Rail 654: Rocky times ahead for Network Rail

There are, apparently, three people on the short list to replace Iain Coucher as chief executive of Network Rail. They may, however, all be disappointed or, at best, find themselves in a completely different job from the one carried out by the overly-acquistive Mr Coucher as it has become clear that Network Rail as currently structured is not long for this world.

 Network Rail faces something between dismemberment and death. That ghastly managerial slogan, ‘doing nothing is not an option’ now reflects the reality. Barely a decade after the creation of Network Rail out of the ashes of Railtrack, we are yet again looking at a fundamental upheaval of the industry involving its infrastructure provider.

 Network Rail has only itself to blame although Gordon Brown must take a share of the responsibility for having created a flawed model at the outset. It was he who insisted that Network Rail should be technically in the private sector, even though its money came largely from the government. Since it does not have an equity base, and its regulator showed all the effectiveness of a feather duster on muddy football boots, Network Rail became a law unto itself. As Lord Berkeley, chairman of the Railfreight Group put it brilliantly in a recent article, ‘Network Rail is a company technically in the private sector, but with ineffective corporate governance; no shareholders, around 100 ‘members’ effectively selected by the company and with few powers to hold the company to account… So the company appears to be somewhat out of control, choosing to operate in the private sector when it comes to bonuses, but with no shareholder pressure, nobody to hold the company effectively to account, and little sensitivity to the communities and taxpayers who largely fund it.’

 Network Rail might have been able to overcome this situation had it been cannier. For example, it could have ceded control over the appointment of the so called ‘members’ who are supposed to hold it to account. It could have shown more sensivity to the train operators over matters like weekend engineering. Most important, though, its directors should have realised that its future would always be in the hands of the government of the day.

 Andrew Adonis, the former transport secretary, admitted to me after he left office that he had rather ignored the problems of Network Rail in order to concentrate on franchises and other aspects of the railway. But Network Rail’s bosses should have known that the incoming government led by the Tories was going to take a much closer interest in its affairs, especially given the huge subsidy it is receiving at a time of austerity.

 It was the bonuses that were the final straw. To keep on paying these exhorbitant amounts, using the excuse that they are subject to scrutiny by a supposedly independent committee rather than realising that the times had changed, was an act of crass stupidity on their behalf. Perhaps they did not care, having made so much money that they hardly ever need to work again.  Or pehaps they were naïve, in the same way that a decade ago Railtrack’s directors committed collective corporate suicide when they decided to pay a dividend despite incuring losses of more than £500m because of the panic caused by the Hatfield derailment.

 Whatever their reasoning, it was wrong. Very wrong. Look at the tone of the letter sent recently by Theresa Villiers, the rail minister, to Lord Berkeley in which she says ‘As both the Secretary of State and I have noted, the [bonus] awards were extremely disappointing as not only were they ill-suited to the current climate on public expenditure, but they also looked curious in light of the ORR’s assessment of the company’s performance in 2009/10.’

 As I mentioned in my previous column, Network Rail used to pay a woman called Victoria Pender, a close business association of Mr Coucher’s, £215,000 per year to advise on its government relations. It was clearly not money well spent. Rule number one of organisations in receipt of government cash: do not p*ss off ministers.

 So what are options: privatisation, nationalisation, break up or a change in the nature of the organisation? Privatisation is just a non-runner, despite the musings of Tom Winsor, the former regulator, whose strange views on economics leads him to think it could be sold for £12bn, not a view shared by many in the industry. Nationalisation is certainly a possibility. It might be strange that a Tory led government would nationalised Network Rail but it would only in effect be recognising reality. In a speech Ms Villiers made in July, she said: ‘we are carefully considering the best options for reform at Network Rail….unlike our predecessors we will not be driven by tortuous attempts to keep Network Rail off the nation’s balance sheet’.

 However, since then the favoured option – or at least the one that is being tested by selective leaks to the media – has become some kind of  dismemberement of Network Rail into smaller regional organisations. The details are unclear. Would it be the old regions of British Rail, or would it be broken up along the more numerous Route directorships of Network Rail, or even along the sectors – Network Southeast, etc – created by British Rail or some complex combination. Even thinking about it is migraine territory but the detail is all important.

 In fact, I am not sure I see the advantages of breaking it up unless there is a longer term plan to begin to reintegrate the industry. Any other advantages seem minor. Yes, it would provide some comparability over the costs of doing the same work in different parts of the country, but there are so many factors involved – location, condition of assets, local labour rates, contractors bids – that meaningful comparisons might prove as difficult as in today’s railway. .

 A move to regionalising Network Rail would, therefore, certainly suggest that vertical integration, which as any fule know, is the only efficient way of running a railway and is the model favoured by all the best railways in the world, is the ultimate goal. A discussion paper just issued by the Association of Train Operating Companies, suggests that bids for the Essex Thameside and Greater Anglia franchises could include options for vertical integration. Oddly, that is almost a reversion to the position of the Tory government in the White Paper on privatisation issued soon after its 1992 election which suggested there could be some vertical integration.

 There will be no shortage of opponents. Network Rail has long set its face against even allowing the small Merseyrail franchise to take control of its own tracks, and the freight operators argue that unified franchisees would discriminate against their trains, even if the powers of the regulator were beefed up. Nevertheless, the break up of Network Rail would undoubtedly strengthen the case for vertical integration trials.

 Lord Berkeley consequently has an alternative idea. He is suggesting that Network Rail should be formed into a mutual like the National Health Trusts with a much stronger governing board, elected from various stakeholder groups with most, 60 per cent, coming from passenger organisations and freight users. They would not have any involvement in day to day running of the organisation but, unlike the current group of members, would have the right to appoint the chief executive and the chairman and their remuneration, and give strategic guidance to the board. Of course, there is nothing to stop a combination of both of these ideas – indeed, as I wrote in Rail 646, there is an idea to let franchises be taken over by cooperative organisations. Why not put the whole lot together in a John Lewis type consortium and call it British Railways? Ooops, sorry, that was a slip of the keyboard.

 We should probably get an inkling of the government’s plans in the spending review announcement on October 20 or soon afterwards. Whatever happens, those three people on the short list should make sure they do not commit themselves too soon to a job that might never materialise. Network Rail may not be quite dead, but it is on the critical list.

National rail enquiries madness

I love the online National Rail Enquiry Service, but it is replete with idiocies that could be ironed out by a bit of ‘engaging brain’ on the part of its managers. This is especially the case when you know more than the program thinks you ought to.  For example, if you put in St Pancras and a destination in the east Midlands, it then tells you there is an error, and offers you St Pancras International as the default. You then press enter and bizarrely it says you have to change to get to Leicester. That’s because the station for trains to Leicester is St Pancras Domestic, a moniker I have never actually seen used anywhere else. Moreover, according to the timetable, the change between International and Domestic would take 16 minutes when actually it is up an escalator and about 100 yards.

 But of course, International was not where I was starting from. This ‘International’ business really needs to be sorted out. Why does one have to type in London St Pancras rather than St Pancras since there are no other stations of that name probably in the world (Pancras was a very obscure saint who was beheaded by the Romans in 304 aged just 14). Oddly, by typing in just ‘London’, one is offered the right information.

 Then, if you go to the East Midlands Trains website, the station it lists is St Pancras International and we are also constantly told by the PA system on the Kent domestic trains that ‘this train is for St Pancras International’ So what on earth should we call the vast Victorian Gothic station next to Kings Cross? This is one of the minor results of the fragmentation of the industry that could be dealt with if there were some type of overall coordinating body for the railways, something that is desperately needed for all kinds of reasons. For the time being, though, let’s settle on calling it St Pancras, shall we?

  • Dave

    Christian you might like to try NRE for a few trips passing through the KGX/SPX space-time vortex which even influences nearby EUS in creating a 35 minute transit between stations, when on foot you can enjoy the tranquilty of Brill Place (if only it was signposted) in under 15 minutes or rattle through in 4 minutes by bike.

    What does amaze me though is that should I enquire after a journey from say Peterborough or Leicester to Gatwick Airport, I am directed to catch a Victoria Line Tube train, endure a miserable crush, an interminable walk with lifts or escalators, and hack-off others on the train with my luggage, plus a further change of train when I can get a direct train to Gatwick taking about half the time without this hiatus. Has nobody noticed the big hole in the ground in the NW corner of the main concourse and the trains running down below?

    My other gripe is that when one goes to book a trip on the Deerstalker Express the system comes up with blank space in the fares box, and even when you go to a staffed counter there is no ticketing route for Westerton to Crewe even though there are trains that make this journey. The ticketing gymnastics I had to work through to get an early arrival in Bristol (08.40) using the overnight train makes you think that they actually want to stop people using it, and thereby make the case that no one uses the service. The 08.40 arrival is actually little different from the service which we used to enjoy with the Glasgow-Penzance sleepers, aside from the need to change trains at an early hour at Crewe.

    As for the telephone service … we might actually get a better service if the booking office staff at less busy stations whose earning power for local ticket sales is often insufficient to sustain a staff presence throughout the day, were taken on as the call centre service to employ them productively and keep the station staffed. Most counter staff* still have a comprehensive knowledge of the railway system they work for, and can manage far better than someone who resolutely denies that there is a train service to Wick – because it cannot be brought up on their screen display. No joke there – train crew on one service called to check and gave a fairly robust response when the National Rail operator suggested that the very train they were working did not exist!

    * I’ll make an exception for the counter clerk (Virgin) at Birmingham NS who resolutely insisted (“are you really sure the is no connection this weekend – I used it 2 weeks ago”) that there was no connection to Glasgow from the 18.03 (Sat) train via Edinburgh when on the date in question there was not only the normal 26 minute connection but a further 2 trains running for the Edinburgh Festival period – I wonder what she put in to her keyboard to get that result, and I wonder how many other journeys are lost to rail because of the inadequacies of the system?

  • Dave

    PS forgot to mention Sevenoaks – suggested for travellers coming in to SPX – Northern Line to London Bridge (or Charing Cross/Waterloo East) yet there are 2 trains/hour direct from the railway in the pit.

  • Dan
  • RapidAssistant

    Yes Dave I once had to be “travel agent” to a former work colleague who was trying to get from Dundee to Haywards Heath in Sussex. Being fairly knowledgeable about the London commuter network, I told him the easiest way to get there was, upon arrival at King’s X – nip across to St Pancras, go downstairs and use Thameslink to get there directly on a Bed-Pan limited stopper. You get there in one change, without having to suffer rush hour Tubes.

    NRE instead suggested to jump on the Victoria Line, alight at Victoria, get on another train as far as East Croydon, change again (to wait for the train he would have got on originally following my advice above…..) and arrive at the same time. Madness…….

  • RapidAssistant

    Going back to the main article – I still have my doubts over whether nationalisation would be considered – the N-word is taboo amongst mainstream Tories who are still largely Thatcherites despite the nice shiny coat of gloss paint applied by David Cameron. If they did elect to undo their own privatisation then it would truly be a watershed moment. Boris has somehow managed to nationalise London Underground – but largely because the PPP was largely seen as a Gordon Brown cock-up (which it was, of course).

    Perhaps proper renationalisation of Network Rail is now more likely given the coalition, but we’ll see. Returning to a BR-model is still seen as “populist” from a political standpoint rather than common sense – which most of the ‘chattering classes’ would concur with.

  • Steve T

    Whilst NRE is definitely a bit bonkers at times, its sibling the “Live Departures Board” has been redesigned and is nearly impossible to use on a Mobile phone because it is so large to download.

    It was a simple page which gave information including name of company running the train and roughly the next two hours of services from a station.

    The new version has adverts and complex graphics which make it difficult to load. Additionally they now only show the next 9 to 12 trains and you then have to scroll down to get more.

    When you are about to use a route home like I am which involved several alternatives (different London Stations to get home from), it is now a 20 minute job to download enough information whereas it used to take less than a minute.

    Thus it is now useless – but then again perhaps that was the plan.

  • christian wolmar

    Yes, sorry Dan, I know David Higgins has been appointed but the way the website works is that I post the Rail articles about a month after publication, to ensure that it does not take readers away from the magazine, hence the introduction suggesting that there were three candidates remaining.
    And Rapid, I have heard it first hand from various Tories that they have no ideological objection to renationalising Network Rail. That is not to say I think it will happen, but it has not been ruled out, as suggested in the Villiers speech I refer to.

  • RapidAssistant

    Interesting article this morning in the Herald – interview with Tim O’Toole

    http://www.heraldscotland.com/business/corporate-sme/firstgroup-ceo-calls-for-realistic-approach-to-the-uk-rail-network-1.1065832

    Brian Souter is sitting in Perth wanting some form of vertical re-integration, yet we have Tim O’Toole – now 86 miles up the A90 in Aberdeen saying he thinks it is unrealistic. Yet this is the person who in no uncertain terms expressed his disdain for the PPP of the London Underground.

    Funny that he appears to be wanting to keep the status quo (at least in part) now that he’s the boss of one of the biggest train franchisees in the country.

  • John Buckeridge

    Christian – it would be much appreciated if you could address in one of your next articles the comments made today by Roy McNulty on the possibility of another Beeching. His interim report is due later this month, and his speech gives a bit of a taster about what to expect.

    http://www.railnews.co.uk/news/general/2010/11/04-mcnulty-warns-costs-must-drop.html

  • RapidAssistant

    It’s an interesting point of view that McNulty has, but the obvious counterargument to that is that the network is no bigger than it was before privatisation, and BR ran it for a £1bn subsidy a year. What we have now is a network that’s only a tiny bit larger than then, yet it now costs £3bn-£5bn to subsidise.

    Network size therefore has no bearing on additional costs as it has remained a constant through the years since privatisation.

    Going back further to Beeching – his goal was to make the railway self-sufficient. Yet he merely turned a loss making railway into a slightly less loss making railway.

    The story of railway reform in this country has been one of a futile mission to pursue that Holy Grail – a 100% self-sustaining passenger railway that makes a profit.

  • Dan

    As to NRE telephone enquiries – I’d never ever bought the National Rail Timetable on paper until a about 5 or 6 years ago – but having become increasingly fed up with the uselessness of NRE (apart from such simple enquiries I’d not ever need to ring anyway) – that I now regularly purchase the Middleton Press book (and even carry it with me on some occasions when i know I need flexible info)
    Dan (a different one to the one above!)

  • Rhydgaled

    @RapidAssistant: Despite everyone who says privatization reduces subsidy requirments the fact is there, the railways require much much more subsidy now than BR did. With this information out there, why has the goverment not yet decided to bring back BR? 1 act of parlament allowing the goverment to retain control of the trains when franchises lapse and requiring the rolling stock leasing (and owning) companies to hand over all their rail assets (probablly would have to come with a promise to keep paying the leasing costs until the purchase value of the assets is paid for, but that only applies to recently purchased stock anyway) would save £bns. For example, leasing the DMUs of the Sprinter family currently collectively costs the TOCs more than £103,500,000 a year. Open access operators are a possible exception though.

    I read somwhere that work done by Network Rail could have been carried out by other organisations for a single digit percentage of what it cost Network Rail. If they can reduce costs to this level and form part of a nationalised railway together with the savings made from not having to lease trains and pay shareholders I can see no reason for the RPI +3% fare rises planned for 3 years from 2012.

  • RapidAssistant

    @ Rhydgaled, as I’ve said before on these blogs – privatisation of the railways is being kept purely for ideological reasons. It simply isn’t the ‘done thing’ to be seen to nationalise and have state-owned corporations, even when – in the case of the railways – it is clearly the right thing to do. I do believe we will go back to a vertically integrated model and probably state ownership eventually. But t will only be after the industry has been completely brought to its knees by near-bankruptcy or God forbid – a major accident. The forced amalgamations of 1922 and nationalisation in 1948 only happened once Rome was burning to coin a phrase. I suspect it won’t be any different this time around.

    Until then we will continue with politicians deluding themselves, and the public that the current set-up works.

    SNCF and DB are among the best networks in Western Europe – yet both vertically integrated businesses largely owned by their respective governments – AND in the case of DB in particular – still allowed to operate in an entrepreneurial fashion, with operations in other countries. We can only imagine how different things could have been had BR been allowed to operate in the more commercial manner it was doing in its twilight years.

  • Peter

    The only rational way forward for the railways is to return to some form of vertical integration. I do not believe you would find anyone involved in actually operating trains who has a good word for the current system.

    Network Rail is a chaotic, high-cost operation with a complete lack of proper corporate governance. It is run by out of touch managers with next to no knowledge of railway operations who are far more interested in retail developments than running trains and has a top-heavy regional structure largely based on pre-1923 railway companies.

    No one in the industry believes that this tottering, insolvent organisation would last more than a few weeks if it were not for the politically motivated life support system that is the ‘privatised’ railway.

    Network Rail has had its chance. And it’s blown it again and again and again; the Rugby fiasco said it all. It’s bosses can’t listen and can’t learn. So let us hope that before too long someone will come along and put it out of its misery – and bring trains and track back under one roof where they belong.

  • Christian Wolmar

    Dave etc

    I received a very detailed response from National Rail Enquiries regarding the anomalies cited above.
    On Peterborough – Gatwick Airport, they said that it was quicker to go by the Underground route to Victoria. But actually there was only ten minutes in it, and that included a supposed 15 minute transfer between KX and St Pancras. They do admit that this is a long time, but say they have to aim at the slower traveller. I don’t agree,actually, I think it should be the other way around,showing a reasonable average time and then warning people that this may require a long walk; but we live in times when backside covering is an automatic reflex…
    On Leicester – Sevenoaks, NRE makes the same point, showing that actually the journey via London Bridge is half an hour or so quicker. They do point out that there is a ‘slower journey’ option on the site which would provide the alternative, but of course that would only help experienced train travellers rather than tyros.
    They are, also, trying to sort out the St Pancras confusion and wrote as follows:

    ‘On the St Pancras issue the underlying problem is that in the Rail Industry Timetable Data Systems St Pancras Domestic and International are referred to and coded as separate locations – the latter to support the Eurostar Services which operate into the truly International part of the station (code SPX). In essence this means that the domestic services operated by East Midlands, First Capital Connect and South Eastern use the other part of the station where the timetable systems recognise this as St Pancras (code STP). This has become a major problem because Train Companies has increasingly marketed their services as calling at St Pancras International – previously both TOC websites and announcements used a combination of St Pancras and St Pancras International, which caused major confusion.
    ‘Our website takes the timetable data from Network Rail and uses both of these codes, because in effect they are currently separate locations in the data. We currently use the St Pancras Domestic annotation to differentiate between the TOC services and the International services.
    ‘It is our intention to undertake a series of data overrides to the supporting timetable data which we use, so as to map both St Pancras locations into one definition, which will be St Pancras International. This work has been scoped and will be tested and released in the next few weeks, and certainly before Christmas. From that release date all reference to St Pancras will be as St Pancras International, to give the consistency that customer and TOC’s have now asked for.’
    I still think they should just drop the International for all these stations!

  • Dan

    The problem with NRES is in the interest of ‘simplicity’ it assumes things about travel (ie assuming you will have no luggage, and will be happy to use the hot, overcrowded, luggage unfriendly underground makes sense for people in a massive hurry – where every minute counts – but this is not the case for many travellers).

    Of course you can adjust their options with ‘advanced search’ but it is not simple to find or quick to do this – all those options could be on the search page as optional boxes for example, so you knew at a glance they were there if you wanted them (even adding a return journey option on NRES takes extra selections!) However, of cours eit does have prominent hotel ads – which must be of use to…oooohh….0.01% – 0.00001% of site users…..

    NRES could also have useful prominent link to the Network Rail pdf full Timetbale pages soemwhere (which most prople probably don’t know exist as downloads), because that helps users plan things clearly too – and would complement the site.

    St Pancras – poor old NRES – does the reply tell you all you need to know about a jargon obsessed non customer focussed industry….?

    If you want a good online timetable see what DB have achieved – all Europe, in connections through to Russia and China, fully interactive, and in English.

    Try Gospel Oak – Beijing

    http://reiseauskunft.bahn.de/bin/query.exe/en

    I find it has a clearer layout, works faster, the ‘prefer slower journey’ is an obvious tick box on front page etc etc (same problem with Leicester – Sevenoaks though – so obvioulsy links to same d-base with common assumptions).

    Talking of Timetables I read that Thomas Cook are to stop publishing the Overseas Timetable (not the European one, that continues). The current edition – eg on sale in my local bookshop – is to be the final one it seems.

  • RapidAssistant

    The laughable thing about it is that with time, St Pancras will become a “brand” in the same vein that “Heathrow” and “Gatwick” are entrenched in the mind as international airports – and all this obsession with the kudos of the word “International” will become completely irrelevant. – the name infers what the place is, and what it does and you need say no more.

    It mirrors the case in the mid 1990’s when Michael O’Leary allegedly pushed Prestwick Airport to rebrand itself as Glasgow Prestwick International Airport – even though Glasgow is over 30 miles away and has an “international” airport of its own, which is only 8 miles from the city centre.

  • Break it, unless there is a long-term plans to begin to return to industry advantage. it will provide some Quanguo do the same work in different parts of the comparability of the cost, but there are many factors involved in the location, asset condition, local labor costs, the contractor, for meaningful comparisons may prove difficult today’s railway.

  • Pingback: gregory グレゴリー リーコンパック()

Shares