Return to Archive -by date - by topic - 1999.
When Sir Alastair Morton took over as head of the Shadow Strategic Rail Authority
there was universal rejoicing. Here was the man to think strategically, think long term, think big and point the politicians in the right direction and the Treasury too.
Of course, there were short term, strategic, issues of franchise renegotiation requiring immediate attention, with the first seven year franchises expiring early in 2003, or just over three years time. So in welcoming the appointment, we gave Sir Alastair some free advice on how to approach franchise renegotiation.
Above all, he had to sort out the inherited problem of Mk 1 stock replacement. This would mean opening negotiations with Connex South Central and SWT. And since these two franchises compete, co-exist or collaborate with Thameslink, which has severe capacity, problems, a three way strategic negotiation would be even better. For example, South Central could make its fleet more homogenous by acquiring additional new stock, thus releasing Class 319s to help tide Thameslink over until 2007, or whenever what was called Thameslink 2000 happens.
Similarly, we suggested that other franchise renegotiations could be route based to obtain synergies from integrating services, the ECML was a case in point.
But when it comes to franchise renegotiation Sir Alastair is proving a huge disappointment. Not because he ignored our advice, not even because he and Franchising Director Mike Grant seem to be making up policy on the hoof through a series of speeches.
No, the reason for our concern, and of others in the industry, is that Sir Alastair seems hell bent on reliving the worst excesses of the first round of franchising. Quite simply, all 18 of the seven year franchises are up for grabs. Bring us your proposals, for your franchise, or someone else's franchise, he exhorts. If you haven't got a franchise of your own, don't worry, you can put in your proposals too for whichever franchise you fancy.
SSRA defends this open season for the predators on the ground that at this stage it is only 'market building' aimed at creating interest in franchising. But to the rest of the industry it looks as if the SSRA has fired the starting gun in the race for second generation franchises, with no idea of what it is trying to achieve.
But can this approach be considered strategic by any definition of the word? In effect Field Marshall Morton is asking his 25 battalion commanders, plus any passing mercenary bands how he should fight the war.
We are assured by the SSRA that it has ideas of what too look for in renegotiation and what to take forward. But equally, it believes it would be arrogant to think that the Authority knows best. It has to tap the ideas of those at the sharp end who are closest to the customer.
But in Sir Alastair's policy speeches it does not come across like that. We quote 'The SSRA is today comfirming its invitation to existing and would-be TOC franchisees to come to us with offers to replace existing franchises with new ones in which there will be value for the franchise owner'. That doesn't sound like 'market testing' or a trawl of ideas to us - rather it is ringing a call to arms.
And already Train Operating Companies are setting up their war rooms. MTL, which only last year was trying to sell its two franchises, has pulled Northern Spirit Managing Director Paul Davison out of the day-to-day railway to head up a franchise bidding unit.
And this is were we think Sir Alastair has got it horribly wrong. Privatisation was a massive distraction for those trying to run the railway, even if you weren't in a management buy out.
This time, it could be worse. True you won't be restructuring your business at the same time. But, unless you, or rather the Group that owns your franchise, are content to sit out the next three years, you are going to have to come up with renegotiation proposals of your own.
And who is uniquely qualified to do this? Why the top managers who even now are working all hours trying to pull a battered, fragmented railway back into shape. And this paragraph was written before Ladbroke Grove.
This lack of top talent in depth cannot be overemphasised. As our occasional tables of TOC and Zone Directors show, the influx of private sector management foreseen by the Tories simply hasn't happened. Most of the outsiders have failed to hack it and it is Bob Reid's old railway that is holding the sky suspended. Interestingly National Express is actually moving railway managers out of its franchises to run other parts of the business. If Virgin decide to go for more franchises, will they be able to resist pulling the bidding team out of West Coast and Cross Country?
Nor is it just the TOCs that are affected. As you will see in Informed Sources this month, TOCs are seeking bids for new rolling stock, and all required to enter service in the same timeframe as the replacement of Mk 1 stock. Clearly some of these are Potemkin tenders - intended for show rather than go. But once again it is a massive distraction just when the rolling stock market was settling down.
Similarly, how can the ROSCOs expect to manage replacement, refurbishment and cascade under leases expiring with the seven year franchises, when an orgy of franchise bidding, either defensive or predatory is underway.
It is all about as strategic as chairman Mao calling for a thousand flowers to bloom. As Ernest Bevin once remarked 'When you open that Pandora's box you never know what Trojan ‘orses will jump out'.
Here we go again.