Rail 704: rail industry’s annual report card

This is fun. Really fun. It’s time for the annual assessment of how the railway school has performed over the past year and to look at new arrivals and old departures, and boy oh boy, have we had an eventful time. There was a period in the middle of the school year when the railways never seemed out of the news with fares rises, franchise hiccups, HS2, investment plans, electrification schemes and rows over bonuses.

This headmaster’s report, therefore, cannot reflect all the events but overall, it must be said, the year has in many respects been very satisfactory. Or even, actually very good. The safety record continues to improve, as does overall performance and passenger satisfaction remains high, despite the increased numbers. And a heartfelt  thank you to all the boys and girls who turned out (although some rather naughtily raided the tuck shop under threat of blackmail) for the big Sports Day which passed over so smoothly. The Sports Day was truly a triumph of organisation and planning, and the fact that it passed off so smoothly with praise from around the world is a tribute to the industry and its partners.

One of the virtually unheralded successes of the Sports Day was a relative newcomer in the School, London Overground. This was the creation of Transport for London and, in particular, its long time director of rail, Ian Brown since, when he took up the post, there was in effect no London Rail.  Not only has his work resulted in the creation of a fabulous addition to London’s rail network, which will soon effectively include an Outer Circle, but it has been done cheaply and efficiently. Moreover, with a franchise arrangement that does not pass on revenue risk or pricing decisions to the private sector, it is a simple contract that works very well. A lesson for others? Unfortunately not, given the obsession with risk transfer.

Given all the activity over the year, there’s no shortage of lollipops and spoonfuls of castor oil to dispense to the boys and girls of the railway school. Let’s firstly assess some of the newcomers. The Office of Rail Regulation’s new prefect, Richard Price, could not be more different from his predecessor. He is extremely keen, seems to have learnt quickly and wants to make his mark. All very good, and let’s hope that he manages to expand his monitoring role over Network Rail class and keep the little blighters in order but a word of warning to the enthusiastic young whipper snapper: all this nonsense about competition and the buzz word ‘contestability’ in the railways is overblown. Railways operate best through co-operation. It never pays to be too much of the smart aleck in this school and with the big decision over the affordability of the investment plans coming up, the headmaster’s advice is ‘don’t rock the boat’. At the end of the day, the schemes will get built with the available money.

Indeed, that’s why one of the most interesting aspects of what’s happening in the railways is the cooperation between the train operators class and the Network Rail pupils at South West Trains. This type of alliance may well prove to be impossible to run, especially if the pupils run into difficulties or there is a crash. However, this cooperative effort is well worth trying and congratulations to head boy Tim Shoveller for giving it a go as it may well be the way that money can be saved on the railway.

While on the subject of the train operators, there have been more changes thanks to some belated action on the part of the Department (about whom more later) but the changeover of pupils is still woefully slow due to overwork and a lack of coherence about the task at hand. Nevertheless, the most famous railway pupil, one Richard Branson, got his comeuppance and finds himself expelled from the School. This was not so much a result of his misbehaviour but rather a long term failure to get on with the Department for Transport class with a series of disputes. And there was a bit of an arrogant swagger about him which did not endear him to the rest of the School. But he will be missed by some, though the on train tuck shops will be all the better for no longer having to sell only Virgin Cola. Yuk.

There remains a lot of uncertainty about which pupils will be allowed to stay next year and in particular whether there will be a lot more of those big foreign boys coming from France, Germany and Netherlands. By this time next year, we should know the answer to that. I suspect there will be some reluctance to allow them in from the ministerial class as its jolly embarrassing to have so many when there are British pupils clamouring to get in. Nevertheless, reports from East Anglia suggest that the Dutch pupils are running the show rather better than their National Express predecessors. Indeed, National Express pupils are only hanging on in the School by their fingernails, having once run more franchises than anyone else but now only still at C2C where the franchise has been extended to May 2013. Despite being in the frame for a couple of contracts, I suspect that they may well follow Branson out of the School door. Meanwhile, First really is now first.

The biggest class, Network Rail, has had a pretty good year. Under head pupil David Higgins, the restructuring and devolution has proceeded apace, though I somewhat suspect it is not quite as radical as portrayed. There is still a lot of power in the centre. There’s been good news, too, on investment plans though we await the results of the assessment of the plans by ORR with some trepidation. Is there really enough money in the tuck shop?

Indeed, that remains the big worry over Network Rail. It’s fondness for gorging itself at the tuck shop is still a great worry and there does seem to be a conflict on the horizon over trying to meet the McNulty targets while continuing the investment programme. That is one to be watched over the next couple of years.

While on the subject of money, another new class, HS2 does seem to have a fondness for the green stuff from the tuck shop, too – namely £300m in the current year. That does seem an awful lot, given the early stages of the scheme, though the pupils report there is a lot of activity – consultation, detailed preparation of the West Midlands route, determining the route of the two branches of the Y to Leeds and Manchester, and so on. Doubts about the demise of the class have been greatly exaggerated. There is an awful lot going on and while the headmaster has doubts about the value for money of the scheme, there is no doubt that progress is being made.

The fate of HS2 is, of course, down to ministers and here the departure of the very clever but rather acerbic Philip Hammond by the rather more friendly but inexperienced Justine Greening has been met with trepidation in some parts of the industry. However, these fears have largely been allayed, as she showed her mettle early on by knocking back the RPI plus 3 per cent fares rise to 1 per cent, and is working hard behind the scenes to repeat the trick in January. Alstom, despite concerns she is not wholly in favour of HS2, supporters of the scheme are satisfied that she has argued its case against the concerns of the Treasury. However, there is talk of a further move because of her opposition to the third runway at Heathrow and that would be of concern to the School as new ministers have take some time to get to know the ropes. A word of warning to Ms Greening however: some of the people you have surrounded yourself with have not endeared themselves to the media – a softer tone and more openness would be in order.

Meanwhile, her junior, Theresa Villiers, deserves an award for long staying, having been involved as shadow and minister on transport for more than five years and does seem to have gained respect for her support for the railways – and gamely has got back on her bike after being knocked off it earlier this year.

Which brings us to the civil servants. Oh, dear oh dear. Groan. Why oh why do all the pupils there insist on using differential calculus, and quadratic equations when they have hardly learnt to add up?  2 + 2 is 4, chaps and chapesses, not 1/1 + 20:4 – 2 which is how you always seem to express it. Express as in Intercity Express Project, of course, the most convoluted train procurement exercise in history and all you can do is say how clever you are that it is only costing £4.5bn or some such ludicrous figure for a few trains. It works out at some £900 per day’s use of a carriage, and that’s before any other costs are factored in. That’s an awful lot of bums on seats.

Will you never learn that simplicity should be the watchword for the 21st century? You seem to be wanting the railways to suffer the same fate as all those hospitals collapsing under the weight of PFI deals that were once the ‘only game in town’. Now the railways are being lumbered with the same types of contracts.

But I don’t want to end on a sour note. All in all, the performance of the School throughout the year is to be commended. The Railway School is now accepted by all political parties as an essential part of Britain’s infrastructure and that is a fact to be celebrated. But there’s a lot of work to be done to see it stays there.


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