According to today's Scotsman the Waverley line could be the first in Britain to be run separately from the rest of the rail network, under radical plans to bridge its funding gap. Apparently the Scottish Government is considering whether the line should be built, financed and maintained by a single company - rather than handed over to Network Rail when it is completed.
Reopening the 31-mile line, which closed in 1969, is a contender to be the first project carried out under the SNP's Scottish Futures Trust, a non-profit version of the private finance initiative. It is thought this could be cheaper than traditional government funding. The estimated cost is £174 million, but The Scotsman reported in September that this had risen to nearly £200 million. Most of the funding is due to come from the Scottish Government. Stewart Stevenson, the transport minister, said in June the funding package "will not be sufficient to deliver the project" and the planned opening date of December 2011 "is not achievable". Construction has already been put back from 2008 to 2009.
Meanwhile the review of the project by Transport Scotland, which was expected to be completed in September, is still under way. According to an agency spokesman. "We are examining the funding and procurement of Borders rail and considering non-profit distributing models, such as the proposed Scottish Futures Trust. It would be a value-for-money decision, and the winning bidder would build and maintain the railway for a pre-determined period."
It strikes me that the Government in Holyrood are up a bit of a gum tree. The costs are out of control and they're desperately tying to find a way to get the project financed out of their tight budget - which will be impossible without some kind of investment. Anyone with half a brain can look at the proposed passenger forecasts to tell that there is no way that the line can make any money - so an investor in whatever form is going to be hard to find.
It's never going to happen....
Subscribe to:
Post Comments (Atom)
4 comments:
Did I read correctly the words "winning bidder"? Apart from a number of Scottish Borders' councillors and senior officials, who would want to take on the financial liability of running this single railway line?
I know. Why not let the councillors who voted for this railway, in partnership with Borders Rail Campaign, take on individual personal liability for running this railway. Oh, sorry! I ment to say ... take up this wonderful opportunity to invest in this railway and make a well earned profit from their endeavours.
Or are they just happy to talk when someone else, Scottish Borders ratepayers and residents, to be precise, have to pick up the financial, and environmental, costs? !
A non-profit version of a Private Finance Initiative - now there's a fish with rather strange feathers. I suppose there must still be people who believe that the PFIs used to build schools are a Good Thing, but at least we can all see that the long term rewards provide the inducement for investment.
I cannot see where the inducement lies with a non-profit version and can only assume those canny folk in Edinburgh have come up with some brilliant new wheeze. Perhaps.
But however the returns on investment are disbursed, I still fail to see how the rail-link will generate sufficient returns. Given the constraints of single-track operation, commuter numbers can never repay the £200M.
I'm assuming that perhaps three trains on weekday mornings might be full of Edinburgh-bound commuters and a similar number in the evening coming home. These wee commuter trains hold a couple of hundred folk, so that's maybe 600 each day.
Each of them has to support one-third of a million of debt, so it's going to take a long time to pay all that back!
Sorry, I forgot that during the day, the trains will be full in both directions with OAPs avoiding their free bus travel and hordes of American tourists heading to Abbotsford. Or not.
Sooner or later, the tax-payer will have to pick up the bill.
Principal among the justifications for the railway are the 750,000 car journeys that we’re told will be taken off the roads from the 22,000 commuters who live in Midlothian and the Borders.
This relates to slightly over 1,440 people a (working) day using the train service to get to work in Edinburgh from the Borders and Midlothian. So roughly 6.5% of commuters will get out of their cars and onto the trains
The economic case for the railway showed it making an operating loss even after five years – that is to say it produces no revenue to put against the construction costs. To me the case seems very flimsy - even allowing for tourists and other one off trips. As an estimate revenue from the commuters might amount to £5.5 million per year (£15 return fare) - they say £6.17m after five years. Even at their estimates after five years the line will still be making an operating loss.
In 2000 the costs of restoring a railway to Tweedbank in the Scottish Borders was estimated at £73m. When MSPs voted to restore it in 2006 the costs quoted were £155m. The current costs are £178M - but almost everyone believes them to be over £200M. According to local MSP Jeremy Purvis said "detractors of the rail project had been proved wrong, and maintained: It will be delivered on time and on budget." Apparently the reason for the increase in the last year are due to a, "much more detailed technical assessments. These identified that significantly more work was required on structures such as bridges and tunnels than originally estimated. In addition, costs have increased due to general increases in track, signaling, earthworks and other factors such as environmental mitigation, some land acquisition and design and management. In addition to inflation, there are also new costs such as landfill tax that has now been built into the revised cost estimate.
Following on from Richard's comment, if we give credence to the 'official' estimate of 1440 commuters, I make that 7 full trains in each direction every weekday. I hope all those people are on flexi-time. Even if there's a half-hourly service, it will take three hours to pack them all off to work.
And each of them will still be bowed by the weight of £140,000 of capital debt to be repaid.
If, in addition to covering his operating costs and maintaining the line and stations, the train operator manages to levy £20 per day of capital from each return ticket, it will take those poor commuters thirty-five years to repay the capital. And that sounds like a very high ticket price. And my fag-packet calculation does not take account of interest on the capital sum.
I cannot see the commercial viability of it.
Post a Comment