification was supposed to be completed by 2020, the end of the current Network Rail five year plan period (Control period 5 or CP5). We are now told that electrification north of Kettering will not be completed until sometime in 2023 which is 3 years into the next five year plan period (CP6). By any standard of measurement this is a serious delay which the Minister describes as "a better plan". No it's not. Let's be clear about this ........... any major infrastructure project undertaken on a railway route adds minutes to journey times during the construction phase so an extension of 3 years on this project prolongs the pain. The Network Rail CP5 Route Plan for the East Midlands clearly shows the planned extra minutes to train times caused by infrastructure work ; link to East Midlands Route Summary Route Plan. This plan, which provides details of how the route will be operated up to 2020 has already needed to be modified because of the inept meddling of McLoughlin but now will have to be redrafted with elements spread out into a rather vague CP6.

The question has to be asked, why did McLoughlin bring down all that national derision and local opposition onto his head when it was perfectly feasible to review the scheme and make any necessary adjustment without the need for a pause? It is normal to investigate first .......... act second. McLoughlin chose to act first then investigate .......... now capitulate. In the real world an MD or CEO acting in this manner would be ousted with more competent management put in place.We should not forget that McLoughlin is a Tory politician who fully supports this current crowd that are besotted with a smaller state mentality and privatising zeal; the fact that Network Rail is wholly owned by the government (in reality the people) must have them gnashing their teeth. McLoughlin put the blame for the pause squarely at the door of Network Rail, claiming that he had been kept in the dark about supply chain and cost problems to major projects. It seems everybody (and by everybody I mean the opposition in Parliament, rail industry journalists, industry insiders, the House of Commons Transport Select Committee and informed sources such as BelperStuff ) ....... we all knew that there was time and cost slippage on a variety of major projects ............... but the minister had no knowledge. Is that credible?

I once shared a pint with McLoughlin  in Cromford ....... I think back in 2005 and at the time thought him to be basically harmless because he was not in government and I could not conceive of him ever being entrusted with any job that required ............. well you know what I mean. His entry in Wikipedia says it all: Patrick_McLoughlin - Wikipedia

His performance in front of the Transport Select Committee has been full of fudge and evasion. He stated that the pause on East Midlands Electrification would not be harmful because electrification does not deliver increases in train speed. On another date he testified to the Select Committee that electrification of the Great Western between Paddington and Bristol would deliver speed increases because that is a benefit of electrification. When a human brain can accept opposing facts as both being tenable we name that brain as being "oxymoronic". Of course McLoughlin may just have made the odd unintentional mistake, he may well have had knowledge of major project problems before the election, he may be aware of the fact that electrification does in fact offer speed increases or that the unpaused East Midlands project plan is not in fact an improvement .............. the point is that a government minister must be consistent and trustworthy.

Regarding the word "unpause". The press is making much of this and I search for instances where the word has been used by the minister. George Orwell described such linguistic phenomena in his novel, "Nineteen Eighty Four", where he introduced us to the language of Newspeak, a manipulation of words by the government to limit dissemination of the truth. link to Oxford Dictionary blog regarding Newspeak.  Ah yes ......... "unpause" fits right alongside words such as "Universal Credit" which really signify "restricted access to reduced benefits". "Unpause" is acceptable in the sense of computing but using the term in relation to major government expenditures is disingenuous and has the objective to trivialise. Watch out at the Tory conference for any sighting of "unpause" ......... or similar.

I sense that BelperStuff will be returning to this subject in the near future. Goodness, it's past lunchtime. I must unhunger myself.

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