Bill Totten's Weblog

Thursday, January 31, 2008

Time to get back on track

Observation on the destruction wrought by John Major's privatisation of our railways

by Christian Wolmar

New Statesman (January 10 2008)

The real cost of the destruction of British Rail, initiated by John Major's government fifteen years ago, is finally emerging. Both aspects of the double whammy suffered by passengers after Christmas - the engineering overruns and the fare rises above inflation - can be traced to that piece of mindless vandalism that Labour has done so little to repair.

A privatised railway suffers such severe engineering overruns because more work is contracted out to companies which either do not have the expertise or which cut corners, knowing any penalties will cost less than ensuring that work is completed on time.

The work at Rugby to double the track was being overseen by Bechtel, the huge US specialists in project management. Expert at building new schemes, the company proved unequal to the task of carrying out alterations to an existing railway. Network Rail insiders, privately furious at Bechtel, now admit that they have contracted out too much of their management role and need to do more in-house.

The chaos would not have happened under British Rail, for two reasons. First, BR had sufficient engineering expertise in-house to plan and carry out such schemes within the required time. None of my ex-BR contacts could remember such a serious incident in the organisation's history.

Second, because BR was an integrated organisation, the engineering director would never have dared to mess up the railway for several days knowing he would have to face the operations director at a subsequent inquest. There would have been co-ordination throughout the process. Indeed, Network Rail staff tell me Virgin, the train operator, knew the timetable for the work at Rugby was too tight and couldn't be achieved without overrunning. Its warnings fell on deaf ears.

Network Rail is also suffering from the low esteem in which the railway, after privatisation, is held. Its top managers are well regarded, but there is a weakness in middle management, resulting partly from low pay. BR used to run a graduate entry scheme that was greatly oversubscribed. It was abandoned by Railtrack and has been revived only recently by Network Rail.

Nor has the public benefited from privatisation through lower fares. It is true that BR had to increase the price of travel in the same way as today. The difference, though, is that at least there was a political furore and debate each time this happened. Now, fare rises that are above inflation have been built into the economics of the railways for the foreseeable future, a crazy policy, in the light of rail's environmental advantages.

Today, rail travel is subsidised to the tune of more than GBP 5 billion a year. In a white paper issued last July, the government made clear that the priority was to push more of the costs of rail on to passengers rather than taxpayers. Fare rises that are above inflation are a deliberate strategy to reduce costs. They are also intended to "price off" demand, thus reducing the need for investment.

The debacle has shown that the organisation, structure, financing and accountability of the railways are in a complete mess, which no one had much noticed. Such issues attract far less attention than the series of accidents in the early days of privatisation.

The chaotic state of the railways demonstrates many of Labour's shortcomings, both in terms of its obsession with the private sector and its dishonesty in refusing to admit responsibility. No minister appeared on TV to explain either what went wrong at Rugby and Liverpool Street or to justify above- inflation fare rises, relying on the pretence that privatisation passed control to the companies which now own and operate the railways.

Nothing is further from the truth. For the first time in railway history, decisions on investment, franchises and strategy are being made by ministers and civil servants, rather than by rail experts. Moreover, the loss of BR means that no one bats for the railways or thinks how rail can be adapted to 21st-century needs.

Contrast this with France, where SNCF recently celebrated its 70th birthday at the Grand Palais with an exhibition of all the arts. Its boss, Guillaume Pepy, spoke with vision of expanding the country's high-speed rail network and running trains at night to compete with air for the huge courier business of the likes of DHL and FedEx. BR's demise leaves no organisation capable of that sort of vision.

It would be good to believe, after the outraged editorials and calls to re-create BR, that ministers would be moved to tackle the mess on the railways. Don't hold your breath. Yes, there is concern about a lack of accountability at Network Rail, stuck in limbo between the private and public sectors. Indeed, ministers are known to be worried about this, but since Network Rail has a GBP 20 billion debt the Chancellor does not want on his books, don't expect any bold moves.

It is even unlikely that Network Rail's directors will lose much of their six-figure bonuses over the Rugby chaos, as these are based on a variety of performance indicators covering the whole year.

The only way to improve the railways is to re-create BR. Labour would see that as retrograde and risky. In fact, such a brave move would be widely popular and demonstrate that Gordon Brown is different from Tony Blair.

Christian Wolmar is the author of Fire and Steam: a New History of the Railways in Britain (Atlantic Books, GBP 19.99)

Bill Totten


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