Rail 672: The real story behind the McNulty report

The authors and contributors to the McNulty review have been coming out of the woodwork, angered by the version of the report that has been published.  Several people have contacted me and have been remarkably critical of the way that the process was hijacked by the Department for Transport which ultimately stifled debate and ensured that the report’s conclusions contradicted its findings.

The production of the report was a fraught process with several contributors having strong disagreements with McNulty over the way that the recommendations of the report were effectively being written by Philip Hammond, the transport secretary. There were stand up rows, furious faxes flying around (McNulty famously refused to use email and spent some of the crucial period of final preparation of the report away in a Tuscan villa) and numerous orders from Marsham Street (the Department for Transport) to excise unwanted sections of the report. That explains why it reads in such a disjointed way, with no attempt at narrative, let along historic perspective. There is, for example, in the full 320 page report virtually no mention of British Rail, apart from a reference to a study on its efficiency which is inconclusive.  It is as if the railways were landed on Britain overnight from the planet Zog.

Yet, there is much to learn from history.  Look at the time series in Terry Gourvish’s official history of British Rail, and you find that between 1983 and 1988, British Rail managed to cut government support from 6p per passenger mile to 4p. Some of this was through reducing service levels, but there were a whole host of other efficiency gains, and yet McNulty, in his ahistoric perspective, ignored the lessons of history (it reminds me, in a non-rail perspective, of the failure of Tony Blair’s government ever to understand the lessons of history, which is why we are still involved in the mess of Afghanistan).  Of course things are different now, and the world is a very different place. But trains still run on two rails laid on ballast, and the railways still require many of the same skills as they did a quarter of a century ago.

Let’s look at two related issues in particular, the need for a central body guiding railway policy and the problem of fragmentation.  The first seemed a no-brainer. McNulty correctly identified the lack of co-ordination in the industry as one of the generators of unnecessary costs. However, nowhere in his report does he suggest any overall coordinating body. Instead, we get the madcap idea that since the problem was created initially by fragmentation, lets have more of it by creating a plethora  of diverse bodies, whose functions will be unclear and whose power will be unlimited.

At the centre will be the Change Management Group between the Department and the industry, along with a Rail Delivery Group  on which will sit the great and the good of the industry, the chief executives of the owning groups and two top bods from Network Rail, although it will not have any powers as such. This is all in addition to the fact that essentially Network Rail is being broken up into 12 bodies, supposedly so that there is ‘contestability’ a favourite word of the Tories which means that costs can be compared across areas.

George Muir, the former boss of the Association of Train Operating Companies, reckons there will now be ten bodies, six of them new, including – I’m not making this up – a Technology Strategy Leadership Group, a Technology Strategy Advisory Group, and a Rail Innovation and Growth Team, all supposedly to co-ordinate cross industry activity. He says in an article in Passenger Transport that it is ‘Frankenstein, the fat controller’ and likens it ‘to a manual on local authority organisation’. Muir is not a man who wants to return to the days of British Rail but he does point out, rather acidly, that: ‘What seems odd is that we are seeking to emulate the efficiency of European comparators, France, Switzerland, Sweden, the Netherlands and the like, by doing something completely different from what they do. You can be certain that their efficiency does not come a thicket of strategy documents and cross-industry bodies’.

It would be impossible to exaggerate the derision with which the idea of creating these toothless cross industry groups has been met by senior people in the rail industry – in private of course. They all make much the same point: that these profit maximising companies are not going to obey injunctions to change their behavior and co-ordinate activities unless it is profitable in the short term or unless they are told to do so by a regulator backed with legal enforcement powers. Indeed, that is their legal duty.

Yet, the McNulty investigation did throw up an alternative. In the report by Arup on rolling stock  commissioned for McNulty (due to be published ‘soon’ on the Department website), one of the main suggestions, right at the beginning is for an ‘arms length body with its own powers and duties to take over responsibility for implementing government rail policy from the DfT’. You could call it British Railways or, if you were feeling more modern, ‘the Strategy Rail Authority’, or why not just Rail UK. Whatever its name, it is an absolute necessity.  Arup point out various advantages that would save cost but, of course, it was not on message so there is nary a word about the idea in McNulty’s report.

In contrast, having all these pan-industry bodies is just a recipe for more expense, more rows, more confusion and ultimately a less effective railway. I’m afraid that on fragmentation, I have to take issue with my friend and editor Nigel Harris – please don’t sack me Nige! – on his use of the analogy of aviation. The aviation industry  is structurally different because of the freedom of the skies, where there is no need for signals, just fairly imprecise (spatially) instructions. Moreover, the industry can hardly be held up as an example of financial success. Most of the world’s airlines would have gone bust several times over had it not been for government bail-outs in bad times.

Moreover, as RapidAssistant, one of the regular contributors on my blog points out, ‘the most profitable airlines in the world just happen to be the ones that are the least fragmented… the dreaded low cost carriers.  They do their own marketing, don’t use travel agents, don’t participate in the hub and spoke system with other airlines as they only fly point-to-point and therefore have as few dependencies on other companies as possible, and now free themselves as much as possible from check-in and baggage handling service companies as well’.

So the result of McNulty will be to make a few changes that will add complexity to the railway and fail to address the fundamental issues of the cost explosion. Even an old hardened hack like me is shocked by the dishonesty of this process. I would not mind so much if the government simply undertook the process itself, but the supposedly independent nature of the exercise is a con on the public. McNulty clearly was not a man to rock the boat and probably craves a place in the House of Lords. But I am shocked that this supposed process of consultation and investigation is such a naked stitch up job that even those who have worked on it feel compelled to leak to the press. However, maybe I am being naïve and that it would be fanciful to expect that the government would have allowed the publication of a report which recommended policies it did not want to enact. It is notable, too, that the organisation that seems to have escaped any criticism in the report is the Office of Rail Regulation, under whose auspices it was carried out.

Ok, so that’s it on McNulty until this bizarre flowering of quango-type bodies in the industry emerges and, presumably, immediately goes pear-shaped. I promise not to mention structure and integration for a few months now, as it risks boring readers.  Unfortunately, the dysfunctional structure remains at the root of many of the industry’s problems and McNulty’s failure to address it properly will cost the railways dear. While closures appear for the moment politically impossible, there will undoubtedly be an opportunity cost in terms of investment schemes. The emasculation of McNulty has done us no favours.

How motoring accidents are treated casually

The contrasting ways in which road and rail accidents are treated never ceases to amaze me. The latest example is the attitude of the police towards the driver of a cement mixer that crashed off a bridge on to a train near Oxhott on Guy Fawkes Day last year.  The train was severely damaged and it was only by pure chance that a disaster like Great Heck in which 10 people were killed and 82 injured a decade ago was avoided and in fact there were only a couple of minor injuries.

In May, the Surrey Comet reported that the driver, Petru Achim, 35, of Hook, Hampshire, pleaded guilty to driving without due care and attention at Staines Magistrate Court and, remarkably, the police considered the matter so trivial that they told him he was allowed to file his plea for driving without due care and attention via the post. Consequently he did not even appear for the hearing at Staines Magistrates’ Court.  In fact, this legal advice was wrong and he should have turned up. Yet now, I understand, on June 2,  Achim received a £100 fine and five points on his licence, still without appearing at the court. He was also – and this seems just contemptuous of the public’s safety – ordered to pay a £15 victim surcharge, as well as £43 in costs.  I am actually for once totally at a loss for words.

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