With his increasingly intemperate public statements, Railtrack Chief Executive Stephen Marshall is concentrating on winning a better deal for his shareholders at the expense of his ‘day job’ of helping run a railway, argues CHRISTIAN WOLMAR.
And, as is traditional at this time of year, ‘Mystic Wolmar’ also pores over his crystal ball to make four forecasts for 2002.
Oh dear. When we all thought it couldn’t get worse, it does. The recent performance of the railways is almost as bad as during the Hatfield aftermath. There are fewer extraordinarily long delays but a staggering number of minor delays during the last couple of weeks of November when four out of ten trains were late even by the relatively generous standards of the Passenger’s Charter, according to figures obtained by Simon Montague, the BBC’s estimable Transport Correspondent.
The railway is in such a bad state that Railtrack senior managers have been musing that perhaps some lines will have to be closed because there is insufficient engineering capacity to ensure the track is in a safe condition.
So what’s going on? First, it must be stressed that this is always a bad time of the year for the railways, given that it is the leaf fall season. But clearly that is not a sufficient explanation as autumn happens every year.
The conventional wisdom gathering momentum in the media is that the collapse in performance is due to that nasty man Stephen Byers pushing Railtrack into the uncertain world of administration. The consequent potential loss of savings to the Railtrack employees who are also shareholders, so the argument goes, has meant a collapse in morale which has undermined performance. It is a point that Railtrack’s embattled chief executive, Steve Marshall, has been quick to make in response to criticisms of his company’s poor performance post-October 6/7, the famous weekend when its tenuous hold on mortal life slipped away.
However, I don’t buy this argument. Moreover, it is quite shameful that Railtrack directors should be using this argument in their unseemly and over-personal row with Mr Byers. I have more respect for the railwaymen and women who struggle, every day, to keep the system going in the face of many difficulties. I don’t think that just because they may have lost some of their savings – and, remember Mr Marshall, much of that was down to your company’s incompetence and not anything Mr Byers did – they will not work effectively. Is he seriously suggesting that the signaller in a remote ’box somewhere will say: “I think I won’t bother giving the route for five minutes because that bastard Byers stole my money”? But it is indisputable that a few are ‘calling in sick’… And that is an issue management should address.
Indeed, Michael Holden, the much respected Southern Zone Director, said as much in response to the accusation from South West Trains Managing Director Andrew Haines that poor morale had contributed to the 80% rise in train delays attributable to Railtrack since last year. Mr Holden pointed out that he had no difficulty in getting his staff out of bed early to deal with the autumnal conditions which can play havoc at this time of year, and told The Independent: “Like me they are determined to do the best we can in the situation we find ourselves put in.” He could, too, have pointed out that most of these people do not even work for Railtrack, but for its contractors and subcontractors, and therefore are presumably not in possession of any valueless Railtrack share certificates.
Fortuitously, just as I was compiling this article, I received a letter from a signaller which reflects classic railway attitudes that the company, and the Government, should do all in their power to foster. Prompted by a reading of my book, Broken Rails, he thanks me for “drawing attention to the fact that the shambolic state of railway system is largely no fault of the rank-and-file railwaypersons trying to keep the many disparate fragments of this industry working in some semblance of coherence”. He continues: “My own loyalties lie with the railway, the people who serve it and the people who entrust us with their goods and their lives, rather than with any particular postprivatisation company, and this outlook remains almost universal among those at the sharp end.” That quote should be pinned on the wall of every manager’s office in the Black Tower.
While Railtrack’s share of delays has gone up somewhat, the train operators are clearly underperforming too. The reasons seem to be varied and difficult to pin down but one suggestion is that the defensive driving recommended by the Health & Safety Executive, especially at this time of leaf fall, may be a major factor.
At the risk of boring you, dear reader, with my pet hobbyhorse, that dispute between SWT and the Railtrack zone director demonstrates the extent to which the fragmented railway is structurally dysfunctional. Those constant injunctions from bodies such as the Association of Train Operating Companies and the Railway Forum on how the various players must work together have a ring as hollow as the middle of a doughnut in the face of these continual public spats.
Just in case there is anyone wavering on this issue, here are a couple of quotes, taken from an interview in the latest issue of the International Rail Journal with Benedikt Weibel, Chief Executive of Swiss Federal Railways (SBB). He says: “Separation of track and operations is a nonsense. Our system is so dense that splitting wheel from rail would be even more of a managerial nightmare than for a less dense system. If you have clear responsibilities, you have a clear command structure. If you think you can solve things through contracts, you do a lot for lawyers but you destroy the system.” (my italics) Of course, the Swiss system is nothing like as dense as the British one.
It is, therefore, something of a disappointment that the initial pronouncements from new SRA Chairman Richard Bowker seem to suggest that integration is not high on his agenda.
But back to the immediate problems of the railway. As the complexities and ramifications of Mr Byers’ move to pull the plug on Railtrack become apparent, it is increasingly clear that while putting the company into administration seemed a good idea at the time, it has created difficulties both in the short and long terms. As Mr Marshall’s increasingly intemperate statements show, he – and some others on his board – have been concentrating on trying to extract the maximum for shareholders which, admittedly, is a legal requirement for directors, while paying insufficient attention to his day job, making sure that Railtrack provides a good service for operators.
The idea being floated around is that Mr Marshall and several fellow directors should be kicked upstairs to run Railtrack Group, which is not in administration and owns assets such as the Channel Tunnel Rail Link contract, while the running of the railway should be left in the hands of Richard Middleton and Chris Leah, the two directors with extensive rail experience, bolstered by new appointments of other people with rail experience.
That is eminently sensible but Mr Byers should also go a step further. He should come to an accommodation with the shareholders, probably giving them much or all of the £2.80 which was Railtrack’s closing price, but not the £8 to which they may be entitled to under European legislation that says that they should be recompensed by the average price of the shares during the past three years.
Most important, it will allow Mr Byers to ignore the expressions of interest in Railtrack from companies such as WestLB which, privately, the Government reckons are just tyre-kickers who have nothing to bring to the table. As one Treasury insider put it to me, “there is no value in Railtrack. These people think there is. They see it as a financing problem, when it is, in fact, an issue about running a railway efficiently.”
Renationalising would give Mr Byers control of the company which is essential to expedite the restructuring of the industry. This will be a two-step process: the recasting of Railtrack into NuTrak as a company limited by guarantee with its profits being reinvested in the industry, and then, at a subsequent stage or, indeed, stages, the creation of integrated companies by hiving off sections of NuTrak.
Otherwise, the uncertainty continues to provide a smokescreen for poor performance and accelerates the departure of experienced staff. While it is impossible for Mr Byers to restructure the industry overnight, he should try to set out the path towards it as soon as possible, perhaps using the publication of the SRA’s Strategic Plan on January 14 as a springboard.
Mystic Wolmar strikes again (sort of)
It’s time to assess my predictions for 2001 which, I’m sure you all remember, were:
- Stephen Marshall will not be Railtrack Chief Executive.
- The final deals for fewer than half a dozen franchises will actually be signed.
- Labour will win a majority of more than 130 seats in the April election.
- John Prescott will no longer be at the DETR and Peter Mandelson will get transport.
Scoring this is rather more complex than anyone, except Mystic Meg herself, could have predicted. Take number one. On the face of it, that is correct because Railtrack no longer exists and while Stephen Marshall is still there, he has announced his departure. I give myself half a point.
Number two is clearly correct, since no deals, not even Chiltern (announced in August 2000), have been finalised. On the third, I give myself half a point as foot-and-mouth delayed the election.
And finally, not only has John Prescott gone, but so has the DETR. However, Peter Mandelson’s penchant for Indian billionaires cost me half a point. So 2 1/2 out of four, not bad for an amateur soothsayer.
And here’s four for 2002:
- Railtrack will still be in administration on October 7 2002, a year after the initial move by the Government.
- Stephen Byers will still be Secretary of State for Transport, etc.
- There will be renewed concern about safety on the railway after a fatal accident, probably caused by vandalism.
- At least one train operator will throw the towel in.