Rail 674: Rail regulation needs sharpening up

A new broom has arrived at the Office of Rail Regulation and not before time. Richard Price, a very energetic and go-getting young man has replaced the remarkably ineffective and inept Bill Emery who seemed to find the job of chief executive well beyond his capabilities and yet survived six years at the helm.

Price’s background certainly suggests a high flyer destined for the top. He spent four years at the Treasury leading the ‘Enterprise team’ (don’t ask) which shows he knows the inner workings of Whitehall, and then was chief economist at both the Home Office and the Department for Food, Environment and Regional Affairs. However, clever and ambitious as he may be, Price faces the task of reinvigorating (actually maybe just invigorating!) an organisation whose purpose following the replacement of the privatised Railtrack with the effectively state funded and quasi government owned Network Rail has been open to question.

Price will not find his new job easy, nor does he expect so. The ORR may have escaped any criticism from the McNulty report, not least because it was the sponsoring body, but that does not hide the fact that the organisation has numerous problems, some of which are structural and therefore difficult to remedy, but others which potentially Price could tackle.

Price has to work out exactly what the ORR is for. The feebleness of the list of ‘achievements’ listed by his predecessor in the annual report is telling. It includes, demonstrating a clear measure of desperation ‘with Network Rail agreeing a set of clear and objectively measured trajectories that will get it to excellence in terms of health and safety, asset management and efficiency’. Wow, surely that is its core function, hardly worth mentioning. Then working ‘with a growing number of dutyholders on systematic measurement of their safety culture’ – what on earth does that mean?  It claims credit for ‘challenging Network Rail over its under-reporting of minor accidents and focusing the company on improving its safety culture and risk management’ when, in fact, it was the unions and this magazine which exposed that scandal that ORR had missed. And then most desperately ‘reaching a speedy decision in October 2010 to impose a £3 million fine on Network Rail following significant disruption to both train operators and passengers as a result of the way in which it implemented a new Integrated Timetable Planning System’. Well, that is hardly something of which to be proud.

All this for a budget of £32m, just over 40 per cent relating to ‘economic regulation’ and the rest on safety. Of course there will be things that Price cannot change such as the fundamental contradiction for ORR resulting from the different status of Network Rail from Railtrack. As I have mentioned before, the sanction of fining an organisation whose income comes largely from the state is meaningless. Iain Coucher and the fellow directors at Network Rail seemed to take little notice.

Therefore, it will not be difficult for Price to do better.  His biggest task is to try to make the ORR more accessible and transparent. Emery’s idea was to have a quarterly press conference at which the latest monitor on Network rail’s performance would be published but the quality of the monitor and the data presented often meant that it was impossible for a layman to make any reasoned assessment of the performance. Moreover, there seemed to be a real Catch 22 problem. Emery always seemed reluctant to criticise Network Rail too much because it seemed it would reflect back on ORR. This ‘regulatory capture’ was made worse by the lack of effective sanctions. However, ORR could certainly have done better over such matters as the director’s bonuses. While it did not have the powers to limit them, more and stronger condemnation, which after all had the support of the Secretary of State, would have enhanced its reputation.

Accessibility, too, means transparency and here ORR has a lot of improvement. I have long wanted, for example, a clear statement of how much subsidy goes to each train company, together with track access charges, in order to provide a clear understanding over time of what they are paying and what their real financial performance is when there are changes to the track access charge regime. But there has never been such a simple table although, with some difficulty, the information is available from various sources. There is, too, the problem, of the fact that Network Rail gets the bulk of its subsidy direct from the government, instead of going through the access charge regime. This is partly historic, resulting from the decision to keep Network Rail off the government books when Railtrack collapsed, and the problem is it makes train operators look profitable when, in fact, they are effectively in receipt of vast amounts of hidden subsidy. It  could be sorted out to make railway economics a tad easier to understand but may be well out of Price’s remit, unless he is very forceful.

There is, too, the nonsense of the open access regime. Does the ORR favour open access or is it against it? Certainly the convoluted way that Wrexham & Shropshire was forced to operate suggested that the ORR sees it as an unwanted hassle, but an expensive one to maintain because of the complexity. Here, too, a clear statement of intent would be useful.

But above all, the work and publications of the ORR needs to be made clearer and simpler. For a bit of fun, I spent a morning wading through ORR publications and came across this beauty: Part A Mandate AO/007: Review asset policy, stewardship, and management of structure, final report review and  benchmarking.  It contains such gems as : ‘PSSS Data Extraction Process – this feeds into the PPM and CaSL calculations. The data is compared each period against TOC PPM and cancellations data as a cross-check, and this gives confidence that the final extraction of data from PSS (post any corrections) is accurate’. Can anyone really say they understand this, or that it is useful information?

Now I do realise that organisations need to use technical language and deal in difficult concepts. The regulatory process is bound to be complex, but it has clearly go out of hand. The document actually relates to KPIs – key performance indicators – used widely across business to assess performance. It mentions, somewhere, KPI 237 and so I idly asked Network Rail how many KPIs it is required to follow. At first I was told that they no longer use them, but then when I pressed, I was told this was a mistake and in fact more than a day after I initially asked, I was told that there were 232 of which 45 relate to ‘asset measures’, 30 to ‘expenditure and efficiency  and 25 to ‘renewal volumes’.

This is all rather mysterious since clearly there are more hidden away given that reference to 237. In other words, no one actually knows how many there are, not even it seems Network Rail. Indeed, a senior Network Rail executive suggested the whole thing is a farce: ‘It takes six months to understand a new KPI, a year to ensure that you comply by fiddling the figures and then you forget about it’.

This is complete and utter madness, micro regulation of the worst kind. Indeed, when you start reading about whether these KPIs are met in the Arup reports, it is clear that in many cases the data is such it is impossible to judge. So along with accountability and transparency, I would add simplicity onto Richard Price’s agenda. I wish him well but as John Lennon said, ‘Christ it ain’t easy’. Given that ORR is supposed to get more responsibility under the changes brought about by McNulty, with a greater role on the train operators and passengers, it is essential that things are turned around quickly so that we can have confidence in the organisation..

New Birmingham New Street has no room for bikes

Despite some 20 years of far greater focus on green issues and encouragement from government of cycling, the penny has still not dropped. Remarkably, the new design for Birmingham New Street incorporates space for just 26 bikes, in a gloomy part of the station.

As a London cyclist who tries not to bang on about this issue too often as it is so depressing and such a hard struggle, it is very noticeable that where cycling provision is made, the number of cyclists go up. There has been a great improvement at several London stations such as Euston, Waterloo and Liverpool Street, and at each of them it is noticeable that far more people make use of cycles to access or leave the station.

Yet, because there is no cycling champion since the abolition of Cycling England – on whose board I sat – there is no one to push the various ‘stakeholders’ involved in the Birmingham New Street refurbishment to ensure there is adequate bicycle provision. When St Pancras was rebuilt, no provision had been made either and it took the threat of a demonstration to ensure that some racks were hastily installed in the car park at the last moment. Bikes continued to be seen as a terrorist threat by some of the less well-endowed members of the Transec community (the committee which oversees transport security) and that makes allocating space difficult.

Shares