Rail 675: Vertical integration own goal from unions

It has long been apparent that most of the difficulties of the railway since privatisation stem from the crass and uninformed decision to separate the infrastructure from operations. A recent column in Transport Times by the veteran transport writer (even more veteran than myself) Adam Raphael highlights the culprit: step forward Steve Robson, a Treasury mandarin at the time of privatisation who as Raphael puts it, ‘persuaded ministers in the dying days of the Major government that the way to ensure competition was to split the management of the track from train operations’.

I concur with Raphael’s opinion that ‘repairing this mistake will take several decades’ and I have always viewed Robson, subsequently knighted for his incompetence,  as akin to a war criminal for what he did to the railways especially since he went onto be a non-executive director of the Royal Bank of Scotland only to sit on his hands while Fred the Shred wrecked the business.  Without Robson’s ideological stupidity, we might have ended up with a far more workable model of rail privatisation such as the big Four preferred by John Major.

Even the supine Sir Roy McNulty, who was unwilling to point the finger at who had created the fragmentation which he recognised as a problem, suggested that vertical integration was likely to have merits and recommended experiments to test whether there would be cost savings. Why those are necessary is a mystery. It is all too obvious that since the railways he used as comparators for concluding that Britain’s network costs are 40 per cent higher than its European counterparts and they are all far more vertically integrated than ours, it does not take a PhD student to realise that possibly, just possibly, that might be a contributing factor.

However, ‘experiments’, we are getting, with two of the obvious candidates being Merseyrail and Greater Anglia. Indeed, Merseyrail has long been a special case. The franchise is actually allocated by the Passenger Transport Executive, under the authority of Merseytravel  – which is now called an Integrated Transport Authority – rather than the government, and currently it is eight years into a long term, 25 year, deal. This was devolved by the Department for Transport because Merseyrail’s tracks are entirely separate from the rest of this system, with few other trains using any part of them.

As a result, Merseyrail has long advocated vertical integration. Its boss,  Neil Scales, who has repeatedly criticised Network Rail over the cost of maintenance and its quoted prices for projects such as electrifying the Bidston – Wrexham line which he claims are three times what they should be. A campaign to lobby the government to allow Merseyrail to become an integrated rail business was launched and apparently spent £1.5m.  Therefore it would seem that the McNulty report with its recommendation for vertical integration experimentation was exactly what Merseyrail had been waiting for.

Not so. Oddly, within days of the publication of the report, the long campaign for vertically integration was nipped in the bud as it seemed that suddenly, in parts of Merseyside, the idea had become as popular as garlic at a vampire feast. In a statement, the Labour-controlled Integrated Transport Authority announced it had voted to instruct the PTE  to stop discussions with the Department for Transport and Network Rail over plans to take over the Merseyrail infrastructure.

The reason for this sudden volte-face which has infuriated Scales, are buried in the politics of what is aptly called Murkyside in Private Eye and getting to the bottom of what’s going on is not easy, as none of the parties are willing to talk about it. Councillor Mark Dowd, the chairman of the ITA denied it was the result of union influence, even though the ITA’s statement specifically mentioned union opposition, suggesting instead that he had already expressed doubts about vertical integration in an article in a rail magazine last year. Rather, he said, that since the funding of the railways was now less secure than it had been under Labour, it would be too risky to take on the infrastructure. He highlighted the particular liability of being responsible for the tunnels under the Mersey and suggested that a franchisee with such a big potential risk might suddenly throw the towel in if they flooded, as National Express had done on the East Coast.

This does not seem to be very convincing because Dowd must know that ultimately the government stands behind every franchise agreement and would not allow part of the railway to simply close down because a franchisee went bust. Rather, the accusations from local opposition politicians that it was the unions which influenced his decision appear to be on the ball. The rail unions have taken a dislike to vertically integration because they see it as a way of splitting up Network Rail which and thus opening the way to the reprivatisation of what is effectively a publicly-owned body. The unions had demonstrated against McNulty at the Rail conference in the city on June 28 just before the announcement by the ITA which was quickly welcomed by the RMT with the comment that it was ‘the first defeat for the McNulty proposals to break up Network Rail’. Scales refuses to comment.

The Liberal Democrat opposition on the ITA has accused Labour of yielding to union pressure and point out that vertical integration might well have suited Merseyrail because its fleet is coming up for renewal. Replacing the third rail with an overhead system would be much easier if both infrastructure and operations were under a unified control. Libdem councillor Andrew Makinson, who sits on the ITA, reckons that such a change is now ‘far less likely to happen [without vertical integration] because we’re hamstrung by Network Rail’s one-size-fits-all mentality’.

Actually, this is a fascinating and difficult issue. The future structure of the industry is up for grabs and there may be little merit, even for supporters of vertical integration, in unifying a very small section of the railway if that means the break up of Network Rail. On the other hand, the unions are probably making a mistake if they think that the big prize, a vertically integrated and unified railway, a concept which I totally support,  is on the horizon. Moreover, by blocking change the unions are making themselves out to be reactionary and negative. It may well be a tactical mistake to oppose Mersey reintegration for the sake of a distant nirvana,  because success would point the way to a wider adoption of the policy and highlight the nonsense created by Robson and his ideologically-driven pals at the Treasury.

New broom at NR not sweeping hard enough

The New Labour regimes used to be roundly and rightly criticised for their tendency to announce, re-announce and then announce again various ‘new’ initiatives ( like Methuselah, initiatives never seem to age) which in the first place did not amount to a hill of beans. The Conservatives had promised to put a stop to this practice but now we find that Network Rail is indulging in it.

On July 14, Network Rail announced,  ‘a £5bn investment programme to provide more seats and shorter journey times on the Great Western rail route [that] will provide a massive boost to the economies of the south west of England and the Thames Valley’.  This was spotted by Hugh Jaeger of Thames Valley Railfuture who wondered if there was any new money and promptly asked Network Rail what made up the £5bn. He was told that there was no new money and, indeed, included the £850m cost of revamping Reading station, a job that is well underway and which, as far as I know, will not provide any extra seats apart, hopefully, those in waiting rooms.

I tried to get more detail but had rather less luck than Jaeger as it took me two days to elicit a response when Network Rail press officer Russell Spink finally confirmed the absence of any new money So which part of the term ‘News Release’ does the press office not understand when producing them?

It took me a further day for the press office to try to get the promised ‘breakdown’, information that surely should have been available immediately in a ‘note to editor’ as is customary. But no, this was just designed to meet the needs of today’s churnalism, the unthinking reproduction of press releases and Network Rail only managed to get back to me to explain what the £5bn figure meant after I lost my temper as they had failed to meet my deadline.

The breakdown I was given was vague in the extreme: Crossrail (tbc but currently for NR) approx £2.2bn (presumably not all on GW) ; electrification  £800m;  IEP  £150m; Reading  £850m; resignalling  £600m; Cotswolds £17m; and Newport station £20m (already completed). That comes to £3,787m, plus Swindon – Kemble redoubling, and then we are supposed to include bits of national projects such as ERTMS, W10 freight improvements, Access for All and rail communication system.

It really is tacky stuff. To include the constantly reannounced Crossrail is bad enough, but then not to be able to properly explain the £5bn figure is verging on the mendacious.  So does it matter if Network Rail sends out nonsense press releases reheating very old news to, in its words, ‘bring media/political stakeholders together to underline the benefits the various improvements will bring.’ (bring,bring)? Well yes. It suggests that Network Rail is more interested in its image than focussing on getting the railways sorted out. Of course the occasion was intended as a political event with Philip Hammond leading the show, but that is no excuse. The not so new boss of Network Rail, David Higgins said at the launch that ‘today sees the start of an unprecedented period of investment in the Great Western’ when, in fact, work had long started on the station. Perhaps he should have said: ‘Today marks the point at which I am starting to lose credibility as a new broom’ Being a patsy for vapid press launches is surely not the path Higgins wants to go down. The trouble with this sort of cheap stunt is that it makes it harder for Network Rail to appear credible when there really is something to say.