Congratulations on taking on a very difficult job. I am genuinely delighted that at last someone who knows the railways intimately has been appointed to head Network Rail, the first time this has happened in its short history.
I must confess, first, that I got into trouble saying this with your occasionally rather thin-skinned chairman, Peter Hendy. When I expressed this sentiment in my column a few months ago, he took it to be an attack on your predecessor, Mark Carne, rather than as a sentiment that has been widely expressed to me in the industry.
Overall, Carne did OK but his lack of railway experience was his main problem. Having a thorough railway background will give you a much stronger base on which to make decisions . Unlike Carne, you will not have to spend six months learning how facing points work or why the East Coast and West Coast are such different railways.
Like many newbies to the railway, Carne became obsessed with the notion that it was an old-fashioned industry that had not moved with the times. While he was right to some extent, the problem, as you know, with the railways is that there is a vast amount of sunk assets. Modernising them is bound to be very expensive and may well be unnecessary – do branch lines, for example, really need modern digital signalling when the well-established token system might well be perfectly adequate?
The emphasis on the digital railway being the solution to, say, inadequate capacity or high costs, meant that the focus on operations and the basic day to day railway was at times lost. Ideas such as being able to increase capacity by 40 per cent through technology were dispelled by the arrival of David Waboso but rather too much managerial energy went into chasing such holy grails.
Carne was seduced by the digital bubble, as testified by the fact that I had a fierce debate with him over the viability of driverless cars which he saw as an imminent threat to the railway. I will not bore you with the details but suffice to say there is a long way before driverless cars will be dropping commuters off at Surbiton station.
Carne’s other obsession was safety and while that was commendable, it did at times seem a process of box-ticking rather than being part of a coherent approach to reducing risk – making people listen to safety briefings when visiting Network Rail’s offices in Kings Cross struck me as being largely for show. Safety and cost do have to be reconciled and that is not always an easy idea to sell to the public.
Carne did come to recognise, as shown in the first part of his interview with Nigel Harris in the last issue, that the present structure of the railway, with its emphasis on franchising out to pass risk on to the private sector, has now been shown to be unworkable. So change is afoot, and you, Andrew, will have to manage that along with all the other problems you have inherited.
Taking safety as a given, I think that cost of projects and asset maintenance is the biggest issue you face. Network Rail has become a byword for inefficiency and, indeed, obduracy, an organisation that is not perceived to listen to stakeholders. It was Network Rail’s failings that have resulted in the crazy policy, which you must work to reverse, of encouraging bimodes as an alternative to electrifying the network wherever it made sense. As an experienced railwayman, I am sure you will know that in relation to the lifetime costs of bimodes, as well as to the operational expense and performance, bimodes are a daft idea, a short term fix in an industry that needs long term strategic thinking.
So getting the costs of projects down is essential. I recognise that there is a difficulty as possession times are ever shorter given the demands of increased traffic but nevertheless there is no excuse for some of the ridiculously high costs for projects. As you will not be familiar yet with some schemes, let me provide a few details on my local line, Barking – Gospel Oak. A reader used a Freedom of Information request to obtain figures for the electrification of the line which was originally costed at £57m in a contract given to J Murphy and sons. I won’t bore you with the detailed history with a lengthy closure failing to result in the job being finished, a host of different problems including poor designs, a failure to recognise drainage issues and late delivery of materials, but the key point is that the cost, estimated as low as £40m by TfL in 2012 has soared to a staggering £172m.
It is the itemised list that demonstrates how the project has got completely out of control. Some of it is, frankly, incomprehensible. The main items are:
Previously closed down Design and Development £10m
Project Management £16m
Multi disciplinary and foundations works contrac t £72.6m
Overhead Line Equipment masts and steel £20m
Possession and compensation costs £16m
It is a sad catalogue. How, for example, in a supposedly £57m scheme can £10m be spent looking at alternatives. Electrifying a route is not rocket science and the expertise should be there. The industry restarted electrifying nearly a decade ago but because of the failure of Network Rail to develop an in-house scheme – like Sir Herbert Walker did for Southern Railway between the wars – and build up expertise, it seems the lessons have to be relearnt for every project.
The same applies for project management – £16m? Really? This, presumably, is again lots of £1,000 + or £1,000+++ per day people who wonder in, sketch out a few plans and bu**er off. I have mentioned in previous columns about how most of the GRIP stage 1 and 2 work – definition and feasibility – is contracted out, which means Network Rail never gets, well, a grip on projects.
Then there are the possession and compensation costs. This again is rightly highlighted by Mark Carne as having ‘perverse incentives’ but it is not something that you can do much about except lobby government for a change in the system.
This, of course, is a small example of how things get out of hand. I have been told of many others such as a waste of nearly £1m – mostly of money coming from other sources than Network Rail – to improve stations in Dorking because of a total lack of information about the condition of the structures involved.
I asked a few people about what should be your key task and one of them worded it well: ‘He has to convince the public that NR spends appropriately. By this I mean not only value for money, but getting on with the technical aspects available. They are always chasing the latest expensive boys’ toys and often they end up with incompatible resources’. It is a good point.
Network Rail (and its predecessor Railtrack) has been in existence for a quarter of a century but there has been no clear development of its skills base or a maturing of its conduct. It is seen as remote, bureaucratic and money-grabbing. It is at the heart of the industry but it is not respected. Of course, again as Carne said in his interview, the real solution is reintegration of the industry and the creation of a proper rail company that has the power and ability to balance all the various aspects of running a railway. It seems that politicians on both sides of the political divide are beginning to understand that, so perhaps there is an opportunity there.
I wish you good luck Andrew, and hope you can achieve the impossible, to make Network Rail both more efficient as well as more liked. You start off with a lot of goodwill from around the industry and let’s hope you can capitalise on it.
Fare rises too much
The rather arcane debate about whether fares should go up by the Retail Price Index or the lower Consumer Price index was a clever distraction by the Transport Secretary Chris Grayling. The key point, however, is that the continued heavy increases in rail fares, especially at a time when the railways have not exactly been operating well, are a step too far. Last year there were 500,000 fewer journeys every week on the network and anecdotal information suggests this decline is continuing.
The rail companies, with their very conservative managements, are too short term in their perspective to care that ultimately pushing up rail fares is a long term negative for their businesses. After all, they do not have to put up the unregulated fares by the same amount but invariably they do. Moreover, where are their voices saying ‘this is bad for the industry, please change the system’.
Meanwhile, Grayling is their prisoner because their contracts guarantee that they can increase the fares by RPI – so his little intervention was a sham. They are simply not going to agree to the change as they think it will reduce their income – though, as I say, given the loss in passenger numbers as a result of high fares, this may not be the case any longer. Indeed, demands from the public that the fares should be frozen cannot be met by Grayling as he would have to pay out money to compensate the train operators and he is never going to do that.
The whole complex structure of the industry, therefore, guarantees that neither the operators or government will make any serious effort to change the fares structure or to limit increases.