Network Rail is changing. It has to. The national rail infrastructure company has had a rough few years with overspending on its investment programme, a series of highly publicised engineering overruns, widespread criticism from within the industry that earnt its nickname Notwork Rail and declining performance of train services. Even the most fervent supporter of the organisation recognises that Control Period 5, the five year investment programme which ends in March next year, has not been the company’s finest hour, with overspending on projects resulting in many schemes being delayed as a result.
The Chief Executive, Mark Carne, is determined to improve the organisation’s performance and reputation, and keen to publicise how this will be done. He therefore invited me in to have a lengthy chat, and to meet, separately, with Jeremy Westlake and Francis Paonessa, respectively the chief finance officer (whose comments I will discuss in my next column) and the head of infrastructure projects. This series of meetings was undoubtedly prompted by my recent columns in Rail criticising Network Rail’s failings but was also stimulated by the company’s desire to put forward a new image.
Network Rail is easy to knock, given its size and scope. As Paonessa pointed out to me, Network Rail represents a staggering 5 per cent of all construction work in the UK, including includes housebuilding. When I met him in the first week of January, he was in a confident mood as Xmas, as the holiday rail construction programme which involved 32,000 workers on the ground has passed off well as it generated just 420 delay minutes. That is a great contrast with previous Christmases which were marked by chaotic overruns, and prompts a little complaint from Paonessa: ‘Overruns last year contributed just 0.3 per cent of overall delay minutes, yet attract levels of media coverage which are disproportionate.’
He accepts that part of this Christmas’s success was down to the fact that several schemes were postponed: ‘We looked at the UK supply industry as a whole and reckoned that there simply was not the capacity to do more than what we did.’ As it was, he said it was the bank holiday biggest programme ever, but like all such claims, it is difficult to prove one way or the other.
I respond by saying that I agree it can be a rough old world out there and the media Rottweilers are frequently unnecessarily hostile to the rail industry. However, I ask, what about all those overruns and the reduction in Network Rail efficiency during Control Period 5, in contrast to expectations from the Office of Road and Rail, that the company would become more efficient? Paonessa does not resile from the fact that efficiency has not been Network Rail’s strong point recently but stresses that the major change in possession policy over the past few years has contributed greatly to the loss of efficiency. Possessions have become shorter and longer ones are a thing of the past, he says, and provides figures: ‘We have seen a 40 per cent drop in possessions of 12 hours or longer, and a 40 per rise in those of eight hours or under. Indeed the average of these is just 5½ hours, and yet, of course, we have to pay everyone for a full shift.’
While the impact of that should not be underestimated, much of the excess expenditure, I counter, has actually come from projects and Network Rail’s failure to manage them. I have pointed out several times that Network Rail does not have sufficient central resources to be able to develop and manage schemes. One of the examples I have cited previously is that the company outsourced stages one and two of the unfortunately named GRIP (Guide to Railway Infrastructure Projects) process, which cover the definition of the output and the feasibility to outside contractors. I have long argued that if Network Rail is unable to even define the project it needs undertaking and cannot assess its feasibility, then it is no wonder that schemes subsequently get into trouble. One could say that Network Rail needs to get a grip.
Paonessa admits that actually, at the moment, only 10 per cent of GRIP stage 1-3 are carried out in house (three is option selection). I find this astonishing, amazing, ridiculous – actually I can’t quite find strong enough words to express it. This simple fact says everything about what is wrong with the organisation and yet countless reports into Network Rail’s problems – Hansford, Shaw, McNulty etc etc – ignore the fact that Network Rail has lack the essential skills of carrying out its core task.
It is the legacy of early days of Railtrack when John Edmonds who hated engineers was its first chief executive. He stripped the company of basic skills which, of course, was the cause of the meltdown after the 2000 Hatfield accident, but remarkably it has taken 20 years for the top team at Network Rail to realise that being able to develop and implement projects was its core competency.
Indeed, when I put my view that that this lack of in-house capability has been a fundamental mistake to Paonessa and Carne, rather shockingly they both agreed with me. Carne said: ‘I accept we have to beef up our project management skills’ and Paonessa stressed that ‘we are strengthening our engineering team rapidly’. Gosh, about time too but one could ask why so little has been done in the past two decades by successive managers to remedy this basic lacuna.
The other main change at Network Rail is devolution which goes hand in hand with the development of a department called the ‘system operator’. Devolution in Network Rail started in 2011 and by 2014 the eight routes had become fully devolved business able to make many decisions without reference to the centre. Now the idea is to push that further with the possibility that the routes might even commission work on schemes from other parties, rather than relying on Paonessa’s Infrastructure Projects team to commission the work.
The system operator is there to ensure that functions that involve the whole network remain a central task. The obvious one is the timetable which cannot be devolved to the routes but the key change is for the system operator to prioritise schemes. This, again astonishingly, has never been done before but now there will be an attempt to assess all projects in terms of the benefit they bring to society as a whole, and prioritise those with the greatest impact. Instead of seeing projects in terms of input such as electrification, Carne says ‘we have to consider what is the best way to improve transport links in a particular area. In the past they might have said “electrification” but then they really meant faster trains’.
Carne and Paonessa both reckon that the other key change is to have much better preparation of schemes. They explain that what went wrong with Great Western electrification was the fact that Network Rail did not properly assess what work was needed before and just plucked a figure for the cost out of the air. I am not entirely convinced by that since the organisation had already started some electrification work but it is undoubtedly part of the explanation. Again, however, I reckon it comes down to the lack of core skills within Network Rail which should have set up a permanent team to handle electrification rather than outsourcing the work.
To many in the industry, the promised changes by Carne and his team are long overdue. Network Rail needs to up its game, despite Paonessa’s justified satisfaction with the Christmas work. The vast sum of nearly £48bn allocated for rail investment in Control Period 6 was a vote of confidence by the government in the railways. The top team at Network Rail have an unprecedented opportunity to modernise the railway but they must respond by pushing through efficiencies and improving the organisation’s capabilities. Of course, changes to the possession regime make life more difficult but on the other hand new technology should balance out much of the downside. If the changes promised by Carne and his team for the next year or so do not result in a leaner and more flexible organisation, some of them may well be looking for new jobs in 2019.
Mystic Wolmar sticks his neck out again
Having performed not too badly last year, Mystic Wolmar, Rail’s very own hapless soothsayer, ventures into the unknown yet again with half a dozen of the best
- The dip in passenger numbers will continue as season ticket sales fall and the benefits of flexible working become more widely accepted
- The Southern rail dispute, and the associated second person rows around the country, will be resolved with RMT giving ground though not admitting it
- The government will be forced to step in on at least one other franchise contract
- There will be a big fuss about the new IEP Hitachi trains malfunctioning
And on the political front,
- Brexit will become more unpopular and pressure for a second referendum will become impossible to resist
- There will not be a general election this year but Theresa May will not be in Downing Street
As for QPR, neither relegation nor promotion will be in the offing. A very happy New Year to all Rail readers as this column has just celebrated 22 years without a break.