Rail 417: Calm before the anniversary storm for rattled Railtrack

Despite the abrupt dismissal of Chief Operating Officer Jonson Cox and the ‘new broom’ approach of Chairman John Robinson, Railtrack remains vulnerable to another post-Hatfield type panic. Just back from the Far East, CHRISTIAN WOLMAR restates the case for appointing a seasoned supremo who will be able to take responsibility for decisions affecting the whole railway.

Returning from three weeks in distant Vietnam, where there is a functioning railway, albeit single-track, but little news from Britain, it is clear that the summer has been a period of reflection for the railways. Looking back at the headline stories during August, it seems that, at last, for the first time since Hatfield, the railways have been out of the news. No longer was there a major story every week about the latest mishaps in the industry which means that there has been scope for a bit of quiet thinking behind the scenes.

Unfortunately, this period of calm will not last long. October will see the first anniversary of the Hatfield disaster and the second of Ladbroke Grove and, in addition, there is bound to be further soul-searching about the future of the railways as the inadequacies of the current structure demonstrate themselves yet again.

It is therefore timely to reflect on exactly what went wrong to create the crisis on the railways which has so dominated the past year. The primary cause was, of course, the broken rail that led to the Hatfield crash. But, as Chris Garnett, the chief executive of GNER, puts it in my forthcoming book, Broken Rails (to be published by Aurum Press next month), “the accident at Hatfield was not caused by a broken rail. It was caused by total mismanagement by Railtrack and its contractors.”

That initial incompetence by Railtrack would not have led to the crisis had it not been for the subsequent over-reaction to the problem of gauge corner cracking and the consequence panicky imposition of thousands of speed restrictions.

The broken rail was the result of the breakdown in communication both between the contractor, Balfour Beatty, and Railtrack, and within the two companies. What struck me when, for the book, I investigated the sequence of events which led to the broken rail was that so many people at various times knew of the defect in the rail but no one was in charge of actually taking responsibility for ensuring its replacement. There were, as always in such events, bits of bad luck, such as the rails being delivered on site in a wagon from which they could not be unloaded underneath overhead line equipment. But the fundamental problem is that no one was in charge of the railway.

The second mistake, the post-Hatfield panic, was largely the result of the absence of engineering and railway operating expertise at the top of Railtrack. It is quite astonishing that the operation of the railway should have been in the hands of a man, Jonson Cox, who had joined Railtrack from Yorkshire Water, with no previous rail experience, just six weeks before the accident. Mr Cox was responsible for making decisions about speed restrictions and it is hardly surprising that, with no experience to fall back on, he took a safety-first approach. Again, his lack of knowledge of the railway and his own company meant he did not realise that, in the process, he bankrupted Railtrack and wrecked the industry’s investment plans.

It is possible to feel some sympathy for the hapless Mr Cox. There was a confusion over the precise nature of his job. He was called the chief operating officer, a title used particularly in the USA for the executive who actually runs the company. In the railways, of course, the title of operations director has a rather different meaning, as it is the title for the person who actually runs the railway. In practice, however, that meant this completely inexperienced man was expected to make informed decisions about what to do in the aftermath of the Hatfield crash. It was hardly surprising he made the wrong ones. A more modest man might have turned down the prospect of running Britain’s railway infrastructure without any prior knowledge of the industry, but modesty was not, apparently, one of Mr Cox’s strongpoints.

Railtrack’s new Chairman, John Robinson, is clearly trying to address these issues. As Nigel Harris noted in RAIL 415, he has undertaken a slow-burn revolution, starting with a fundamental review of the top structure of Railtrack with changes to the board and senior management. In sacking Mr Cox, who was widely disliked by his colleagues, particularly the zone directors, and had failed to deliver on operating performance, Mr Robinson, who only took up his post in July, showed that he is a quick learner in identifying some the past failures of the company. However, the intractability of those problems is demonstrated by the fact that he has handed Mr Cox’s responsibilities to Steve Marshall, the chief executive, whose in-tray is already overflowing. Indeed, Mr Cox was appointed precisely to try to give support to Gerald Corbett, Mr Marshall’s predecessor.

While the departure of Mr Cox and other changes made by Mr Robinson, such as removing deadwood directors like Jenny Page and David Jonas and getting rid of the ludicrously unsuitable public relations advisers, Brunswick, are important, the key question is whether another Hatfield and post-Hatfield type debacle could happen tomorrow.

Say, for example, that the concerns about the signalling set out in Railtrack’s Network Management Statement emerge as more troublesome than originally envisaged. As mentioned in this column in RAIL 413, the number two risk highlighted by the company was “latent signalling control system wire degradation”. This means that there are concerns that faults in old electro-mechanical relays, of which there are still many on the network, could potentially result in wrong side failures (signals that should be red showing green). Say a signal suddenly shows the wrong aspect. There is not a crash, but there is concern from the HSE. And then it happens again. Railtrack already has a great shortage of signalling engineers and there aren’t enough to go round checking other signals.

Will the company, fearing yet more adverse media coverage, start shutting down sections of the network? Or is its management now robust enough to make the sort of rational decisions that the old BR men (they were nearly all men) would have made in the past – in other words, a risk assessment based on their experience and on an acceptance that there will always be some risks in any industry in which very large objects hurtle around at speeds of 125mph?

I suspect not. So, unfortunately, the conclusion must be that Railtrack, despite the changes, is still not robust enough to withstand an unexpected crisis. Pace Mr Cox’s departure, the weaknesses exposed by Hatfield still remain. Both the preconditions for a Hatfield-type crisis remain: the absence of a ‘Fat Controller’ who is actually in charge of the whole railway and the lack of railway experience at a high level.

This was, in fact, well illustrated by one of Mr Cox’s last actions. In a leaked memo suggesting that Railtrack be reorganised into 18 divisions (sounds familiar as BR was once carved up in pretty much that way), he accepted that the railway had not been performing well and that as many new temporary speed restrictions were being imposed as removed. That is because the very conservative decisions about safety are being taken by junior managers terrified of finding themselves in the dock as their colleagues involved in Hatfield are likely to do so. Ironically, the memo seemed to suggest that Mr Cox had begun to learn a bit about how to run a railway.

The problem is that there is still no one in charge of the railway who is able to take responsibility for decisions like ensuring speed restrictions are not imposed too easily which is why, despite all his good intentions, Mr Robinson’s efforts are likely to be in vain. As I have stressed here before, without a major structural change to the industry, the weaknesses will remain.

Underground madness

In the light of Railtrack’s travails, it is all the more amazing that the Government is pressing ahead with its scheme to split the Tube infrastructure from services through the controversial Public Private Partnership. The evidence against proceeding with the 30-year plan has become overwhelming with the publication of the Deloitte & Touche assessment into the scheme.

It is hardly surprising that the Government wanted to keep this report hidden from public view because its findings are so damning that it seems inconceivable that ministers can actually sign off the deal when it is so clearly, to put it mildly, ‘sub-optimal’. Unfortunately for ministers, a judge has now given permission for Transport for London to publish the report (available on the TfL website, www. tfl. gov. uk albeit with a few black lines in order to protect ‘commercial confidentiality’). Having read through many such consultant reports, I can say that it is very rare to find one with such unequivocal and damning conclusions.

Essentially, Deloitte & Touche says the decision to press ahead with the PPP scheme is based on a series of assumptions which have been drawn up to show the public-sector alternative in a poor light. The word ‘misleading’ is used to indicate the way that the PPP scheme has been made to look better than the alternative. The comparison is based on the assumption that public-sector inefficiencies will be so great that anything else will be better, but the calculations to fatten up the cost of continuing with the present public system are nakedly biased, as Deloitte & Touche has uncovered evidence of doublecounting to massage the figures. Billions have been added into the supposed costs of the public-sector comparison on the basis of flimsy evidence.

Moreover, the consultants say that is impossible to assess whether the private bids offer value for money because they only provide firm prices for the first 71/2 years, the first breakpoint in the 30-year contracts. Since there is a review every 71/2 years, prices after that may well be changed, completely altering the economics of the deal. They also criticise the fact that the Government has rushed in to the selection of preferred bidders, since this has limited the potential for bargaining, and they question the way the bidders have been selected, suggesting that the process favoured one over the other.

In short, Deloitte & Touche, in their sober language, have barely a good word to say for PPP and conclude that the assessment between PPP and the public sector has been so skewed in favour of the former as to be meaningless.

It is not too late for Stephen Byers and his boss to back down, even though it would be politically embarrassing and, in the short term, expensive as the bidders would have to be bought off. But the report seems to leave them with little alternative, especially as the flaws in the selection process suggest that losing bidders have a cast-iron case for a judicial review. This saga will run and run.