Dear reader – I may bore you at times with my view that the railways are best run as a single integrated business which I often frame as the ‘What are franchises for?’ I try not to go on too much about this as I am conscious that the structure of the railway is not, for many of you, the most fascinating topic but this time bear with me.
However, the launch of the roll out of the Hitachi train at a ceremony in December and its planned operation on the main line network this autumn highlights, yet again, that the fragmented railway is fundamentally flawed and dysfunctional. In fact, you may have noticed that the integrated railway is somewhat flavour of the month given that Chris Grayling, the Transport Secretary is keen on the concept even though, as I wrote in the last issue, he has got the wherewithal or the ability to see it through. Moreover, the truly integrated railway with one company in charge of all aspects of running the service is an impossibility given the ownership of the rolling stock by third parties – neither the operators nor Network Rail – namely the ROSCOs. That would mean getting all the three main components under sole control – operations, infrastructure and rolling stock – is impossible given that no government would sanction buying back the trains from the private owners. Nevertheless, nearly every senior rail manager I talk to recognises that an integrated railway is far more efficient than a fragmented one.
It is the disconnect between the rolling stock owners and Network Rail, the infrastructure company which prompts me to write about integration yet again. This became apparent when I visited the Hitachi assembly plant in Newton Aycliffe in December for the launch roll-out (in fact the third such event of what promises to be a long series) of the first train intended for the Great Western.
Let me digress a bit to mention the plant. Hitachi is keen on calling the plant a factory but it really does not befit that description. Virtually nothing is made there. Parts are brought in from across the UK, Europe and Japan and fitted together by people whose skills are specific and rather limited. The staff, dressed all in black with baseball caps sporting their names and a uniform of sweatshirt and trousers, work silently on the assembly line of coaches which are moved through the plant in the way that Henry Ford invented a century ago. There is little noise, no dirt, no pits – the trains are raised instead – and no welding or molten metal.
This is not a criticism of Hitachi – though I suspect their trains for domestic use have few parts not made in Japan – but rather a reflection of globalisation and modern manufacturing. In the book I am writing on Indian railways (your perfect Xmas present for 2017) I mention the huge plants which built and maintained the locomotives dotted around the sub-continent. It was not uncommon for these to employ 20,000 people or more and even the UK equivalent in places like Derby or Swindon stretched to several thousand. Newton Aycliffe will have around 900 people and the production of the coaches will stimulate probably five times that number elsewhere but it is another measure of how technology is eating away at employment levels.
The government – or rather us taxpayers – is spending £5.7bn on the first of the two new rolling stock contracts for Hitachi (East Coast is the second one) which involves the maintenance over a period of 27.5 years. This is a completely ludicrous way to purchase trains. For a start, it is an attempt to pass on all the risk of what could go wrong over a very long period when it is impossible to do so. Hitachi actually gets paid for providing the train for a path, rather than for the hardware itself, as it is a payment by results system.
In order to take on that risk, Hitachi is being paid top dollar because, as I never tire of trying to explain to ministers, the private sector is not a charity – it does not take on the future potential risk of having to shell out a lot of money without being compensated in advance. The government is, in effect, paying out huge sums of insurance premium in order to pass on the risk to the train manufacturer which, understandably, sees this as a way of making a profit.
The way the contract was devised by the Department for Transport highlights one of the real problems of the fragmented railway. Because the train franchises are short and the life of rolling stock is far longer, the operators cannot be allowed to specify the trains (actually Virgin was allowed to do so with the Pendolino with very mixed results – who doesn’t feel sick on them north of Rugby?). Therefore the government did so resulting in a train devised by a committee and a contract that is complex beyond comprehension. In simple terms, the trains are costing around £75,000 per month to lease which will have to be paid if they are available and the train operator is not able to use them.
To avoid this eventuality, the delay in the electrification programme on the Great Western means that all the trains on the route have had to become bi-mode i.e. to have a diesel engine fitted capable of generating the electricity to operate the train. Previously only a proportion of the trains, intended to run beyond the wires, would have needed to be fitted with them.
And now here’s the real rub. There are concerns that running the diesel engines flat out for long periods, which they were not expected to had the electrification been completed, could burn them out or mean extra maintenance. Moreover, it is unclear whether the existing timetable will be able to be met since this relies on the current HSTs running at 125 MPH while the new trains will run at a maximum of 100 MPH when powered by diesel. At a briefing following the launch, Hitachi officials admitted that work on the timetables was ‘ongoing’ and it was not yet clear whether retiming would be required. They will be able to accelerate faster than the HSTs which will save some time but it is unclear whether that will be sufficient to make up for the reduction in the maximum speed.
Therefore the new trains will not only cost far more than expected –it is the Department for Transport which is paying for the extra diesel engines, some of which will have to be taken out to reduce weight when electrification is completed – but will run slower than existing trains. You could not make it up! And the lesson is clear. If a ‘fat controller’ were in charge of the whole railway, this type of debacle would not happen. Under integration the whole improvement of the line would have been planned, in the way that Chris Green’s Total Route Modernisation schemes were put in place under British Rail. That is not being nostalgic, but realistic.
Usually, at this time I have to write that Mystic and his crystal ball have let the side down again. But actually, this year old Mystic has not done too badly, though he was, rightly, a bit gloomy.
Here were miserable Mystic’s predictions for 2016.
- A financial crisis in the industry is inevitable. It may not happen in 2016, though I feel it will, but will certainly occur before the end of Control Period 5 (2014/9). The figures simply do not add up as relatively generous franchise deals, with lots of goodies for passengers are signed up, while savings are expected of the industry. So watch for real cutbacks in maintenance and renewals, leading to more temporary speed restrictions, and a squeeze on later franchise deals.
- Wonderful as they are, the Underground trains refurbished by Vivarail will not find a market in the UK simply because recycled carriages from London will be deemed politically unacceptable in the North.
- There will be a desperate scrabbling around to find depot space for the completed IEP trains which will sit idle for months if not years.
- My political prediction is that Sadiq Khan will be elected mayor at the May London Mayoral election.
- In terms of personnel, Mark Carne the CEO of Network Rail will survive. The one whose future, I reckon, is bleak is the affable Patrick McLoughlin, the Secretary of State for Transport who will be put out to grass not so much for the various debacles in the industry but to allow some whippersnapper to take his place.
- And finally, permit me a football prediction: QPR will lose out in the play-offs after a late run and sadly Arsenal will pip Leicester for the Premiership title.
Well, the first one certainly has proved correct with the overrun on the electrification of the Great Western and other projects having to be kicked into touch (1/1). Vivarail, too, has not found a UK market perhaps for precisely the reason is expressed (2/2). As for the depot for the new Hitachi trains, that prediction was probably expressed too soon, so I will leave on file (2/2). Sadiq Khan easily beat Zac Goldsmith to be mayor, Mark Carne is still there and Patrick McLoughlin has indeed gone
In truth, Mystic was saved by the intervention of Nigel Harris who spotted that even before the issue had gone to press, one of the predictions – that Richard Price would survive at the head of the Office of Rail Regulation – proved incorrect and cut it out of the printed version (4/4 – thanks Nigel). The football prediction was all rubbish – good old Leicester! – so total of 4/5, the best ever!
What encouragement. Consequently, a further lot of Mystic’s predictions will be published in the next issue. And this time, you can pop along to William Hill and bet on them. Guaranteed. Honest.