Rail 863: Will review really be root and branch?

So the review is going to be a ‘root and branch’ examination of the state of the railways and what to do about the structure of the industry. While I give my full support to Keith Williams who is carrying out the review, it does seem strange that someone with limited experience of the industry – he does have some transport knowledge but has never worked in the railways – has been asked to carry out this task. It is rather as if longtime railway managers like Jeremy Long or Richard Brown were suddenly asked to examine the recent downturn in Williams’ organisation, John Lewis.

Let’s leave aside, too, the fact that we hardly need yet another review. There’s been a whole series and the answers are mainly contained therein. It is a way of pushing hard decisions into the future but let’s give the Government the benefit of the doubt and assume this is a genuine process, not just a mechanism for delay and, ultimately, the publication of a report that will gather dust.

However, we are where we are, and therefore to help Williams along, let’s have a look at how to go about this review. First, what are the fundamental problems that it is seeking to address? Well, Chris Grayling, the Secretary of State for Transport, himself has admitted that the ‘the structure we inherited is no longer fit to meet today’s challenges and cope with increasing customer demand’. Leaving aside that the inheritance was eight years ago and that passenger numbers have fallen over the past two years, something that he did not mention when discussing in the terms of the review, Grayling is right to highlight the issue of structure. He has long been an integrationist, wanting to see track and train merged but has been constrained by the ideology of privatisation and competition, and he has also realised that the lack of a ‘guiding mind’ – he certainly does not fit that role! –  is a barrier to the efficient operation of the railways. Indeed, at a fringe meeting of the Tory party conference, Grayling even said that an organisation like the Strategic Rail Authority is needed and that he expected the review would result in a reduced role for the Department for Transport.

Grayling also said that the review would provide ‘external validation’ to the government’s plans, which suggests, given his support for integration and a strategic organisation,  he knows what he wants to do already (if, of course, he is still in office when it is published, something Mystic Wolmar would not expect since his boss in number 10, who has protected him, is unlikely to be still there).

There is, indeed, something of a consensus emerging in the industry around the need for integration, or at least better co-ordination between operations and infrastructure, and the need for better co-ordination from above.

This is both an opportunity and a problem for the Williams review. It suggests that if he comes up with answers in that mould, then they may not fall on deaf ears. On the other hand, it rather limits his scope. Suggestions of further fragmentation or giving the private sector greater scope to make decisions without reference to the rest of the industry are unlikely to find favour.

With that in mind, Williams has to examine the context of the various crises which have affected the industry in the past couple of years and to enable him to ask the right questions – and eventually deliver solutions. First, there is the franchise process where the problems are, to say the least, multifaceted. Clearly with direct awards now becoming the norm, a paucity of bidders, the collapse of East Coast and declining passenger numbers, the current system, as Grayling all but recognises, is dead. Yet, oddly, the Department seems to be stumbling towards putting out more lines for franchising, including the virtually impossibly complex West Coast partnership that includes the transfer to HS2. Risk transfer – in other words, making the finances of the franchise dependent on future predictions of revenue – no longer works in a declining or static market. Therefore, the review will have to look at alternative models with the added complexity that contracts for integrated sections of the network – linking track and train – may become the norm.

Then there is Network Rail’s inability to cut costs. I got a sharp rebuke from the departing Mark Carne just before he left because I dared to say that some of the safety requirements were box ticking rather than effective danger reduction. I stand by that while accepting that some of what Carne did was definitely positive, and the review is going to have to look hard at rules that add considerably to costs while doing little for improving safety. Managers I have talked to in the industry have no doubt that there is considerable box ticking as well as genuine improvements such as, for example, the beginning and termination of possessions. Improving the efficiency of Network Rail must be a key aim of the review but it is a hugely complex matter. Here, the role of the Office of Rail and Road comes into it and must be part of the review given that its policing of Control Period 5 was lax, to say the least. My view is that an independent confident Network Rail should not be making decisions and cuts on the basis of what a rather remote regulator has to say – and that undoubtedly contributed to the timetable chaos.

For that particular debacle, which prompted the review, Williams is bound to come up with a plan for better coordination and essentially some sort of fat controller. That is probably the most tricky part of his work and will involve re-arranging a lot of deckchairs. Here, too, is where it could get very interesting. The fragmentation of the railway, which is at the root of its current problems, adds greatly to costs, given the various games played over compensation. As I have said many times, if you pay to do up your kitchen, the builder does not provide funds for you to go buy Chinese takeaways for the duration, but essentially that is how the railway works.

Another problem that has prompted the current crisis is the ongoing industrial action over the role of guards. Though this has tailed off a bit, it is still causing some disruption and taking up a lot of management time. The RMT has backed itself into a corner but nevertheless remains strong enough to disrupt services, though its impact has been reduced as it does not have the support of ASLEF, except on Merseyside. If this is part of the agenda for Williams, good luck to him in trying to resolve it.

Next up is rolling stock. Clearly, having civil servants make decisions over rolling stock has proved expensive and given us ironing board seats on both Thameslink and the various Intercity lines that are getting the Hitachi IEP. Here again, a strategic body seems the obvious solution given that individual operators clearly do not have the long term scope that is required and civil servants are not up to the task.

The other major crisis is the performance of the railway which has fallen to levels lower than any time since 2006. This is at a time when investment levels are high, so Williams is going to have to delve deep down into the cause which undoubtedly is rooted in the dysfunctional nature of a fragmented railway.  There is, too, the question of fares but if Grayling wants to see the review published in this decade, then best to leave that one out.

The performance of the railways has become a crucial political issue. There is widespread discontent, especially in the southeast, which may well have an impact on numerous marginal seats. Therefore, as I mentioned in my previous column, renationalisation is bound to come up. My advice would be to dodge this, arguing instead for integration. The integrated railway would have to be in the public sector, given that Network Rail has all the assets. Williams can therefore dodge this argument, perhaps postulating that at a future time the railway could be re-privatised in a different, integrated, format. And then add in the factor I have not mentioned, which is devolution. So, how about the Big Four Mr Williams? John Major would be ever so pleased.

 

The North loses out

 

Here’s words which stick in my gullet: I agree with Boris Johnson. The ex-London mayor, and ex-lots of other jobs, is never one to avoid a populist cause and has spoken out against HS2, suggesting that a faster Transpennine railway should be prioritised.

Indeed, there is a desperate need to create a better network of trains in the north. The imbalance between transport spending in the South and the North has become a crucial political issue and needs to be addressed. HS2 is not part of a regional policy – quite the opposite as its focus is very much on London. Consider these statistics released recently by IPPR North: ‘over the last year (2015/16-2016/17), transport spending in London increased by 11.4 per cent while it fell by 3.6 per cent in the North of England’ and ‘North received £289 per head on transport, while London received £708 per head on average over the last ten years’.

Having just spent time in several northern cities, it is clear this can’t go on. The Northern Powerhouse seems to be a forgotten initiative and needs to be revived. How better than announcing an immediate series of improvements to railways in the North?

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