Rail 682: open letter to Justine Greening

Dear Ms Greening,

First off, congratulations in your rapid rise to a Cabinet level job and I hope, after reading this, you won’t be regretting your decision to accept  the post. However, I thought in a spirit of helpfulness, I would set out a few isshoos (as Tony Benn used to call them) on the railways that you will be facing over coming months.

I’m sure that your civil servants will have been briefing you in great and copious detail but, and how can I put this delicately, they cannot be entirely trusted to be the impartial innocent souls that they present themselves as being. It is, I must confess, rather difficult to know where to start. You have been left rather more hot potatoes than can be found at the average bonfire party.

Your predecessor may have presented himself as a safe pair of hands who kept a steady ship and all that sort of thing, but in fact, he has left you with a bulging in-tray out and a lack of clarity about where Conservative transport policy is going, other than his obsession with business cases and what he perceived as the needs of the economy. Possibly, you might want to take a wider view of your brief. I know you have taken far more interest in public transport than your predecessor, even meeting the head of the District Line to discuss your constituents’ problems (there’s a great photo online) and that suggest you may have a more rounded view than a man, who at his first meeting with me, asked why trains always get priority at level crossings.

The transport brief is a very full one, and there is so much going on in terms of the railways that for you to become au fait with the finer details will take some time which, in truth, you do not have. I only have space to deal with rail in any detail, but just a word on other aspects of transport policy. It is clear that there is no strategy on aviation given that Hammond seemed to want both more of it and yet was not suggesting anyway to accommodate this rise given the ban on south east runway expansion. That’s one hot potato. (Don’t be fooled into thinking that high speed rail will diminish demand for either air or road travel.)

Indeed,  as for roads, do you really want to be responsible for a rise in deaths thanks to Hammond’s ridiculous decision to end funding on speed cameras and, more recently putting forward the idea of an 80 mph speed limit (read my previous Rail column on this), all under the ridiculous banner of ending the non-existent war on the motorist. That’s a second hot potato. Then there’s a good half dozen sizzling spuds in the railways, some of which will burn your hands if you don’t try to decide quickly what to do with them. Let’s get one easy one out of the way, can you revisit the decision to give the new rolling stock order for Thameslink to Siemens rather than the home-based but foreign-owned Bombardier?  It was a decision handled particularly badly by Hammond because the reasons he gave for awarding the contract to Siemens were not convincing. However, given the Treasury’s interest in cutting expenditure, in all likelihood if you looked at it again then there would be the same outcome. Therefore only announce you are doing so if you can see a way forward to make a change.

Here’s a more difficult one. The McNulty report into the efficiency of the rail industry was entirely hijacked by Hammond. The conclusions make no sense in terms of the analysis, and indeed are almost farcical – an industry that suffers from too much fragmentation and a diffuse decision making process, should have yet more bodies imposed on it to, well, further complicate matters. At the centre is a body called the Rail Delivery Group, a body which despite being chaired by the excellent Tim O’Toole of FirstGroup is clearly struggling to find exactly how it is going to be the midwife for better ‘delivery’. Just take a look at the minutes of meetings on its website and you will see what an uphill struggle it faces. The latest set includes the gem: ‘There was particular interest in the DfT’s emerging thinking on franchising and how that would affect the RDG’s priorities’. I think they call that navel gazing in the real world. The truth is that the RDG and all who sail in her is a distraction from the fundamental mess created in the rail industry by the misguided method of privatisation and its rapid implementation.

Railways are an integrated business and the creation of myriads of interfaces has led to a wholesale expansion in the industry’s cost base which, unfortunately, cannot be mitigated without the type of major structural reform which every transport secretary has shied away from because it would mean admitting that the whole thing has been a terrible mistake. Is there anything you can do about it? I’m afraid I doubt it – don’t believe a word about costs being able to be reduced by the arbitrary total of £1bn by the end of the decade. There is no road map for this destination and, while you will no longer be in Marsham Street by then, you will face the consequences of this cost escalation because it will impact on Network Rail’s ability to invest in rail enhancements. So press Network Rail and the RDG to, at least, offer you a few positive examples of ways they are saving money.

OK next one is HS2. Hammond has done well to make route changes which have ameliorated some environmental concerns but this is a controversial project that is now attracting more flak from within your own party. Setting aside the overall question of whether it is worthwhile, on which you probably cannot make a decision as it is a key Coalition policy, there are numerous questions over the detail. Probably the key one where a change might be possible and would be popular, is the issue of why the line needs to be designed to 400kph (250mph) which is ridiculously fast given the short distances involved and given that most high speed lines operate at 300kph. Not only does that increase the cost of building and operating it, but also means the alignment has to be straighter, and therefore more environmentally damaging. The problem is that the business case depends on this high speed, which highlights the ludicrous nature of this methodology (read my columns passim) but again probably best not to go there.

OK, if you are still with me – two big ones left. The two F words, franchising and fares. You are going to be immediately faced with a lot of issues on franchising. You have been saddled with a policy that says most franchises should be for 15 years but there has been no proper explanation of why. Supposedly it is to attract investment, but that is dependent on a complicated formula to ensure that franchisees get some of their money back for long term investments they have made.

Shorter franchises are said to be bad because there is no commitment, longer are problematic because if there is no break point the public may get saddled with a lousy performer. And if there is a break point, they won’t invest – oh, you get my drift, it leads to the question I have been asking for years and never had a satisfactory answer: ‘what are franchises for?’ but that discussion is for another time. So what can you do? In the short term, you have to try to get the best out of the bids. Here’s the immediate problem, another very hot potato left by Hammond who rejected the initial draft of the Invitation to Tender (ITT, get ready to learn a plethora of initials in this industry – see for example the RDG minutes for a quick course) on the basis that it did not deliver what he wanted, which was more investment and less central control. Your civil servants are bound to come back with a new draft that has been barely amended and try to push it through. And that will set the blueprint for future deals. So don’t let them do that. Make sure the franchise bidders will be able to offer real improvements to passengers – of course, actually delivering them is another matter.

The West Coast deal is particularly tricky. The Treasury – and your civil servants – may well argue that because HS2 will be delivered at the end of the 15 year deal, then there is no point building in extra capacity. On the other hand, if the growth on the line predicted by HS2 Ltd materialises, then there will be a need for that capacity well before 2026. Tough eh? Overall, the key point is this. The civil servants hovering around your desk will try to exploit your lack of experience and knowledge to push through a range of decisions which may well not be the right ones. Seek advice from experienced people in the rail industry, the old hands who have been around for years, not the young whipper snappers who, after two years at McKinsey’s or Accenture think they are the bees’ knees. Be prepared to overrule your civil servants, or at least throw their ideas back at them. Steve Richards in The Independent rather unkindly suggested you will be in another job after having gathered ‘a fleeting interest in transport’.  Whatever you do, don’t make the mistake of acting on that assumption. Transport problems can blow up very quickly and you should be in a position to handle whatever is thrown at you. First up, unless you are unlucky and something happens sooner, will be the other F word, the big fares rises in January – so if you have a skiing holiday booked for the first week in January, cancel it.  And make sure you get some media training to try to work out arguments to justify them. Wishing you the best of luck, Yours

Christian Wolmar

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