What does a transport secretary do on a day when rail passengers are grumbling about annual increases in fares? One diversionary tactic is to put the boot into one of the most unpopular franchises in the country – Arriva-operated Northern rail – to give the impression the government is primed for radical intervention.
Thus Grant Shapps talked excitedly on Thursday about how he is not prepared to tolerate Northern’s “completely unacceptable” service. The contract would be “brought to an end” and “frustrated commuters will not have to wait long” for action. Fine, so what’s your plan?
At that point, Shapps’ script became vague. He hasn’t actually decided which of two immediate courses to take. The Northern franchise could be handed to a state-owned “operator of last resort”, as happened on the east coast mainline in 2018; or Arriva, owned by Germany’s Deutsche Bahn, could simply be handed a new short-term contract with revised operating targets and conditions.
Since the latter idea sounds like dressing up the same service in different clothes, it could not be called radical by any stretch. Andy Burnham, the mayor of Greater Manchester, was right to express alarm that Shapps, despite promising a change of some form since last October, still hasn’t ruled out the weakest version.
The “operator of last resort” plan sounds more attractive, but unless it’s accompanied by definitive spending commitments and detailed operational ambitions, it’s impossible to judge its nature. Arriva has failed in multiple ways but the firm has been affected by Network Rail’s slowness in electrifying lines and manufacturers’ delays in building new rolling stock to replace the loathed Pacer trains. How would a state-directed operator tackle those problems? Shapps hasn’t even started to explain what a nationalised operator would do differently.
In fact, both options are probably best regarded as sticking plasters. The more adventurous long-term solution would be to grant Burnham’s wish for devolved control. The Department for Transport seems to be edging in that direction but the industry-wide review by Keith Williams, which is supposed to provide a blueprint for greater accountability on the railways, still hasn’t been published. So Northern could get, first, a tweak, and only receive a permanent shake-up at an unspecified time in the future.
It is why Shapps would be well advised to save his boasts until he has something substantial to say. Tory transport secretaries have promised for ages to “bring the Northern Powerhouse to life” (the laughable words used by Patrick McLoughlin when awarding the Northern franchise to Arriva in 2015). The time for an actual plan, rather than bland rhetoric, is long overdue.
China’s suspension of Shanghai link won’t worry London Stock Exchange too much
The London-Shanghai Stock Connect programme is one of those “flagship” financial initiatives that is hyped by politicians on day one and then largely disappears from view. It was conceived in 2015 as a way for Chinese companies to raise money in the London market, and for UK-listed firms to tap Chinese investors, but only got off the ground in June last year when Huatai Securities, a broking firm, launched a $1.5bn offering over here. To date, Huatai is the sole company to make use of the facility.
Beijing, though, seems to have remembered that Stock Connect exists because it has now suspended the scheme, reported Reuters on Thursday. China, apparently, doesn’t like UK ministers’ criticisms of the Hong Kong government’s handling of street protests.
David Schwimmer, the chief executive of the London Stock Exchange, has sounded enthusiastic about the Shanghai link in the past but will not lose sleep over Beijing’s mild display of petulance. The unofficial ban may not be permanent anyway and would-be Chinese issuers in London will be the first affected.
In fact, the moral of the tale is this: the LSE was 100% correct to resist the half-baked £32bn takeover approach from the Hong Kong stock exchange last year. A merger would have made the LSE a political football, vulnerable to the bullying tactics of Chinese officialdom. The Stock Connect scheme is currently better for being very small.
