We'll have to spend lots of money if we really want a new golden age of rail

`Rail has endured a complete policy vacuum in Labour's first couple of years in power'

THE BACKTRACKING on the Government's much-vaunted integrated transport strategy has begun - even before the policy has been enacted. Over the weekend we were treated to the wondrous spectacle of Downing Street spinners undermining the Government's own Transport Bill, to be published tomorrow, which will introduce congestion-charging and ways of trying to reduce car use.

The panicked spinning was an attempt to show that Labour is really the motorists' friend, with suggestions of reintroducing previously scrapped road-building plans and hints that congestion-charging would be quietly kicked into the long grass. In an effort to further Labour's car-friendly image, yesterday's meeting between John Prescott and the motoring lobby, hastily convened in the wake of "Labour is clobbering the motorist" headlines in the right-wing press, was quickly promoted to the status of a "roads summit".

Yet, until recently, rail was being portrayed as the key element in solving Britain's congestion crisis. One of the ministers who went through the revolving door that is permanently spinning at what used to be called the Department of Transport, John Reid, said last year that the "train is the central element in solving all our transport problems". This always seemed to be a bit of hyperbole, as only 6 per cent of journeys are undertaken by rail, but at least it showed commitment to expanding rail use.

But while rail has been talked up, it has endured a complete policy vacuum. In its first two-and-a-half years in power, Labour has done nothing to improve the railways. The subsidy from central government to the railways has been allowed to fall dramatically, in line with the Tories' spending plans, from pounds 1.4bn in 1997/8 to pounds 1bn this year; and it is only this week that the Transport Bill, which creates the new Strategic Rail Authority to co-ordinate and give direction to an industry that was split into 100 parts by privatisation, is being introduced in Parliament.

Prescott has made a lot of noise about getting people out of their cars and on to public transport, but the policy has not been backed by any firm promises or any vision about the future of the railways. Now, belatedly, the Government seems to have woken up to the fact that, far from being a cheap solution, transforming the rail network to make it a real alternative to the car will eat up billions of pounds of government money.

This message is being brought home to ministers by research undertaken for the BBC's Rail Week programmes by Sheffield University's Advanced Rail Research Centre. The researchers looked at the predicted growth of passenger demand for the railways and at how the network could cope. In particular, they tried to assess what investment levels would be needed to ensure that a reliable and safe service could be maintained.

The Sheffield researchers reckon that a relatively conservative estimate of passenger growth in the next 10 years is 53 per cent, and Railtrack, which had previously based its investment plans on a 30 per cent rise, has now accepted that figure.

But where will the money to pay for the improvements come from? The problem for the railways is that once the railway companies have to buy new rolling- stock or add extra capacity by improving track, the investment requires subsidy from the Government.

Although Gerald Corbett, the chief executive of Railtrack, said on Panorama last night that Railtrack would be upping its estimate of the required investment from pounds 27bn to pounds 35bn over the next 10 years, there would still be a major funding-gap on schemes that cannot be justified on strict commercial grounds. Corbett suggests the gap is about pounds 1bn per year, which would require doubling the existing subsidy, although the researchers reckon this funding-gap to be closer to pounds 2bn.

One option for the Government, hinted at yesterday by Sir Alastair Morton, chairman of the Strategic Rail Authority, would be to raise fares in order to choke off demand, British Rail's old policy. But that would be completely at odds with the Government's stated policy of encouraging people to let the train take the strain.

However, any attempt to obtain the money from the transport budget will be met by complaints from the ever-strong roads lobby. In his pre-Budget review, Gordon Brown very cleverly announced that any future money raised by the fuel tax price escalator, which had become an electoral millstone, would be used on transport projects. But the hints over the weekend of reviving the roads programme mean that the first call for this money could be for motorway-widening and new by-passes.

The Government is paying the price for its two years of inaction. Transport policy is about the long term - taking decisions that hurt in the short term, by forcing people out of their cars, but reap societal benefits in the long term, with less pollution, clearer roads and better public transport. The political opposition, and, in particular, the right-wing media spurred on by the AA, were always going to use policies such as congestion-charging and taxes on workplace parking to do a bit of rabble- rousing.

The about-turn was predictable. Professor Stephen Glaister, of Imperial College, has long argued that, with roads becoming choked, and the fuel tax escalator bringing in massive revenues, the pressure to increase road spending would become irresistible. And so it has proved.

The best possible interpretation of this messy situation is that the about-turn is a clever wheeze by Prescott and his fellow ministers, a bit of pro-car spinning to stave off the tabloid press. That would be according Prescott rather more nous than he has demonstrated in his two- and-a-half years in charge of the Transport brief. At the end of the day, money talks. If we are really going to have a new golden age of the railways, the BBC survey shows clearly that the bulk of extra new transport spending will have to go on ensuring that the network can cope with the influx of passengers. Only when Prescott starts delivering on real, hard cash for the railway shall we be able to say that he does not deserve his appellation "two Jags".

The author's book, `Stagecoach', was published last week in paperback by Orion Books, price pounds 9 99