Inside Story: Who needs railways?: The signal workers' dispute may be proving that large parts of Britain can do without trains. Christian Wolmar reports

THE KNIVES are out for the railways. Commentators hostile to rail travel have been quick to point out that the signal workers' strikes have conspicuously failed to cause the expected chaos. There has been no gridlock on the roads, most commuters have still managed to get to work and those who stayed at home have enjoyed their extra days off in the sun.

Writing in last Tuesday's Independent, Madsen Pirie used the lack of impact of the strike to argue that far from being the second golden age of the train, the 21st century should be trainless. He even raised the old rail-hater's proposal that the lines should all be paved over to create special high-speed tolled trunk roads. As he put it: 'If the present strikes continue, it will be only a matter of time before people contrast the morning view of an empty line from a railway bridge with the high traffic density to be seen from a motorway flyover.'

The argument underlying this analysis is that rail is a marginal form of transport used only by a few unlucky or foolhardy commuters in London, the odd eccentric inter-city businessman who eschews his car and a lot of ne'er-do-wells who cannot afford one.

It is an opinion that finds an echo in the statements of ministers when they point out - as they do frequently - that the Government spends much more on railways than seems warranted by the numbers using them.

Ministers never tire of saying that while only 6 per cent of journeys are made by rail, the Department of Transport spends almost as much on British Rail and London Transport as on the roads, where the other 94 per cent of travel takes place.

It is thus no surprise that the Government is sitting idly by while the two sides in the rail dispute conspire to destroy the system they both say they want to see flourish. The Conservatives are ideologically uncomfortable with the railways. They see them as a form of public transport, inherently inferior to private motoring, which people almost always abandon once they are old enough or rich enough to buy their own car.

John MacGregor, the recently sacked Transport Secretary, used to like describing, somewhat inaccurately, how he would drive back to his Norfolk constituency on crowded roads while empty trains were to be seen running along the parallel line.

The continued need for subsidy makes railways a sitting duck for such arguments. They have absorbed a lot more than pounds 1bn of public subsidy in each of the past two years and are likely to continue swallowing cash for some time to come. The costs of preparing the railways for privatisation are negating both the savings made through increased efficiency and the growth in revenue that is coming from higher fares and the effects of economic recovery.

It is only the famous fondness of the British middle class for the railways, and their well- organised pressure groups, which have prevented any significant line closures since Beeching's axe stopped swinging in the early 1970s.

Railways are a 19th-century invention, which probably would never have been introduced had Tarmac roads and pneumatic tyres been available then as an alternative. Do they serve any purpose as we approach the 21st century? Are the opponents right in arguing for their rundown, leaving perhaps only a handful of lines open - for commuters in the South-east and a few steel mills and power stations?

EVEN before the strikes, the railways were in disarray. For more than a decade fares have been rising at well above the rate of inflation and last year there were 31.5 million fewer passenger journeys than the year before, a fall of more 4 per cent that brought the total to its lowest since 1987.

To make matters worse, only three years after the last upheaval in the rail organisation, which created InterCity, Network SouthEast and Regional Railways, the railways have been restructured again in preparation for privatisation. The passenger business has been split between 25 companies, which are to be offered for franchise to the private sector.

Bad as things were, however, the strikes have undoubtedly made them worse. Sir Bob Reid, the chairman of British Rail, has repeatedly pressed for the two sides in the dispute to get together and find a solution. He is concerned about the long- term effect.

The airlines and coach companies have joyfully being cashing in on the inability of the railways to provide a reliable service, and previous experience suggests that some of that trade will be lost for some time, perhaps for ever. As Ian MacKellar, BR's chief press officer, put it: 'People find out that coaches have improved since they last used them and will stay with them until maybe they get stuck on the motorway for a long time or have a horrendous journey.'

Some lucrative traffic on InterCity may be lost forever. Brymon Airways was cheering last week over the increase in traffic on its internal routes such as Heathrow-to-Plymouth and Southampton-to-Newcastle and it reckons some business travellers will now stick with air. A spokeswoman said: 'July was a record month, with 37,000 passengers, a 62 per cent increase on last year, and the load factor was up from 54 per cent to 70 per cent. We're convinced a lot of that was down to the rail strike.'

The trade union shares these worries. Jimmy Knapp, general secretary of RMT, said: 'We realise that you cannot have this dispute for a long time without having a significant effect on the railways. But there are managers going round saying they are happy for the dispute to continue until Christmas, so they can't be too worried. Indeed, the threat to the railways from privatisation and sectorisation is much greater.'

Sir Bob Reid is particularly worried about the future of freight. Although the few companies which still use rail for freight tend to have a long-term commitment because of the need for investment in terminal facilities, Sir Bob said that these firms may decide to withdraw permanently from rail next time their contract comes up for renewal because of the unreliability of the service.

Julia Clarke, the director of the Rail Freight Group, which has more than 100 member companies, is equally concerned: 'We have spent two years building up confidence in rail freight, trying to attract people back to rail now that the new legislation allows open access to the rails and the BR companies are being privatised which makes it easier for other hauliers to compete against them. The strikes are a terrible setback, as much of that work is now wasted.'

The story of freight typifies the long-term decline of the railways and highlights the Government's failure to look creatively at rail as an environmentally friendly form of travel (although ministers frequently make noises to this effect).

The amount of freight carried has declined sharply in the past few years, and last year fell to 103 million tons, a drop of 18 per cent. This compares with the 1,500 million tons now carried by lorries and the 333 million tons carried on the railways as recently as 1966. Back then, box cars plied the lines filled with every object under the sun, a trade that was phased out in the late Eighties.

In part, the loss reflects the decline of coal, but it is also a result of the deliberate pricing policy forced on BR by the Government, requiring BR's freight department to make a high rate of return on its capital. Ms Clarke points out that there is no similar requirement on road hauliers to pay for the roads in this way. 'It is not a level playing field,' she adds, 'but at times BR also has been its own worst enemy. Rail freight, in the hands of BR with all its old-fashioned practices, has lost out in competition with the private and more efficient road hauliers.'

While there are still 400 trains per day, many carrying 50 or more lorry loads of freight, freight on the rails is under threat. BR's profitable bulk freight carrier, Trainload Freight, has been split into three regional companies in preparation for privatisation, but they all have to pay very high access charges to Railtrack for the use of the track, and this means that freight flows are not competitive with roads.

Of course, there is a lot of romanticism about freight. Glib assertions by opposition politicians about putting more freight on rail should be treated with scepticism. Freight is most viable for bulk cargoes and for haulage over distances of several hundred miles. Even if the Channel Tunnel provides a boost, we are never going to return to the days when Granny's old furniture could be sent from, say, Cornwall to Norwich economically by rail.

But Ms Clarke argues that the policy of putting off freight has gone much too far. 'BR has being managing a decline, rather than looking for new opportunities. Whenever it was in the position of being left with an insufficient loading for a whole train, it would scrap the service rather than looking out for new opportunities. It has rejected flows of 20-30,000 tons per year which should be viable.'

Last week there was more bad news for rail, when a House of Lords committee suggested that the maximum weight limit for lorries in the country should be increased from 38 tons to 44 tons, a step which would clearly encourage yet more freight away from rail. Interestingly, the peers stressed that heavier lorries should only be permitted if road freight operators were 'charged the full cost of their road use, including currently external costs such as environmental degradation and safety enforcement'. If implemented, this might create the level playing field sought by the Rail Freight Group. The Lords also suggested that there should be much bigger grants to encourage hauliers to set up rail freight terminals.

It is not impossible to revive rail-freight business. Jim Steer, of the transport analysts Steer Davis Gleave, points to America for an example of freight on rail as a strong growth area. 'In the States, private freight firms are building by-passes to avoid bottlenecks and even deepening tunnels to allow trains to carry two decks of containers,' he says. 'Of course the distances are longer but with the Channel Tunnel, many flows become viable.'

To be fair, British Rail has spent pounds 450m on creating and improving freight facilities for use by cross-Channel trains and seven terminals - in Glasgow, Manchester, Birmingham, Liverpool, Cardiff, Cleveland and North-west London - are ready for use with two more, in East London and Wakefield, being planned.

Some 50 trains per week in each direction are already running and this will eventually build up to more than 200, with the hope that 6.5 million tons will be carried by 1995/6. Some transport analysts suggest that this is an unambitious target because the Government refused to consider adapting parts of the rail network to allow lorry trailers to be carried 'piggy- back' fashion on railway wagons. It has also favoured only 'inter-modal' containers, which can be easily transferred on to lorries, rather than old- fashioned general freight wagons which, the analysts argue, are more viable for the long distances which the Channel Tunnel enables trains to run.

WHILE they still have an important role to play in carrying freight, in the age of the motorway and the articulated lorry there is no escaping the fact that the future for the railways must be primarily as a passenger service.

Since it is becoming widely accepted even in Britain that road capacity cannot increase to meet the demands of increasing traffic, a second golden age is a realistic prospect.

Professor Roderick Smith, chairman of the Advanced Railway Research Centre at the University of Sheffield, identifies at least two passenger markets where rail has an inherent advantage: commuter railways and inter-city travel. But he feels that there is even further potential for railways. For example, rail links between provincial towns have much more chance of being viable now that shorter trains are available.

'There used to be infrequent long trains between between Manchester and Sheffield,' he says, 'but now, with shorter, air-conditioned and comfortable trains, they run a half-hourly service which means that people hardly bother to look at the timetable.'

He identifies light rail projects as another potential growth area but warns that it is not easy. In Sheffield, for example, because of the Government's spending restrictions and its policy of deregulating both trains and buses, the new tram system is not blended in with the rest of the local transport infrastructure. 'The trams are not integrated into the existing bus network or its schedules and there is no good connection with the rail station. It shows the lack of planning.'

But all hopes of expanding services and encouraging a return to rail are prejudiced by the Government's niggardly rail investment policy, which betrays its inherent dislike for the railways and which contrasts so strongly with what is happening in Europe. The long-term lack of investment, familiar to all rail users, was highlighted in a report produced last week by Steer Davis Gleave for, among others, the Tory Bow Group. It showed that British investment in railways per head of population will be the lowest in Europe between now and the end of the century. Alone among major European countries, Britain has no plan for the role of the railways or targets for their use.

Professor Smith asks: 'How can we have any idea of what our transport needs are likely to be when there is no national environment, transport or energy policy.' Although investment has been more than pounds 1bn annually for the past three years, a lot of the money has been spent on preparation for the Channel Tunnel trains and overall investment is now declining sharply. Privatisation is causing an investment hiatus. British Rail, which is now little more than a holding company, is unable to order new trains and the 25 operating companies which are due to be franchised starting late next year are not yet in a position to order any new stock. The cost of the strike, now topping pounds 100m, will have to be taken out of the pounds 400m for investment this year by Railtrack, which took over the track from BR in April.

Jim Steer, one of the authors of the report, says that Britain is out of step with other developed countries in its rail investment policies: 'The argument that rail is unimportant because it only accounts for 5 per cent of journeys is wilfully misleading as most journeys are under three miles. In the markets where rail competes most strongly - between cities, commuting to London, bulk freight - its share is substantial and in some cases dominant. Across the world, countries are investing in high-speed rail systems. Even Poland will be ahead of us soon. Those countries can't all be wrong.'

Leading article, page 18

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