Trainspotters know best

Date : 28 October 1999

To : The Editor, Accountancy Age

From : Nagindas Khajuria

Subject : UK Trains

UK Trains

Trainspotters Know Best

Your leader an Anglia Polytechnic University's article on rail delays and rail finance, (14 October) deserve careful scrutiny. There are acronyms galore: SPAD, TOC, TAC, MEAV, RAB and ATP. There are also percentages galore: 5%, 23% and 61% uplift on the value of Railtrack shares. Finally, there are rail companies galore: 25 of them.

SPAD means 'Signals Passed At Danger'. If there is sun or glare, the driver does not see the signal properly, so he cannot tell whether it is green, yellow, double yellow or red. I hope he errs on the safe side in future and stops.

TOC means 'Train Operating Companies'. The 25-odd companies ought to merge by April 2001 into a maximum of four: South East, South West, North East and North West.

TAC means 'Train Access Charges'. The new charges from April 2001 should be lower. They should have been based from April 2001 on operating costs, historical cost depreciation and a 5% return on factual asset base. While Railtrack's profits have been too high, the TOC's profits have been too low.

MEAV means 'Modern Equivalent Asset Values'. Current cost accounting is a misleading system. In any one year, the maximum replacement of assets would probably be only 1/30th of the asset base rather than 100% of the asset base.

RAB means 'Regulatory Asset Base'. This is to work out what Railtrack's reasonable return on capital employed should be to compensate shareholders fairly for their investment. There are so many variations in percentage uplift on market capitalization it may be best to drop this method. A net profit before tax falling between 5% and 10% of turnover would compare favorably with historical net profits in the motor industry.

ATP means 'Automatic Train Protection'. Computer software failure in signaling systems was blamed for the delay in completion of the Jubilee line extension. We shouldn't rely unduly on ATP.

I don't believe fines are the real answer to train delays, poor maintenance of signals and tracks, bad management, blaming one another, etc.

I have studied the causes of train delays. During the six months ended 30 September 1997, they were as follows: in 2,500,000 loaded train movements, there were 301,974 delays (12%) of 3 minutes or more; 36,726 (1.5%) due to maintenance and renewal causes; 265,248 (10.5%) due to other causes, signalman being late for work, etc.

The total number of minutes delay was 9,708,349 (3.88 minutes per train movement) during the six months; other causes were 7,160,383 (2.86 minutes per train movement).

While there were sub-divisions of the former types of causes, such as track and structures, power supply, control system and acts of God/Vandalism, there were no sub-divisions for other causes. Statistics for other causes should be developed into specific sub-division data rather than lumping it all under than lumping it all under other causes. Only then can we attempt to improve the rail industry as a whole.