Robson missing from the dock

As the bankers squirm during today’s session with the Treasury Select Committee, one man should count himself lucky that he is not there. That is Sir Steve Robson, ex permanent secretary at the Treasury and more recently non-executive director of the Royal Bank of Scotland.

Robson is a serial offender when it comes to wasting taxpayers money. A very cerebral and self-confident mandarin, he pushed through the structure of rail privatisation, insisting on the separation between operations and infrastructure that is at root of so many of the railway’s problems and so heavily criticised by rail managers from Japan who know how to run a railroad. Robson was obsessed with the notion of open access and stimulating competition, and had no knowledge of operating practices of the railway. With the Tory politicians unable to agree on a new model for the industry, Robson was able to push through his scheme ignoring the protests of all and sundry in the industry.

It was he who had the notion that every train path should be sold individually which fortunately never came to fruition. At the Treasury, he also blocked moves to regulate the banking industry more tightly and then got his reward by being made a non-executive director of RBS. The role of non-execs is to safeguard the interests of shareholders. With RBS shares having gone done from £17 50 to 22p in the past four years, he has obviously done as good a job with the banking industry as he did on the railways and clearly deserves his knighthood.

  • It’s remarkable how the same cadre of people who block environmental legislation or ideas as ‘uneconomic’ seem to be rather bad at economics themselves…

  • Allan Hedley

    Robson! and his conservative buddies… Wasn’t at the that time of privatisation plans that the BR Board was sidelined by the government to implement those idiotic plans? The managers of BR at the time who knew how the railway operated was not even allowed in on major decisions regarding the structure of the privatisation operation.

    And yet these individuals who make decisions like this that lead to the difficulties the railway is in now with splitting the operation is still let loose on this country, and to spend OUR money.

  • The Thin Controller

    I know that a lot of the problems in the current railway are blamed on the separation of infrastructure and operations, but why?

    Consider another transport industry which is heavily congested, has huge infrastructural requirements and massive safety issues – ie. aviation. It is far more fragmented than the railways, with the equipment provided by different parties, air traffic control (equivalent to signalling) provided by another party, and then there are the airports and operators themselves. Yet it seems to work. The difference (and thus, why railways need to be run in an integrated fashion) ? Railways are hugely dependent on financial subsidy and probably always will be. So – to make it work together – some Fat Controller is needed, to – in economists’ jargon – minimise the transaction costs.

    In a market environment like aviation a Fat Controller isn’t needed, although there is significant safety regulation, and some market regulation for international access. One school of thought is that the Tory Gvernment of the time thought that the railway could be run without any financial subsidy, so took a regulatory model which was appropriate enough for the previously-nationalised industries (BAA, BT), and tried to make it work in the railways’ case. Needless to say it could not, short of abandoning the whole of the BR Provincial and rurals sectors.

    In the American railway sector, which is mostly freight-based, companies can and do negotiate trackage rights over each other’s track, and without overmuch regulation or indeed integration. But that is because it is working in a true ‘market environment’.

  • Thin Controller: Surely there is a more basic, technical, reason why the aviation model is inappropriate, which is the railway’s intimate relationship between track and wheel, for which there is no aeroplane equivalent. This is intrinsic to the infrastructure, whereas between taking off and landing a plane has no physical infrastructure and needs only to obey the air traffic controllers in order to avoid crashing into other planes. Among the many differences this creates is the fact that to run a train from A to B you have to build a railway line, which takes many years to plan and execute. To start an air service between A and B, on the other hand, all you need in principle is to rent an aeroplane and off you go.
    All this, and much else besides, Robson and the extremists at the Adam Smith Institute failed to understand, since they knew nothing about railways and would not listen to those who did.

  • The Thin Controller

    “Taking off and landing a plane has no physical infrastructure”

    You’re forgetting the amount of engineering required for the runway! 🙂 And airports take “years to plan and execute” as well, as the saga over T5 shows.

  • RapidAssistant

    Thin Controller – you are not comparing like with like. Sure, US freight railways make money, but that is also the case in Britain – even in BR days it was the most profitable part of the business.

    On the other hand – Amtrak – the US passenger railway hasn’t earned a cent since it was created in 1971. And there’s the rub. The present structure was largely created to sweep the fundamental fact under the carpet that passenger railways don’t make money. They don’t. Full Stop. Sure, in Britain the long distance routes are profitable, but that is more than outweighed by the losses made elsewhere on the network.

    But back to your point about integration – the fragmented nature of aviation works because it has to – and anyway it would be totally foolhardy to have a vertically integrated industry setting its own standards and working practices across international boundaries – particularly with what is probably the most safety critical industry in the world. The infrastructural ends of it need to be tightly regulated by governments and agreed by cross border treaties by its very nature.

    Is it fair to say that airlines don’t need subsidy over the railways??? – lets face it major flag carriers don’t waste any time in getting the begging bowl out whenever times get rough even though a lot of them are 100% privatised which totally flies in the face of what privatisation is supposed to be for. Expect BA to be lobbying Gordon Brown within the next year.

  • Dan

    Isn’t the US example valid re Amtrack – ie seperation (on most but not quite all routes) of train and infrastructure results in terrible time keeping and service because what Amtrack calls ‘host railroads’ fail all to often to give Amtrack trains reasonable clearance. I’ve certainly waited hours in passing loops in an Amtrack train waiting for a freight to overtake (!) or pass the other way on single line. Delays in the US are measured in hours and sometimes days – certainly not minutes.

    This, to me, is another proof of why seperation of track and infrastructure is daft.

    Christian raises a key point here about Robson and Co – it’s interesting to note that the civil servants think (no doubt due to their education and training) that they have the skills to know about all sorts of things, yet clearly lack the practical experience, but are too arrogant to accept this. At least when these businesses were originally nationalised the politicians then allowed their existign managers to keep on running them – in retropect that looks like a canny political move!

    The way the civil service works can hardly help – we had a civil serveant whose work was in our field seconded to us for 8 months – he really got to know the nature of the business, and understand key issues from our perspective. I presumed that was why he was seconded. 1 Month after returning to his civil service post he was shifted to a completly unrelated policy area – his secondment experience presumably largely wasted. You couldn’t make it up!

  • The Thin Controller

    To Dan and Rapid Assistant –

    Thanx, you’ve actually made my point, which was: *If* railways had the economics of the airline industry, which generally doesn’t get subsidy, then vertical integration would not be an issue. This we see in the American freight industry. I’m not sure how the problems that affect Amtrak are a function of its running over freight tracks, in that even in a vertically-integrated industry there is still no guarantee that a passenger service would get the priority it needed.

    There’s an interesting parallel to this debate up in Scotland, where the highlands airports are heavily subsidised and have to be. With that subsidy in place, though, the operational side of the business (airlines) covers its costs. An interesting compare-and-contrast with the rail network!

  • Paul O

    Gentlemen,

    Personally I think that Airlines are profitable because they are not paying their true costs in terms of infrastructure and the environment. They are however percieved to be the lynchpin of the modern world, a vital piece of the infrastructure that Politicians in particular feel cannot be neglected in the same way as the railways are. Remember the massive amounts of cash US carriers got from the Bush Government after Sept 11th 2001. Whether they are as vital as we believe they are is another story, How many of our journeys are absolutely essential? Do we really need two foreign holidays a year if those holidays are going to reduce to destroy our environment and threaten our lives in the long term? Maybe not.

    Which moves me on to this story.
    http://uk.news.yahoo.com/21/20090212/tuk-virgin-atlantic-may-axe-600-staff-6323e80.html

    I’ve been half expecting this announcement. As numerous high street banking and retail institutions have fallen has anyone else noticed the deafening silence from Mr. Branson of late in comparison to a few years ago when he was always popping up on the news pledging to buy Northern Rock, keep Concorde flying or save the Flying Scotsman for the Nation ? Woolworths and a few more high street banks have gone down the pan without a single offer of salvation from Saint Richard. Very interesting when one considers his involvement with the rail industry, will he bid for the WCML franchise when it comes up for renewal in the not too distant future? Will his own airline survive? Will his empire turn out to be a sort of Bernard Madoff, Investment Securities LLC, type empire with little in the way of real cash in the till that you can put your hand on when you need it? Time will tell.

    As for Sir Steve Robson, Christian I think you should keep digging. I remember an old saying we had at work, “Don’t put your shovel where where their isn’t any S**t”. I think in this case there is plenty of S**t but as its is well concealed within the corridoors of power it may take some time to dig it out. Notice how little we respondents, all with a tad more knowledge of railways then the average man in the street have been unable to ellaborate yet further upon this gentlemans part in rail privatisation. At this rate he’s going to get away with it. There is the material for a classic “Yes Minister” episode in this story if it wasn’t so true.

  • Anoop

    Airlines are profitable because they have no competition on long-haul routes. They are sometimes not profitable on short-haul routes, but they can easily switch routes because the only fixed infrastructure are the airports.

    On the other hand, railways have competition in the form of road transport and short-haul airlines, which rely on the plentiful availability of cheap oil. Railways can be profitable without subsidy, as Intercity and Network SouthEast were in BR days. However railways have benefits to society which cannot be measured by farebox revenue, such as reduced traffic congestion and increased social mobility, so sensible countries subsidise them. Overall it is better for society to pay more tax and have a decent railway than to pay less tax and not have a railway.

    The people who privatised BR did not share this view. They viewed railways as a national burden rather than an asset and wanted to eliminate the subsidy. Once privatised, the plan was to reduce the subsidy to zero. The privatised railway could either survive by becoming more efficient (e.g. running fewer trains, increasing fares, closing less busy lines) or would go bankrupt.

    The main benefit of this plan was for people involved in business deals at the beginning of the privatised railway. They could make a lot of money initially and then sell on their share so as not to be encumbered by it in the long term. The travelling public would be likely to receive either a worse railway service or no service, but this was obviously not important to the architects of privatisation.

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