Rail 473: Media flurry may signal treble trouble for railway

After a period of relative calm while media and public attention was diverted overseas, the railways are now once more back on the front pages. Christian Wolmar assesses the implications of three big news stories about the industry that broke in the space of just two weeks

Remember those quiet times earlier this year when the media, its attention focussed on Iraq, was singularly uninterested in anything that happened on the railways. Now, as I predicted then, rail is never off the front pages. seems to be almost permanently in the news. Indeed, events are moving so fast that it is difficult to keep track. In the past fortnight alone, there has been three major news stories: Jarvis’s withdrawal from day to day rail maintenance; the rail regulator’s draft recommendations on Network Rail’s income; and the derailments on London Underground.

All three are significant developments with various subtexts and implications that could easily fill one of these columns. While intuitively it appears that the attempt by the regulator, Tom Winsor, to pare down Network Rail’s costs is the most important of these stories, Jarvis’s decision to pull out of day to day maintenance raises potential fundamental issues about the future structure of the railway.

Jarvis has invested more than many other maintenance firms in the industry but, unfortunately, its blemished record on safety, together with its appalling PR in the wake of Potter’s Bar, has convinced the public that there is something fundamentally wrong with working methods.

Sure, as its high profile non-executive director, Steve Norris, pointed out on TV, the company maintains a quarter of the rail network and therefore the occasional incident is inevitable. However, the similarities between the derailment of a freight train at Aldwarke last year when part of the track was left missing after repairs had been carried out on a set of points and the one in September at King’s Cross, also after points work, suggested that the company has not learnt from its mistakes.

Moreover, public confidence in Jarvis has been wrecked by the company’s misguided attempt to suggest that saboteurs may have caused the Potter’s Bar crash, a theory for which there was no evidence except that the company was convinced its own people could not have made the errors. The problem trying to spin that story, irrespective of the facts, was that in the public mind, it looked as if Jarvis were more interested in protecting its sliding share price than in finding out what happened at Potter’s Bar.

And it is because of the share price that Jarvis has now pulled out. The company said that the decision was taken because of the reputational risk when such incidents occurred. That is actually a mature decision and the right one. Jarvis was never going to get over its image problem because of the impossibility of proving a negative. Even years of incident free operations would not have repaired the damage.

However, there is a bit more to this story. Following the King’s Cross incident, Network Rail began to brief against Jarvis, which resulted in press stories about how NR would be keeping tabs on its contractor. That bit of spinning against its own contractor was just the sort of thing which we journalists love, but which does the rail industry no good at all.

So, to some extent, Jarvis was pushed by NR, backed by ministers who were infuriated by the King’s Cross incident as it happened on the same day as the best news story of the year on the railways, the opening ‘on time, on budget’ of the first section of the Channel Tunnel Rail Link. NR has not said definitively whether it will keep the three Jarvis contracts in house, but the early indications are that it will. This begs a wider question. Contracting out all the engineering work on the railway was always a daft idea because it left Railtrack without the in-house expertise it needed. But the problem with doing all of it in-house is that there is no cost comparator and work.

Now for safety reasons – many of these incidents are caused by failures of communication across the interfaces between companies – it may be right for NR to do all its day to day maintenance itself, but only if it can prove that it has an effective means of keeping down costs, something which British Rail did very effectively. Which brings us neatly to Tom Winsor’s oeuvre, which has the rather unsexy title of Interim review of track access charges; draft conclusions. (I hope he finds a better title for his forthcoming memoirs – Happy days with my friend Stephen Byers is not thought to be a front runner.)

Winsor’s efforts in examining Network Rail’s costs in great detail and trying to ascertain what a reasonable level of funding should be are, indeed, heroic. Thanks to the employment of substantial numbers of consultants – who presumably spent a lot of time talking to Network Rail’s consultants, meetings that collectively ran up a bill for taxpayers of several thousand pounds per hour – he has managed to identify many of the causes of cost escalation in the industry.

Winsor has, as expected, made nobody entirely happy with his conclusions. He has given Network Rail less than it wanted, £5.3bn for the next financial year compared with £6.3bn set out in its latest business plan, but more than the government has budgeted for – between £6bn to £8bn over the five year period.

The £6,400,000,000bn or so question (don’t billions look impressive when you put in all the zeroes!), therefore, is how will the shortfall be made up. Winsor has always insisted with great force, that under the current legislation, the government must cough up whatever amount he determines. However, on the day of the publication of his great work, Alistair Darling, the Transport secretary said delphically that the railway would not be getting any more money until costs are under control. Since, patently, this is not the case, some kind of showdown is inevitable. Indeed, Tom Winsor, who goes off into the sunset next July to be replaced by a committee, always intended to leave a bombshell behind him when producing his review of access charges.

The whole process is bizarre. Winsor is the only one of the regulators who, apparently, has a direct call on taxpayer’s money. As one rail insider put it, ‘I vote for a political party to decide what to spend on the railways, the roads or hospitals, not Tom Winsor, clever as he is.’

If there is not to be a constitutional showdown, the money will have to come from somewhere. I suspect there will be a traditional fudge for the first couple of years: a bit of extra money from the roads budget and the Department for Transport’s contingency fund. But the railways will be made to suffer, too. Any money earmarked for enhancements by the SRA will have to go towards Network Rail’s operating costs, and there will be real pressure to push fares up, once the next election is out of the way. It is, as Anthony Smith of the Rail Passengers Council put it, using ‘smoke and mirrors on a scale we have never seen before’. And then, after the election, there may well be serious cuts, certainly in enhancements but possibly even in services.

Moreover, the fact that the regulator is determining what Network Rail can spend is bizarre. The original purpose of having a regulator was to make sure Railtrack was efficient and did not make super profits for its shareholders. But now that NR is essentially a publicly-owned company, and the money is raises is underwritten by the government, should not the government’s own SRA carry out this task. By the time of the next access charge review, I predict that this may well be the case.

A brief mention of the third story, the London Underground derailments. Looking back at past Health and Safety Executive statistics, in a bad year there were three passenger train derailments and it a good one, none at all. To have two over one weekend does suggest more than a coincidence, although one cannot rule out a statistical blip. However, given that the Underground has gone through a major change with the implementation of the public private partnership, it is difficult not to postulate that the two events are interrelated. It certainly raises, yet again, the issue of whether it is advisable to separate the infrastructure from the operations in railways. There is, at least, a prima facie case for the supporters of the PPP to answer. Yet, it is noticeable how none of them will come on to TV and Radio programmes to defend their baby.

Leaf fall Fantasies

It is great to know that Network Rail is tackling the leaf fall problem in a more systematic way than Railtrack ever did, though trying to chop down evergreens in the Birmingham area suggests their contractors may not have the required botanic knowledge.

However, rail companies have to be wary of making promises they cannot keep. My attention was drawn to a press release by First Great Western suggesting their drivers had received special training to deal with low adhesion. However, when I phoned to check what sort of training was being given, I was told that it was only new drivers who were being given extra tuition on the problem, not existing ones. I have always argued that train companies do not make enough effort in trying to stimulate good news stories in the media. But making it up, chaps, is not the way to do it!

While we are on the subject of PR, another own goal was scored by Virgin Trains publicising the fact that it would carry travellers’ luggage by road on busy Saturdays. By the time the story found itself on BBC radio 4 news, the impression given was that the people would have to travel separately from their luggage, rather like on aeroplanes. In fact, the service will be optional and cost extra.

While the misinterpretation may not have been Virgin’s fault, with a bit of forethought it was obvious how the story would play. The impression given by the story is that the railways are an optional extra, great if you can use them, but marginal to transport needs. If that becomes the dominant public’s view, then the case for rail will be lost before it is even set out.

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