Rail 730: Alliance reunites railway…and John Major explains privatisation blank

Reintegrating the railway has been the subject of much debate ever since the network was broken up and privatised in the mid 1990s. Indeed, one of the main suggestions to come out of the McNulty report into the finances of the railway was to find a way for the train operators and Network Rail to work better together in order to save money.

The way that the industry is presently set up mitigates against co-operation: what is good for the infrastructure provider is not necessarily what the train operator wants. This is most evident in, for example, the length of time that the line is closed at night when the operator wants to provide the latest possible train while the infrastructure provider wants to get people down on the track to carry out maintenance. There are a myriad such conflicts built into the structure which while they did exist under British Rail were resolved internally and without cash incentives such as compensation payments.

Therefore, South West Trains, owned by Stagecoach whose boss, Brian Souter, has long argued for an integrated railway, has got together with Network Rail to form an alliance to run the railway together under the expressed encouragement of the Department for Transport. Easier said than done. Because of European Union rules, passed by politicians with no understanding of railways, they are not allowed to form a legal entity to run the franchise together.

So the alliance that has developed since April 2012 on the route out of Waterloo is an informal structure run by a board consisting of managers from both the train operator, South West Trains and Network Rail. SWT actually has a majority on the board. According to Tim Shoveller the boss of SWT and now also of the alliance as recognised by the badge with the logos of both organisations which he wears proudly, of the 6000 staff who work for this new integrated railway, 4,500 are employed by SWT. However, they have been melded into one team. Shoveller says: ‘there are South West Trains staff who manage Network Rail people and vice versa. All the responsibilities and liabilities of the two organisations have been pooled with myself as MD in charge’. For example, Mark Steward, the operations director is responsible not only for the drivers, as is normal, but also for the signallers who, of course, work for Network Rail. It is, therefore, a genuinely integrated structure.

He says, though, that this is not a return to British Rail: ‘This is not about nationalisation or privatisation. It is recognising that both models have strengths and weaknesses and that each should do what they are best at’.

One key change has been the way that delays have been treated. The compensation mechanism between Network Rail and SWT only considers delays of three minutes or more, and never examined those of less. (Note, with a sigh: this is different from the Public Performance Measure, the PPM used to assess performance overall which only considers delays of five mins or more). In practice these small delays are a great majority and the normal practice meant disregarding a staggering 5,000 delay minutes and only considering 2,000 which were three minutes or longer. There was no incentive to look at these shorter delays because they did not come within the compensation scheme.

Now this has changed. Every delay is taken into account with the result that more staff have been employed to despatch trains at stations such as Wimbledon or Earlsfield where previously this was done only occasionally.  Shoveller’s explanation about why this had been the case is revealing about the way that everything in the privatised railway is about profitability: ‘In the past, this would not have been worthwhile to put on these extra people as there was no incentive to reduce these shorter delays. We would not have been rewarded for reducing those delay minutes.’ That implies that the operators will only make changes if there is a financial reward rather than merely to run a better railway. The alliance may to some extent changes this.

The perceptions about how the other half works have changed throughout the railway: ‘Robin Gisby [Network Rail’s Operations Director] now understands how the fare structure works and Brian Souter [Stagecoach chairman] knows a lot more about the infrastructure’, said Shoveller.

Despite the alliance, the PPM has not improved and, indeed, has been declining for the past four years. Shoveller is clear about the reasons and explains that thanks to the alliance, things are going to get better: ‘It’s simple. The trains are simply overused. What used to be a 60 second stop now turns into 80 secs. And that adds up. In 1995 108 million people were going through Waterloo annually, now it’s almost double that at nearly 210m. We simply can’t run more trains as there are no paths but they are so overcrowded they cannot get away from the stations.’

He relates how a few years ago a decision was made by all the stakeholders – the Department for Transport, Network Rail, SWT and ministers – that it was not worth the disruption to extend platforms 1 – 4 to accommodate longer trains so the work was not carried out during the current Network Rail control period which ends next March. But Shoveller says: ‘This was the wrong decision. And now we are going to expand capacity’. That will be done by bringing into use the Waterloo International platforms and that will provide the extra capacity to rotate platforms as they are worked on. Shoveller insists: ‘We would not have made that decision a few years ago. Now the money available for investment is pooled between us and Network Rail and we are able to carry out this scheme.’ Moreover, the Department for Transport is on board and has sanctioned the purchase of 135 new vehicles to enable 10 car trains to run on several more suburban services.

Shoveller emphasises that the alliance is very much an experiment and both sides have had to learn as they go along: ‘We are learning how to meld the organisation together and that takes time. It was never going to transform the business overnight. The driver manager has to learn what the signaller manager wants and vice versa.’ However, he is evangelical in stressing the potential gains: ‘At root, the theme is that railway can only be efficient if you look at it as a system. Even British Rail did not do that. No model has optimised the whole life costs. Look at East Coast where the catenary was not sufficiently robust.’

All the political parties support the alliance initiative and it is being looked at closely to see if it can be replicated. There is not going to be a universal roll-out because of the complexity and the difference between franchises, though in Scotland there is improved co-operation between Network Rail and Scotrail under a similar but looser arrangement. It will certainly be many years, if ever, that such a scheme could be made to work on a railway with as many users as the West Coast or even the East Coast, though Shoveller says that other users of the route out of Waterloo, such as Arriva and First Great Western, have been very pleased with the work of the alliance.

While saving money was the spur for this initiative, the result seems to have been a better, more co-ordinated railway with a clearer idea of long term objectives, rather than a cheaper one. That is good news for passengers but may be less appreciated in Marsham Street.

 

John Major’s silence on the railways explained at last

 

I met that John Major at a drinks do (it’s not all hard toil at the coalface as a journalist) celebrating, if that’s the right word, 20 years since the publication of the Railways Act that enabled the railways to be privatised. I had for many years been dying to ask him why there was nothing about rail privatisation in his 2006 autobiography. He responded that there had not been sufficient time and that it was getting too long, and therefore he was unable to include it. I must say that did not sound entirely convincing.

If you do want a a statement about why he privatised the railways, the research team on a TV programme I presented was given quite a full statement. I have made it available as part of the Kindle and other e-versions of my book, On the Wrong Line (sadly out of print in hard copy) available at Amazon via my website: http://www.christianwolmar.co.uk/books/on-the-wrong-line/  His explanation is all about how the railways were inefficient and not innovative, hardly an original argument, but at least it explains the reasoning. He did tell me, too, that he had wanted to break up the railways into much larger groupings, but he had been dissuaded from doing so by his advisors, and he rather regrets that.

It still remains strange that there was as much about the railways in his autobiography as there was about his affair with Edwina Currie in a 816 page volume, published nine years after he was ousted from office which therefore gave him plenty of time to be comprehensive. Perhaps he will include something about the railways in a new edition but don’t expect the inside story on Ms Currie.

 

  • Chris

    Tim Shovellers excuse that performance has declined due to the increase in passenger numbers since 1995 simply doesn’t wash. Performance improved dramatic ally after the introduction of a re-cast timetable in 2004 and stayed high for several years. The truth is that since the financial crisis in 2008 growth on the railway has levelled off yet performance on SWT has plummeted. This is despite the introduction of vastly extended station dwells in the new timetable which mean journey times are now slower than when lines were first electrified, and in some cases slower than in the days of steam.

    Perhaps the alliance has actually reintroduced one of the worst aspects of a single organisation, that people become either less able or less willing to hold others to account for poor performance. I’d also controversially suggest that maybe Mr Shoveller simply lacks the ability to inspire his staff in the way that great railway managers such as Chris Green managed.

  • Chris Robertson

    That’s just wrong, growth on the railway hasn’t levelled off – the recession only constrained growth very briefly. Passenger journey’s, a substantial proportion of which are made in the south east, have grown by a QUARTER in the last 5 years.

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