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How to turn around loss making rural rail lines

Summary:
From the north of Scotland to the tip of Cornwall loss-making rural railway lines are embedded in the landscape. Epitomised by slow, infrequent clapped out trains often carrying just a handful of passengers they wind their way from somewhere to nowhere. Inefficient, unappealing and ultimately underused it’s understandable why many question why such lines continue to be a ‘drain on the public purse’.However, the reason for these lines survival is complex. Most of these routes are purely ‘social’; to even suggest closure would be political suicide. So successive governments have simply given up and have resorted to instructing franchise operators to provide the bare minimum level of service.However, such a negative approach is short sighted. Private companies might run the services but with

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From the north of Scotland to the tip of Cornwall loss-making rural railway lines are embedded in the landscape. Epitomised by slow, infrequent clapped out trains often carrying just a handful of passengers they wind their way from somewhere to nowhere. Inefficient, unappealing and ultimately underused it’s understandable why many question why such lines continue to be a ‘drain on the public purse’.

However, the reason for these lines survival is complex. Most of these routes are purely ‘social’; to even suggest closure would be political suicide. So successive governments have simply given up and have resorted to instructing franchise operators to provide the bare minimum level of service.

However, such a negative approach is short sighted. Private companies might run the services but with the regulatory brief so restrictive and narrow focused there is no ability for the  companies to show entrepreneurial flair. If the state can’t or won’t make a go of it then it needs to allow the private sector – or at least a partnership between the two – to have a go.

Conventional wisdom dictates that rural lines are loss making basket cases. But such narrow focused ideology is to miss a trick. After three months of painstaking forensic analysis of the Settle to Carlisle route, what was widely assumed to be a loss making liability in fact turns out to make a small profit.

The route was once described by the late Bishop of Wakefield, the Rt Rev. Eric Treacy as “the 8th wonder of the world”. While this exuberant ecclesiastical accolade might be over egging the pudding, there is no denying that the line has oodles of untapped potential. Had private sector nous been allowed to flourish earlier the route could by now be a major visitor attraction.

Tourism is set to be worth £257bn to the UK economy by 2025. The Yorkshire and Cumbria Dales are major players yet are hampered by poor roads. The Settle to Carlisle route runs right through the middle of the Dales national park, it even has nine intermediate stations where today only a handful of people join or alight. If ever there was an example of supply so mismatched to potential demand through lack of vision this must surely be it.  

The line is currently run by the Northern Rail franchise, a vast short distance inter-urban provider of largely commuter trains serving conurbations such as Leeds, Manchester and Sheffield. ‘No frills’ trains of distinctly utilitarian ambience shuttle back and forth between city and suburb all day with the average fare less than a Starbucks latte. The Settle-Carlisle line is about as mismatched from Northern’s core business as Ryanair would be from providing a bespoke limo service to ‘Fortnum and Mason’ shoppers.

Over a drink recently, a friend who is the Finance Director for one of the leading industry players told me: “The model for rural lines is all about delivering the status quo as cheaply as possible. There’s barely a budget for marketing let along doing anything entrepreneurial.”

As I identified in my recent ASI policy paper, How to Make Long-Distance Work: Fixing Britain’s railways with open access, rail is not a ‘one size fits all’ model. Different routes have strengths, weaknesses and potential, whether its long distance business travellers, commuters, rural locals or tourists. What is needed is a visionary new approach that looks at the assets individually and then adopts a bespoke plan. This approach would stimulate growth, generate additional revenue, support the wider economy and provide a better return on investment for the taxpayer.

With a focused service offering, improved rolling stock and targeted marketing there is huge potential for the Settle to Carlisle line to become a thriving niche business. The route can act as a foundation where other businesses can thrive off the back. The private sector is extraordinary adept as making a go of things with other Cinderella businesses having been turned around into successful ventures.

For too long the railway industry languishes near the bottom of both innovation and creating thinking. Other businesses such as aviation, hospitality and retail have thrived largely as a result of a free market but also because there is a genuine desire to think outside the box and do things differently.

It is widely accepted across the political spectrum that the current franchising model is broken. We need a consumer rather than government led railway where innovation is allowed to flourish. Only by adopting a broad and flexible approach will patronage increase, jobs be created, local economies strengthened and hard pressed taxpayers, at last, seeing more bang for their hard earned buck.

Adrian Quine is a Non-Executive Director of the Settle to Carlisle Development Company Ltd and the author of a submission to the Williams Rail Review on turning around loss making rural lines. Twitter: @adrianquine


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