Rail 570: First milks Great Western ‘cash cow’

First Great Western’s problems have more to do with the structure of the group and the financial pressures it faces than the size of the franchise, argues CHRISTIAN WOLMAR.

LONDON TravelWatch, has called for the termination of the First Great Western franchise because of its continuing poor performance. While we are used to Bob Crow and his politically motivated pals regularly calling for all ‘privateers’ to be consigned to oblivion, such appeals from the respected official passenger body is an entirely different matter and should be taken seriously. Brian Cooke, the chairman of London TravelWatch is particularly exercised over FGW’s failings. He points to the most recent Passenger’s Charter figures which show only 68% of trains in the peak being less than five minutes late, and since the charter – unlike the performance figures – excludes suicides and bridge bashes, more than a third of trains are delayed significantly.

Moreover, as Cooke stresses, this comes after a series of timetable changes which, on average, allow four minutes more to cover the distance between Slough and London than five years ago. Sure, some of this is a response to extra passenger numbers, but much of it is padding to make the figures look better. And even then FGW has failed to meet this new timetable. What snapped Cooke’s patience was a recent meeting between TravelWatch and Alison Forster, the head of FGW, and Robbie Burns, the local Network Rail man: “They said they knew the service was lousy but that it would get better. But we met them 15 months ago and that’s what they said then, and since that meeting, things have been getting worse.”

Meanwhile, though, FGW is coining it in. The company has a virtual monopoly on travel between London and the Thames Valley as no one in their right mind would drive to Reading from the capital on the M4 if there was any possibility of taking a train instead. Cooke points out that the latest figures suggests rush-hour trains are 10% in excess of capacity – the PIXC measure – whereas DfT guidelines specify a maximum of 3%. So there is little incentive for FGW.

Why is it, Cooke asks, that most other companies can manage something now approaching 90% – 88% in the latest figures from the National Rail Trends Yearbook which has just become available on the Office of Rail Regulation website – and their performance is improving, while FGW’s operations are not only poor but getting worse? Moreover, he says, there are countless examples of poor customer care received by TravelWatch, which has seen complaints concerning the company double in the past year.

There are a couple of possible reasons. The management of a railway is highly dependent on the day-to-day routine being carried out efficiently. This is clearly not happening with FGW, and Cooke suggests this is because the franchise is simply too big, having been a merger between the original Great Western, Thames Trains and Wessex. He points out that ‘one’, the other merger between long-distance and suburban operators (Anglia and Great Eastern), took a long time to bed down and is only now beginning to show signs of recovery.

These mergers were, of course, a result of Richard Bowker’s policy at the Strategic Rail Authority to amalgamate franchises to ensure that, wherever possible, all the trains out of particular London stations were operated by the same company. Given that Bowker has now gone on to higher things, running National Express (which, by the way, operates the ridiculously named ‘one’ that is in danger of becoming NEG’s ‘one’ and only major franchise…) it would be easy to blame him for this failure, but I don’t think that argument holds water. Bowker was right to try to get local and long distance services under one management that could then decide how best to timetable and prioritise its train services.

It is the quality of management and the organisation of the company that is important, and there are many examples in the world of far bigger railways than FGW that cope with similar situations. It would be quite possible to run FGW efficiently but clearly there is a reluctance on the part of management to employ the right people at the right price to ensure the job is done.

There are, for example, inherent problems with the timetable. According to a well-informed pal, if you plotted the train on a graph as they did in the old days, there is a bottleneck on the up relief line in the morning peak, exacerbated by fast trains catching up ‘stoppers’.

Therefore, the franchise’s problems are more to do with FirstGroup’s structure and financial pressures than the size of the operation. Uniquely of FirstGroup’s franchises, FGW was, until recently, run directly by the company’s finance director, Dean Finch, a man for whom the expression ‘bean-counter’ might have been invented because it was seen as the cash cow for the group’s business. All the others were the responsibility of Andrew Haines, the former head of South West Trains, who showed there that he is a good operator. Indeed, some of the other First franchises, notably TransPennine Express and ScotRail, are among the best, and now, interestingly, after all the flak – which, according to one source, has ‘troubled the top table’ – Haines is to get control of FGW.

FirstGroup has recently made the major acquisition of a bus company in North America, Laidlaw, tripling the number of school buses it operates there from 20,000 to 63,000 and obtaining the Greyhound name into the bargain. This suggests the company needs all the cash it can get, as witnessed by its unusual accounting practices which have attracted the attention of MPs on the Public Accounts Committee. The company, uniquely among the rail operators, has excluded ‘non-recurring bid’ costs and other ‘non-recurring items’ from its operating expenses, boosting its ostensible profits by 12%. It says its practices were in line with those of international standards, but investigations continue. FGW accepts that its recent performance has been poor but suggests that part of the problem lies with Network Rail. Indeed, there are more delays on Great Western than elsewhere on the network apart from London North Western. The company also says there have been ‘rolling stock’ problems which are being resolved, and that crucially there is the bottleneck at Reading which, it hopes, will be the subject of an announcement when the government publishes its investment plans for the railway later this month. None of this is a full explanation: Network Rail’s performance is only marginally worse than on other lines, and Reading has been a problem for years, so it hardly explains the deterioration in delays.

The company then resorts to the usual type of guff: “We have in place a comprehensive service recovery plan that is addressing the problems we experienced earlier this year. The plan delivers additional and more reliable rolling stock, more staff, timetable enhancements and improved customer service. Train punctuality and reliability is being addressed, and we are working with Network Rail to improve track performance.”

Perhaps some of this will come about. Indeed, Burns has ambitious plans for the line which he is quietly implementing, and FirstGroup cannot be delighted at all the bad publicity it is getting.

Of course, it is all too easy to blame a rapacious company for the state of the franchise. But Finch and FirstGroup are under pressure to meet the onerous franchise requirements set by the government that will involve huge premium payments. As Nigel Harris argued in the last issue, the department is deeply implicated in every cost- cutting decision made by franchisees. Cooke is unlikely to get his wishes. The company will probably suffer little more than the occasional rap on the knuckles, provided the numbers stay healthy. The last thing the department wants is another franchise competition with the likelihood, as with the East Coast, of not getting such a good deal as the present incumbent offered.

All change again on front bench

Transport has suffered in the ministerial reshuffle. Doubly so, indeed, as not only do we have a new Secretary of State, Ruth Kelly, with no transport experience, but the Tories responded by sending their excellent shadow spokesman, Chris Grayling, off to shadow Work and Pensions. Kelly faces a sharp learning curve to cope with the forthcoming announcements and all the complexities of dealing with an issue that can suddenly shoot up the political agenda. She is bright but has leaden political feet and is on the way down the political ladder.

Grayling was about to issue his plans for the rail industry. I was watching eagerly, but now I will not have the chance to grill him on them. He is one of David Cameron’s rottweillers and therefore was given the pensions portfolio, seen as one of Gordon Brown’s weak points. Actually, given Brown’s involvement in – nay, addiction to – PPPs, transport may prove to be one of them too.

Whether Theresa Villiers, the relatively inexperienced new shadow spokesman, can cause as much trouble as Grayling is doubtful. She, too, has no track record on transport and will take time to master her brief, which means informed debate on controversies in this field will be put on hold.

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