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INFORMED SOURCES May 2004

Darling's Review – integration on the agenda?

You don't invite people with radical views to a seminar for fun

Among the gricerati invited to the first of four seminars supporting the Government's current Review of the railways, the view beforehand was that there would be not much of moment to report but you might meet some interesting people. How wrong we were.

Chaired by Transport Secretary Alistair Darling and held at the DfT's London offices on March 23, both the timing and the list of speakers suggested that the Government really might mean business after all. The previous week the Department had held an ‘awayday' where ministers and officials had assembled to think through the outcomes of the review.

Those attending the seminar would be talking to ministers and officials who were up to speed. But what was really heartening, at least for those of us who believe that something must be done, was the choice of speakers. Two sessions were scheduled: before the coffee break the subject was ‘Performance' followed by ‘cost/regulation'.

What was effectively the keynote address was given by Graham Eccles of Stagecoach. And in my book the Grey Fox gets better and better. This is how he began.

‘There are no new lessons to be learned in how to run an on-time railway. All the knowledge to do that exists within the industry today'.

He then ran through the elements of success; a sound train plan – not just the timetable, but the use of rolling stock to deliver the timetable and the crews to work the trains: reliable kit, both infrastructure and trains; and competent management and staff. Those staff also need the confidence to act decisively when things go wrong.

There also has to be an absence of conflicting objectives and you need everyone in the delivery process pulling in exactly the same way. There must also be a short and effective chain of command.

Good analysis is another vital ingredient. ‘You need to be able to point to what went wrong, why it went wrong and what you have to do to ensure it doesn't go wrong too often again'.

Graham's analysis of the current situation was equally simple. Railtrack let the balance of maintenance and renewals be disturbed. The maintenance backlog has yet to be recovered and Network Rail is ‘labouring up a very steep cliff face' to catch up.

In addition there are too many interfaces and too many players. The goals of the players are not aligned, thanks to the contractual nature of the industry. ‘We are not all aligned behind running the best service for the customer', he said.

But above all, when it comes to train service delivery there is no single ‘guiding mind' on a day to day basis responsible for taking decision which will optimise performance.

Integration

This naturally led into the Stagecoach proposal for vertical integration (Informed Sources March). Warning that there was no instant solution to improving performance, Mr Eccles urged a phased approach which Network Rail had already started by bringing maintenance in-house.

This, said Graham, was the ‘hardest part'. But Phase 2 has also begun. Integrated control centres are being set up and should be in place in all eight Network Rail routes by the end of the current financial year.

Now came the political pitch. Building on these initiatives, Mr Eccles would also like to see the Review supporting one or more vertical integration pilot schemes. This would demonstrate whether a proper railway produces better results than the current lash-up (my terminology). If the case is proved, the concept would then be rolled out across the network.

Now given that Graham Eccles has been known to visit the DfT and that Alistair Darling must have known what he was going to say and that all the national media were present, then even an old cynic like me finds it improbable that the Secretary of State would give such high profile exposure to someone of Graham's authority if the aim was to knock down a straw man.

And the feeling that tectonic plates were shifting hardened when Christopher Garnet concluded the first session. Christopher took the Virtual Integration ball and ran with it. ‘If the move is towards integrated controls (Virtual Integration), I don't know why we don't go to the next stage and run a trial with the TOC taking over control of signalling where they are the dominant operator' he said.

This was a smart move because the East Coast Main Line is not an obvious candidate, giving weight to the argument. But, Chris also urged caution. ‘In the longer term we may well have to move to more of an integrated railway, but I would say we mustn't do that today because Network Rail have their hands totally full bringing maintenance in house'. In his view Network Rail should be allowed to deliver integrated maintenance ‘before we cause further complications'.

Single mind

Summarising these two presentations Alistair Darling noted the emerging ‘common theme' of a ‘single governing mind', with which he ‘had a great deal of sympathy'. He finds it frustrating that when he wants something to happen, ‘you have to have a surprisingly large number of people in the room with you'.

But there was a caveat: while the opening speakers had a common theme, this should not be taken as reflecting the government's view. Seminars are also in Glasgow , York and Cardiff where other views might emerge, but I suspect that London was the main event.

Of course, nothing in politics is free from smoke and mirrors. I mentioned that the national press was present at the London event and next morning Transport Minister Dr Kim Howells, who was also at the seminar, was quoted by The Times as saying, ‘I would be very much in favour of having at least one area where we tested integration with a joint venture company. The two most obvious shareholders in the joint venture would be the train company and Network Rail but there could be other shareholders'.

Howells also identified SWT as ‘an obvious possibility for the test' together with ScotRail and the new Greater Western franchise. Significantly, no one else heard him say this.

Now Dr Howells has a reputation as a bit of a loose cannon, which is an asset in his sort of job. If this statement had caused a storm of protest, Alistair could have said ‘That's just Kim, you know what he's like', and defused the situation. But he didn't need to.

Young turks

At which point we come to Network Rail for whom you might think Virtual Integration was anathema. Well, it depends on your relation to the wheel rail interface.

Looking downward, Messrs Eccles and Garnet want to take over the infrastructure. Looking upwards, Network Rail Chief Executive John Armitt and his band of young Turks want to take over responsibility for running, or at least controlling, trains.

Does this column have a policy on this? Not really, because the aim is vertical integration which is all about bringing the railway managers and engineers who have continued to run the railway for the last 10 years under unified command and control.

So when people object ‘you can't let Virgin run the West Coast Main Line', my response is that ‘Virgin' are a thin layer on top of the real railway and that in reality Chris Green and his team would be running the WCML.

John Armitt was the final speaker of the second session and like the other speakers fought his corner resolutely. Not only did he challenge the calls for Vertical Integration but also made it clear that Network Rail would remain in overall charge of the new joint controls – the so-called Virtual Integration.

Clearly, I haven't been paying attention, or my cynicism generator needed an outage for heavy maintenance, because I thought joint controls were intended to be a partnership. Duty Control Managers are being recruited and appointed jointly by Network Rail and the dominant TOC.

However, Network Rail has now put me right: it retains the ultimate corporate responsibility for what happens on its network so that when push comes to shove it is in charge. Or as John Armitt explained, while the new Wessex Control centre has ‘Network Rail people and SWT people' at the same location, ‘ultimately there is also a Fat controller and we believe that that Fat Controller should be a Network Rail person'.

He argues ‘only Network Rail has the independence to ensure that all the operators on the infrastructure get a fair crack of the whip'. A single controller also ensures an effective interface between operations and maintenance.

Just to make sure the point got home, a Sunday newspaper story followed in which a Network Rail spokesman was quoted as saying ‘we need the right to cancel trains, turn trains round early or run trains through without stopping'. The same spokesman also called for each of Network Rail's eight routes to have a ‘dominant TOC so that ‘timetabling would be a bilateral process'.

So as you can see, in the unification of the railways Network Rail is taking on the mantle of Prussia in the unification of Germany in the 19 th Century. Unlike the TOCs it has organisation, stability and, above all, guaranteed income for the next five years.

And, as remarked last month, as it gets a better grip on its own internal affairs it is going to throw its weight about externally – the 25 stone gorilla syndrome. From the Government's viewpoint this is not necessarily a bad thing and some of my deep thinking chums reckon that upwards vertical integration is going to win the day.

Viewed from the DfT's Railways Directorate, who would you think would bring the most to the party if Anglia were selected for a VI pilot scheme – National Express or Network Rail? Particularly since the timetable is already determined by the SRA and the infrastructure operator's need for maintenance possessions.

SRA confused

All this will get the Freight Boys jumping up and down. They are the true open access operators and they need their access rights protecting. On the other hand I sense a harder line emerging from the SRA on freight access where EWS stitched up Railtrack – as shown in the wrecking of Settle & Carlisle.

Where is the SRA in the VI debate? Confused, to judge by conflicting statements from its Chairman. On the one hand ‘ Maybe Vertical Integration is the thing. It is certainly one option' and on the other ‘The Vertical Integration debate is a complete red herring. If we get hung up on Vertical Integration we are going sown the wrong course'.

Richard is certainly right about not getting ‘hung up' on the VI debate, assuming he means the debate about ‘whether'. Since no one has denied Dr Howells, the debate is now about ‘how' and either of the two options ends up with the same result. And my chums in red braces can't see a financial return on TOC involvement.

It's that gorilla again. But according to Informed Sources when new Chairman of the Office of Rail Regulation Chris Bolt visited ORR to meet the team he told them ‘we'll see where the Gorilla sleeps'. I think it's called reading yourself in.

Continues.........

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