Rail 842: The non-strategic strategy

Chris Grayling’s spin doctors deserve a big fat Christmas bonus. It was ever so clever merging a series of different rail announcements into one ‘strategy’ with most prominence in the accompanying PR given to reversing the Beeching cuts.

That went down so well with the media. Mention the legendary and loathed figure of Beeching and the news stories start flowing. The romantics on the news desks start harking back to the age of steam and station masters, porters and parcel offices. Several journalists rang me up to ask how bring back lines closed by Beeching could be done, and the BBC radio news led on this aspect of the story. Of course reopening lines would be great news but there is nothing in the Strategy that says anything new about it. The hopes of opening a few miles here and there have to be set in context. Beeching’s proposals led to the closure of over 5,000 miles of line and 2,500 stations, and since then, largely thanks to the efforts of rail preservation societies and local community groups, some 400 stations and 600 miles have been reopened.

The most obvious reopenings, which indeed could be done fastest, would be lines now housing heritage railways. A couple of candidates with which I am familiar would be the Swanage Railway, where services were partly reinstated this summer, and the West Somerset, which parallels a quite awful windy road. Indeed, Minehead and the surrounding area were recently highlighted in a government report on inequality as having particularly poor access to employment and consequently those at the bottom of the ladder were unable to get a leg up.

I realise that this might not be a popular suggestion among some people in the heritage movement but I make no apology. I would far rather see a genuine railway keeping people out of their cars or offering genuine new opportunities on those tracks than steam trains at holiday times.

In order to speed up the process, I suggested in a letter published in The Times that there ought to be a ‘Railway Reopening Tsar’ who would have money and the power to bang heads together to get the process moving – and to force Network Rail not to block schemes by suggesting outrageous quotes for very basic work.

However, the implied suggestion in the strategy that large chunks of lines closed in the aftermath of the Beeching cuts could be reopened is pure nonsense. Most of these lines are gone forever, neither needed or available, and ill-suited for the needs of the 21st century railway. Nobody will travel from one small village to another on branch lines offering a service every couple of hours in day and age.  It’s not au revoir but adieu to Adelstrop and Ynys and countless others in between.

There are a few good ideas in the Strategy though little that we did not already know and as ever it is suffused with ideology that at times prevents rational thought and bars obvious solutions. As I have mentioned before, Chris Grayling understands that the fragmentation of the railway was privatisation’s biggest mistake but he is unable to reverse it comprehensively since that would mean merging operators with the public-owned Network Rail and that is outside his ideological framework.

However, the big story that was buried in the Beeching b******t and it is really difficult not to characterise it as the end of franchising as we know it. Yet again, the East Coast Main Line has been the site of broken dreams and broken promises. For the third time in its 20 year history, the franchisee has thrown the towel in. Stagecoach, having promised to pay around £3.3bn over the eight years of its franchise, will now only contribute £1bn as it will be cut short three years early, now terminating in 2020.

Instead, Grayling has announced that there will be some type of alliance with Network Rail during the remaining period of the contract and that will be the basis of the arrangement after 2020. There are no details and we only have a couple of sentences in the Strategy to go on: ‘The East Coast Partnership will be operated by a single management, under a single brand and overseen by a single leader. It will see the train operator actively collaborate with Network Rail to bring its expertise and a passenger view to the planning of infrastructure management and to developing future plans for route infrastructure; create a unified ‘one-team’ identity and brand across Network Rail route and train operator; and ensure staff share in the success of the railway.’

Decoding this in terms of the East Coast, it is very clear that Stagecoach (which operates under the Virgin brand but owns 90 per cent of the operating company) has been bailed out. Big time. Having had a long history throughout its involvement with franchising of playing it very safe and not overbidding, for some reason, perhaps out of desperation of staying in the game as it was struggling to retain its South West Trains franchise, Stagecoach went for broke and massively overbid. That was risky because the a franchise has been problematic throughout, as its record shows, because it runs relatively few trains and is therefore highly vulnerable to relatively small changes in demand.

There were other factors behind the collapse of the franchise apart from Stagecoach’s rush of blood to the head. Most notably Brexit. You Leavers who write me rude notes whenever I mention this issue in this column can squeal all you want but Brexit is having a real and deeply damaging, possibly disastrous, effect on the economy in general and the railways in particular. The message I get from rail managers is that it is the perception of the negative effects of Brexit that is already leading to a reduction in passenger numbers. People are hunkering down in the expectation – rightly – that a downturn is looming. Add in the fact that the economy is in a poor state, that fuel prices have remained low partly thanks to the government’s seemingly permanent policy of scrapping tax rises while ensuring that rail fares still go up, and that the run of terrorist attacks in the past year scared off a few discretionary travellers, and you have the perfect storm. Slow delivery of the new trains together with Network Rail’s failure to make promised improvements to the track was the final coup de grace. Stagecoach never stood a chance of reaching its forecast numbers and, as ever with these contracts, most of that is not the companies fault. Sure it overbid, but what killed it was, as Gordon Brown may have put it, exogenous factors.

That’s precisely why franchising as we have know it is doomed. Hundreds, probably thousands or even tens of thousands of very expensive consultants’ person hours have been spent trying to work out how to precisely define the relationship between the performance of the economy and the number of people travelling by rail, and it has pretty much proved impossible. Therefore, franchise bidders can always hit lucky and make lots of money thanks to the overall state of the economy or suffer because of a recession or slower than expected growth. Franchises, therefore, are pretty much bets on the future, with the rewards as random as winning the lottery. Basically, whatever the other factors, Stagecoach got it wrong but is not being punished for its mistake. Instead the franchise system is being changed yet again as according to Stagecoach chief executive, Martin Griffiths, future bidders will face little risk: ‘While the train operating company will still bear some revenue risk on most new franchises awarded by the Department for Transport, we anticipate that its exposure to revenue risk will be significantly less than on franchises awarded in the last few years, such as the Virgin Trains East Coast franchise.’ What amazing chutzpah. So because Stagecoach messed up, the whole franchise system will be derisked. If ever there was a time to ask the Wolmar question, ‘What are franchises for?’, it is now.

Andrew Adonis, who famously as transport secretary was rather reluctant to take the East Coast back into public ownership in 2009, has very much changed his tune and sees public ownership as the obvious solution. He has been apoplectic about Grayling’s ‘partnership’ deal, suggesting it was only a ruse to prevent public ownership.

I agree but ironically the ‘partnership’ solution is ultimately the best option, as the only sensible way to run a railway is through integration. It is unclear how Grayling sees it working in the case of East Coast but it is certainly, as I explained in the last issue of Rail, working in Scotland. I think it ought to be the model for future Labour party thinking. It could be used as renationalisation by the back door, essentially ensuring the state has all the risk and therefore all the profit. Grayling’s model could therefore be exploited by Labour to get to a more sensible structure for the railway. And the Wolmar question would no longer need to be asked.


Glasgow Central station tour


It is great to be reminded of just how the public loves the railway and so many people appreciate its history. When I travelled up to Glasgow to meet the boss of the Scotrail Alliance Alex Hynes for my column in the previous issue, he arranged a little bonus for me, a tour of Glasgow Central station – or rather the three levels underneath it (if we had more time we would have gone to the roof, too). I was in effect jumping the queue because the tours are booked up months in advance as they are so much sought after.

The idea for taking people down there was the brainchild of Paul Lyons, a lifelong railwayman who realised that there was huge tourism potential down there. While still working for in Network Rail’s office upstairs as his day job, he spends much of his time conducting tours for which he charges £13 – the money goes straight into NR’s coffers though he is hoping to get a little bit back to pay for the hats which visitors are required to wear. It is at times a struggle dealing with the NR bureaucracy but Paul reckons his tours have netted three quarters of a million pounds since he started doing them four years ago.

It certainly is a treat for the money, not least because Paul is a fabulous story teller. While his knowledge of the countless famous people who have been through the station is unparalleled, it is when he talks of the first world war that the emotion comes through as he talks about the dead highlanders being brought back from France, their bodies on stretchers and how their womenfolk had to hire a couple of local unemployed for a shilling or two to take them home as the army did not help them. He has commissioned a series of murals, and there is no doubt that eventually it should be turned into a permanent museum with Paul as its curator.  It is no surprise that Paul has amassed a staggering 2,253 review on TripAdvisor.

The other high point was when we got down to the bottom level and where Paul had found an abandoned platform, running at right angles to the buffer stops upstairs. It has been unused since before World War Two but can easily be reached by rail from the curve serving the two low level platforms under the station and consequently Paul is hoping to bring in a old locomotive to provide a permanent display.  He would be delighted to hear of any offers….paullyons2@networkrail.co.uk