Rail 496: How the Curse of the SRA claimed two high casualties

The government set up the SRA as a quasi-independent body, but whenever its chairmen tried to exercise that independence, they were squashed by ministers. CHRISTIAN WOLMAR analyses what went wrong – and believes the late Sir Alastair Morton may have been judged too harshly.

The Strategic Rail Authority was cursed from the outset. It certainly contributed towards breaking the health of Sir Alastair Morton, its first chairman, who died earlier this month at the sadly premature age of 66. Nor has it done much for the reputation of his successor, Richard Bowker, who left on September 11.

Now, of course, the organisation itself is to be killed off and during its slow death, under the interim leadership of Nick Newton, the rail industry is in something of a state of limbo. So what went wrong and why was it cursed? Both Morton and Bowker were good men with a belief in the rail industry, and their successive failure suggests that the government is right in abandoning the whole concept of a quasiindependent strategic body. Although they failed for different reasons, they shared some common characteristics: arrogance, an inability to delegate and, most tellingly, a lack of nous about how to play politics in Westminster and Whitehall.

Both had a vision that the public and private sectors could be melded together to bring about massive improvements in the public realm. But their experiences suggest that, as far as the rail industry is concerned, it seems to be an impossible dream.

Morton arrived at the SRA while it was in shadow form. He had accepted the appointment from John Prescott, with whom he had a good relationship, because they shared a common ideal. Britain had failed to invest in its transport infrastructure ever since the Second World War and that was now going to change. Prescott talked of integrated transport and attracting private investment, all of which was music to Morton’s ears.

Safe in the knowledge that Prescott wanted a real step-change, Morton refused to engage in the nitty-gritty of a modest franchise deal with a few extra trains here and there. Instead, he said to the private sector: “Think big, bring me your schemes and we will consider them.” There were several problems with that concept. First, it was very difficult to allocate a franchise on that basis because everyone’s idea was different and it was impossible to compare them fairly or accurately. Virgin suggested various parallel high-speed sections on the East Coast Main Line while GNER proposed more of the same but with tilt. It would have been impossible to have to decide between the two should Morton ever have been allowed to do so.

And here is the real cause of the SRA’s downfall. When the Treasury became aware that the financial implications of what Morton wanted – a 21st century infrastructure – meant lots of extra money, it made sure he had no room to manoeuvre, and Prescott, though convinced, was not a strong enough player to save him.

There was another flaw. Morton’s scheme relied on Special Purpose Vehicles being created to invest in enhancements. These were to have been joint ventures between various engineering companies, train operators and Railtrack to create enhancements. As an expert on Private Finance Initiative schemes, having chaired the government’s panel on the subject for three years, Morton was convinced these would work but the idea never got off the ground.

The problem? It was never clear how the SPVs would be paid for. The basic concept was that Railtrack would take on the enhancement after it was built and pay for it through extra track access charges received from the train operators. But the complexity of this arrangement was its undoing. When Railtrack collapsed in October 2001, therefore, so did the one SPV which had begun work, for improvements to the Brighton line.

In its short life, the SPV had already been fraught with difficulties. One of the members of that SPV told me at the time that it took Railtrack six months to give his staff permission to get on the site because it was seeking insurance of several hundred million pounds in case of an accident. With such a lack of cooperation, the concept was clearly doomed from the start.

So Morton’s dreams came to naught. I was as hard on Morton as anyone, but actually, looking back on that period I think we were all too harsh. Although Morton may have been naïve in trying to push that agenda, because taking the word of a politician is never a great idea, he was right to do so. The government had a choice: it could either recognise that the railways were a vital component of Britain’s infrastructure and ensure they continued to be so – creating tunnels under London or highspeed links between the capital and the North were, and remain, much-needed – or it could simply argue that this was all too expensive and want none of it. And the government chose the latter. But at least Morton asked the question. Bowker never really had the chance to do so. A couple of years ago, he did give a speech outlining what he wanted the railways to look like in 2012. It sounded like a fairy tale, and it was: unlike Morton, he had absolutely no road map – pardon the expression – on how to get there, except through such fatuous concepts as the industry pulling together.

Therefore, to some extent Bowker made the same mistake as Morton but on a more modest scale. Bowker had a habit of making deals with the franchisees before alerting the Treasury to the consequences, although by then the costs had begun to soar. The Treasury – which, it must never be forgotten, invented the privatisation scheme – realised that Bowker seemed to be offering the opportunity to spend lots of money for… well, not much return. Morton, at least had been offering a major expansion of the railways – Bowker offered a bit of tinkering around the edges.

Bowker was also bad at delegating. He made several crucial mistakes at the outset. He should not have been chairman and chief executive. He should have delegated the CEO role to an experienced operator, someone who had firsthand experience of the railways and would have been his eyes and ears in the industry. Bowker’s arrogance in thinking that he could do it all himself was a key factor in his failure. He wanted to be the Fat Controller – overseeing all of the industry – and to bask in its revival. But, without a clue of how to create it, he instead appointed a press spokesman who thought that he could spin the media into support for the railways. This was a catastrophic mistake that helped sound the death knell for the organisation.

Bowker does have some achievements to his name. He helped drive down costs on the West Coast project and sorted out the power upgrade on the Southern. But he did not express – or was not allowed to express – a real vision for the railways for the 21st century. And he failed to define what franchising was for, or to realise that the industry’s very structure was dysfunctional. By the time he did so, it was too late. He had, originally, thought the private sector could do it on its own, and he learnt the hard way that he was wrong. And to his credit, he has accepted that was a mistake.

And, like Morton, he never mastered Whitehall and alienated much of the industry – as one insider put it, “he did not herd the sheep in the industry.” Quite the contrary. As with Tom Winsor, Bowker does not leave a lot of friends behind in the industry and, like Morton, he ended up loathed in Whitehall. So that is why the SRA had to die. It was presented as a quasiindependent body, but the minute either Morton or Bowker attempted to exercise that independence, they were squashed like butterflies hit by a high-speed train.

There is no doubt that failure at the SRA, after the exhausting near-decade at the helm of Eurotunnel, contributed to Morton’s decline in health. He was a man who really cared and wanted to make a difference. At least there will be the Channel Tunnel by which people will remember him. Let’s hope that Richard Bowker goes on to similar great things.