Four years in the firing line…

If a week - as former Labour Prime Minister Harold Wilson famously said - is a long time in politics, then to Mark Carne, four high-profile years as Network Rail Chief Executive must have seemed an eternity.

Carne’s stint in this very public and most controversial of rail’s ‘top jobs’ kicked off in crisis (Dawlish track washout, 2014), continued with the mother of all Christmas screw-ups at Kings Cross (2014-15), and now ends with the railway’s reputation in tatters following the devastating timetable meltdown on Northern and Thameslink, as a result of the botched major upgrade launched on May 20 - with the misery continuing even as I write these words in early August.

Along the way, Carne has had to deal with the notional tripling of Great Western electrification costs to £2.8 billion, the consequent cancellation of Midland Main Line and Northern wiring plans, and criticism on NR’s performance from bodies such as regulator the Office of Rail and Road and passenger watchdog Transport Focus.

And all these major headline grabbers (with the associated critical media) were in addition to the ongoing rumbling discontent at NR’s perceived excessive costs, poor efficiencies, winter resilience, summer resilience… the list of problems is seemingly endless.

Many CEOs see out their time - even in major national companies - invisibly and rarely (if ever) encounter national news editors. To Carne, it must have seemed like he was never out of the headlines, for four years. That is an extremely stressful place to be - not only for the individual involved, but also for their families.

In some ways, it’s perhaps surprising he made it past the first year - not, I hasten to add, because of any lack of ability, credibility or commitment (although there were those who questioned one or all of those requirements when he was appointed), but because the job he found himself doing was not the one he had been interviewed for.

When Carne took over as CEO in January 2014, NR was a private limited company with a group of members as a proxy for shareholders. This was a manipulative and uncomfortable Labour Government construct, launched in October 2002 (after Railtrack was put to the sword by Labour Transport Secretary Stephen Byers) by Labour Prime Minister Gordon Brown, who was desperate to keep NR’s multi-billion-pound debts off the public balance sheet.

Given its love of public ownership, it’s ironic to note just how hard Labour worked to keep NR in the private sector, especially given its determination nowadays to nationalising the railway (whatever that actually means, because today’s Labour still won’t say).

Anyway, back to Carne - he’d barely taken the job on when the National Audit Office (NAO) reclassified NR’s debt onto the public balance sheet, and we saw the slightly bizarre spectacle of a Conservative Government nationalising NR in September 2014.

To raised eyebrows all round, Secretary of State for Transport Patrick McLoughlin insisted that this was merely a technical administrative change. It was nothing of the sort, and its impact on NR was highly significant. The stark reality was that NR’s ability to simply borrow endlessly on its ‘credit card’ was immediately choked off by the Treasury, wreaking havoc on NR’s programme in Control Period 5 (CP5, 2014-19).

So, while Carne had come to a massively controversial (very public) job at the head of a private company, he unexpectedly found himself leading what was effectively a huge subsidiary of a Government department. He reported formally to NR Chairman Peter Hendy, but he was very much beholden to the whims, shifting priorities and politically driven decisions of the Secretary of State.

Here was a man who in his successful global career as a top oil and gas executive had enjoyed use of his own private jet, who was now horrified to find himself standing at tracksides being showered by sprayed mists of raw sewage as HSTs raced past when he was out with track workers. As a metaphor for his new job, that takes some beating: huddled in an exposed and personally dangerous position, being showered with… well, I’m sure you get the idea!

This was not what Carne had signed up for - not by a very long chalk - and there was much consequent speculation that he wouldn’t be around for long.

“He’ll be gone by Christmas - early next year at the latest,” was a common refrain. And to be honest, I don’t think anyone would have blamed him.

Dawlish was real back-to-the-wall, challenging stuff, but at least it was all about grit in the face of adversity. Christmas and New Year 2014-15 at King’s Cross was very different - horribly botched, over-running engineering work caused travel chaos for thousands of seasonal travellers, and the toxic media coverage, criticism and contempt was as merciless as it was relentless. In the circumstances, few would have blamed Carne for throwing in the towel.

But he didn’t. Carne confounded the naysayers, stuck it out and gave it his polished best for four years. I interviewed him for RAIL in late 2014, once he’d found his feet. That exclusive interview was published in two parts in RAIL (763-764), and can be found at railmagazine.com if you’d like to catch up with what he exclusively told me back then.

Skip forward to the summer of 2018, and having decided it was time to move on, Carne submitted his resignation in February 2018. But he was to be denied a quiet departure - the end of his four-year tenure would be bookended by an episode of railway trauma which is probably more intensively and widely critical than that which launched his railway career in late 2014.

Carne’s departure was announced amid the reputational wreckage of the Northern and Thameslink timetable meltdowns, and a viciously critical media which reflected and amplified the fury of tens of thousands of commuters whose daily lives had been plunged into relentless misery by the railway.

As if that wasn’t enough, announcement of his CBE broke in the Queen’s Birthday Honours List on June 8, prompting a tsunami of ‘rewards for failure’ and ‘slap in the face for commuters’ headlines.

They were entirely predictable in the political media prism of the here-and-now, but took no account of Carne’s crucial four-year role and relentless hard work in transforming NR’s safety culture, in particular. He had spearheaded this safety improvement alongside ORR Director of Railway Safety Ian Prosser, who also was appointed CBE at the same time.

Carne agreed to do his only departing interview exclusively with RAIL. So, when we met, we revisited some of the subjects we discussed four years ago, starting with the reclassification which so changed the nature of his CEO’s role.

“I was interviewed for the CEO role in the summer of 2013 and appointed in August - and then reclassification was announced in December. At the time we all thought, I think, that it was going to be a statistical anomaly.”

I tell him SoS Patrick McLoughlin told me that it was merely “a book-keeping exercise”.

“Yes, exactly, and I think we all naively thought that,” he replies dryly.

Carne reflects and then goes on: “I think you have to bear in mind that at the time, the sheer scale of the challenge that existed in the enhancements portfolio and the very small amount of money and time we spent on the development of that portfolio, the significance of reclassification wasn’t clear. 

“But in late 2015 it became clear that there really was no more money, and that we were going to have to live within our means.”

The days of adding debt via NR’s ‘credit card’ were over. The Treasury had closed off this means by which escalating costs had been accommodated.

Back in 2014, Carne had counted off his priorities on his fingers: improving safety, reliability, capacity, cost. How does he regard these today?

“Those remain - I still talk about those four things as being the key reasons for network rail to exist.”

So… let’s take them in order: safety?

“Safety is the thing that the public and politicians take for granted. And I’m very proud that they can do, because our record as the safest infrastructure provider and the safest railway in Europe - and more widely, I think, actually - is an enviable one. It’s a hard-won reputation and we constantly strive to improve on it.

“I’m proud of that progress. And I’m especially encouraged by the progress we’ve made in workforce safety, where we have started to see a significant shift, which is really, hugely encouraging. I always stress that safety and performance go hand in hand, and organisations that are passionate about safety and really think about it at all times are inevitably passionate about performance, too.”

Are rules being obeyed more - or do you think you’ve seen significant behavioural change?

“Traditionally it’s been about rules. ‘Do this… do that.’ We had 1,200 safety standards, but there are so many that people can’t possibly know what all these standards mean - so the journey over the past few years has been much more about behavioural change.

“I do think we’ve seen a sea change in the attitude of people to stop the job when they see something that’s unsafe, and not to worry about reporting incidents - because we now welcome the reporting of incidents rather than punishing people for it, which had been the case. You only had to go back a few years to find that.”

Rail is a big industry, with big machines, big risks and very significant dangers. And yet, the most recent fatality at Bearsden was a young worker falling a couple of metres from a step ladder, in June 2018.

“Yes, that was a terrible tragedy,” says Carne, clearly upset. “We’ve had six workforce fatalities in my time - and five of them are road vehicle driving fatalities. You were talking about behaviours - in four of those cases, they weren’t wearing seat belts.”

“NR’s problem was that the most basic behaviours around safe systems - the use of safe systems to keep you safe - was just not part of the culture, which was too ‘macho’. We had to overcome that, and to care more for one another and the communities that we serve.

“That’s been a really important change - but this last fatality, as you say, was a young man who fell from a stepladder. A very simple accident, but caused by multiple, small, isolated failings.”

Was it a moment’s carelessness at Bearsden?

“No. This was a good team, but they were operating within a culture that still needs work.

“If we look at all safety incidents - and some are very serious safety near-misses - the underlying root causes are often very similar. This is what led to the death of this young man - small, seemingly isolated failings that we can tolerate because ‘it’ll be all right, won’t it’.”

Right up until the moment that it suddenly isn’t alright.

“We’ve got to constantly change our game, and recognise that to really make the next step change it’s up to all of us to set a different set of expectations.”

Carne has been relentless about this, and even though he has led significant change, that Bearsden death made clear that there is no substitute for eternal vigilance.

OK… reliability. In our 2014 interview, you said: “In CP4, we did not deliver in terms of reliability, so there has to be an absolute focus for us in CP5. We have to make underlying assets not fail so frequently.” CP5 was a disaster in terms of projects - but what about reliability?

“We have improved asset reliability, but what’s frustrating is we haven’t increased reliability for passengers,” Carne replies.

“So, we have delivered a significant increase in the reliability of the underlying asset base in the last 40 years, through the use of intelligent infrastructure and better inspection techniques, and certainly in the last five or six years there has been a 25% reduction in asset failures.

“Interestingly, fleet reliability has also improved over the same period, and yet reliability for passengers has got worse. The fundamental problem is about ‘delay per incident’. We have this hugely complicated, integrated system which needs to be managed as a system. Just making improvements in individual areas is not good enough.

“This accelerated my passion for devolution, and the creation of local teams to work closely with train operating companies to try to manage the system in a more efficient and effective way. You can’t dictate from the centre how the local system can operate - it has to be done locally, with train operators. But there’s still a long way to go.”

I point out to Carne that I vividly recall having precisely this conversation with Railtrack CEO Gerald Corbett nearly 20 years ago!

“Well it’s a complex issue…”

Is it because the network is now busier?

“Well, it’s partly that,” he replies. “But there are multiple excuses, and in my first year I was probably listening too much to the excuses - that we have more passengers, which means dwell times are increasing, we’re running more trains so we’re more congested… blah blah…

“So yes, those are all true, but you have to respond to that with a higher level of fundamental operational performance. And I don’t think that the industry as yet has managed to achieve that - and it needs to.

“The ‘Gibb’ report of 2016 was a very interesting report to read regarding ‘delay per incident’ because it talks about the system and the way it operates, it talks about the need for more reliable infrastructure, but it also talks about the timetable.

“If you have a timetable that never lets you get onto the railway to maintain it, and that doesn’t ever allow you to recover poor performance in the middle of the day, you’ve got a big problem. And if you don’t have enough drivers, or you have a driver and a crew schedule which is over-optimised so it’s theoretically perfect but practically useless, then you have another real problem. I observe a lot of those failings in other train operations around the country.”

He sees only patchy and inconsistent progress towards meaningful change. As I said in my Comment in RAIL 858, the DfT had been in the habit of signing up franchises despite warnings from NR that the proposed timetables were not possible on the existing infrastructure. That is changing.

Says Carne: “Until a year ago or so, a franchise operation would feature a timetable that was in a sense independent of the infrastructure provider. As Chris Gibb highlighted in his 2016 report, that led to massive problems. Today we now have the system operator and the infrastructure provider signing off the franchise, which indicates that NR is satisfied that the franchise timetable and track access are all consistent with what we need to do.”

So, NR is now a signatory to a new franchise and not merely a consultee?

“Exactly. I think that’s a significant change, but there are more changes needed. We will need to see closer integration between train operations and infrastructure operations, in terms of planning the long-term capacity of the railway and also in terms of day-to-day operations.”

So, presumably you’re urging this thinking on the DfT with regard to the (as yet) unknown nature of the forthcoming East Coast Partnership?

“Throughout my time here I’ve been representing the view that the train operations and NR should get closer, which is why it was absolutely fundamental to devolution. What is also fundamental to me is getting the support from the regulator to change the way in which our targets are set. So, our train performance targets are now set by the operators - the objective was to create alignment of interests so that we’re all pulling together.

“What I would say, though, in honesty, is that I think we’ve come about as far as we can within the current model.”

So, what should come next?

“More radical things are needed. I think the Secretary of State absolutely recognises that… I think that Labour recognises that. In some respects, their policies are very similar - they believe in bringing track and train much closer together in integrated teams, focused on what passengers need. Where they differ is in the degree to which the private sector is involved.

“But let’s put that to one side. There is a real opportunity to bring the two parts together - but you just can’t do it under the current rules of the game.

“The interface between the two entities is defined through the Schedule 4/8 regulatory compensation payments. They were drafted to try and achieve the right economic outcome, but they also have perverse effects. What we need to do is to bring the two parts of the railway together and run it as a single team without it being distorted by perverse incentives.”

So, you’d scrap the Schedule 4/8 payments then?

Carne cannily - and not unexpectedly - sees the trap that might come across as trying to simply make life financially easier for NR. His answer is carefully delivered.

“We need to rethink all this in the longer term, irrespective of your political affiliations - because this is not a political comment, this is purely a railway comment. You need to run the railway in the best interests of passengers, which means you need to carefully consider the best time to shut the railway to allow us to maintain it. When is the best time to shut it so we can renew it or build new stuff, and how do we deliver the best daily performance?

“That also means having the right numbers of drivers with the right train crew - all these things - and at the moment there are lots and lots of little levers in there which don’t ever necessarily allow the right outcome. So, yes - it needs some rethinking.

“The public/private partnership model proposed for East Coast doesn’t go far enough, because actually it’s still trying to keep the NR entity and a private sector entity. There needs to be some rethinking of where the boundaries might lie.”

Hmm. How would you do that?

“Well, franchising is merely a contractual mechanism to bring the private sector into the railway. I do that all the time in NR - I have lots of ways of bringing the private sector into our business.

“So, if you bring the two parts of the railway together and run it as an integrated business, you can still contract out certain elements of that and create risk opportunity for the private sector. But it may not look like the current franchise model, and it may not look like the current NR model.”

Radical thinking indeed. Does Carne have a plan? Even in outline terms?

“No, I don’t have a clear plan,” he responds, rather bursting what has been an increasingly interesting bubble.

“We’re talking about how might the industry need to evolve. And I’ve been very clear that I like the devolved NR model because it creates the opportunity to innovate in places where you don’t have to bet the farm on one ideological model.

“So, we innovated in Scotland, where we have an alliance under one leadership. We can try something different on Great Western Railway, or on South Western Railway, or on East West. It’s important to try different models, but I do think the time will come when we need to be more radical then the industry can be at the moment.”

My, how times have changed in a relatively short time. Former NR CEO Iain Coucher (2007-10) took a diametrically opposed view, characterised by unflinching centralisation to inconsistent regional approaches of the kind now advocated by Carne. “There cannot be five best ways of doing something,” was his inflexible mantra.

The third of Carne’s priorities in his 2014 interview? Capacity. From the outset, his thinking here was - entirely unsurprisingly - driven by his oil and gas experience, where there’s an obsessive drive to increase production (through, say, an offshore platform) without making too many changes. The parallels are clear.

“My impression from the start was that we had a lot of latent capacity on the existing network, which is why I was so passionate - and still am - about the digital railway. It’s so much more than just a signalling system - it’s really about digital train control, and that will enable us to run more trains faster, more reliably, closer together and so on - and more safely.”

In that first interview, Carne had pointed out that taking the digital route with UK air traffic control had yielded a 40% increase in capacity, and he is still very much driven by this thinking. Critics claim that rail will come nowhere close to that because even the long main lines - such as the 400 miles of the East Coast where digital railway is to be tried first - have relatively short runs between hub junctions (on the East Coast at Peterborough, Doncaster, York, Darlington and Newcastle), where digital will be difficult and with much more limited benefits.

“It is a work in progress,” he replies. “But after four years, while I think we’ve made progress, we haven’t made as much progress as I would have liked. We have, however, had tremendous political support and the Secretary of State’s recent speech at York regarding £450 million for digital railway. But the industry now has to step up. We have to speak with one voice as well, to make such a big transformational change.”

I observe that the summer timetable meltdown and chaos has masked the world first of ETCS (European Train Control System) on the central Thameslink core, with an ATO (Automatic Train Operation) overlay. Carne shares the frustration.

“Yes, that IS a world first - a fantastic achievement,” he says. “It’s working brilliantly and it will be core to the success of Thameslink. You couldn’t do it without it - and there will be many other places, many other bottlenecks on our railway where similar technology can apply, such as the two-track Welwyn Viaduct. 

“It’s a perfect example - and it’s quite exacting. I can envisage, in ten years or so, that we could have digital train control guiding trains into the core of Waterloo.”

I tell him that Chris Green made an interesting comment to me in the first few days of Thameslink, during spells when it was working well at St Pancras. He pointed out that in watching a procession of trains running simultaneously through both platforms, it was the first time in his railway career that he had seen a peak service running in both directions at the same time. Not only has the railway has received no credit for this, it is seen as leaden-footed and incompetent.

“It can work really well, and is another way in which you can involve the private sector in novel and different ways,” agrees Carne.

“Going back to your earlier point, and about how we don’t have to be slavish about franchising or not, there are multiple ways of involving the private sector and creating opportunities for them to take risk on the skills that they have. We need to be more creative and innovative in the way we do that.”

Carne’s fourth priority back in 2014 was “we must do everything we can to drive down costs”.

“Well, we must,” he declares.

There has been plenty of criticism there - especially around such projects as Great Western electrification? Yes, it was poorly scoped, but what sticks in the public mind is that costs are perceived to have tripled from first estimates.

“It depends how you look at it,” he replies. “Clearly, when you look at it compared with the regulatory supplement to CP5, people say ‘well you haven’t done well’.

“I think that calls into question the effectiveness of the regulatory supplement and its targets. This is why I much prefer customers to set targets, which is what now happens. But I think it also shows that in CP5 we’ve very consciously tried to do the right asset management work, and not the cheapest.

“You can create perverse behaviour where if you say ‘I want everything to be done at low cost’, then people will find the cheapest things to do in order to drive that kind of behaviour.

“In this Control Period we absolutely haven’t done that - we’ve tried to do the best thing from a long-term asset management perspective. That has sometimes meant doing some really difficult and expensive stuff - but it was the right thing. Yes, there are still enormous inefficiencies, we all know that, so we need to constantly strive to improve and drive down costs further.”

Why is that not happening faster?

“I’ll pick three, if I may,” he begins. “Firstly, we need to adopt new technology more quickly and more intelligently. Secondly, sort out track access. This is a massive driver of inefficiency. We are carrying out the GW electrification - a monstrous project - on 2-3 hours a night, and every time we finish the railway has to run the next day. It’s incredibly difficult and therefore inefficient.”

Carne pauses… and then tackles his most controversial point.

“The third issue is our slowness to change the terms and conditions of our employees, and the dominant impact that the unions have on the rail industry. This is not something that is spoken about in the public eye to any extent - but any railway person will tell you that the hold the unions have over terms and conditions of the vast majority of people at the front line of our industry is a huge impediment to fast and effective change.”

What specifically would you want to change?

“I’m not going to talk specifics. But every railway person will know - whether you talk about train drivers, or train guards, or frontline maintenance staff or signallers - the terms and conditions are preserved and some go back to the year ‘dot’.

“There are some very perverse things in there, and they are incredibly difficult to change because of the power of the unions. The impact of industrial action on the performance of our country is significant. I believe very strongly - and this will be a controversial comment in the industry - that unions have disproportionate power. Our railways are too important to our country to allow that to continue.

“I think railways should be treated in the same way that other critical industries are in Europe, and that there should be legislation to ban action which is disproportionate in its impact. It should not be right that a few hundred people are able to affect the lives of hundreds of thousands or millions of people by taking industrial action.

“I know that will require some fundamental union legislation, and now is not the time with everything else we are seeing in the political space, but I do think it is going to be necessary.”

We return to efficiency. Carne says that only 0.5% of train delays are caused by possession overruns. I ask if that’s because there’s too much risk aversion in the amount of work being put into them, after the pain of King’s Cross in 2014.

“It’s not because too little work is being put into them as such - more because the downside risk of overrunning is so serious that people naturally are very conservative about what they put into possessions. Nobody cares if you finish on time, but all hell breaks loose if you finish a few minutes late.

“That drives an inherent conservatism in the way in which the industry operates, and inevitably when you have a particularly bad event - as we had not long after our first interview - then the pendulum swings and people say ‘that will never happen again’.”

That sounds as if Carne isn’t denying my point? Have we got the balance right then, or not?

“We’ve made fantastic progress, because we now design our jobs with a series of break points - if everything is going well you keep going, but if something has gone wrong then you can cut and run.”

 And that’s exactly what you didn’t do at King’s Cross?

“No, we didn’t do that at King’s Cross. Nor was there sufficient oversight. I am proud that when I look back to King’s Cross, I see a completely different company today. The professional approach now to major engineering processes is chalk and cheese compared with King’s Cross - it’s completely different.

“There was also no contingency plan with train operators - but today we work very well together in an integrated fashion across the industry to say what we will do in the event that something goes wrong. How would we get different bus or train services in? How would we deal with passengers? I think that’s come on in leaps and bounds.”

But NR’s critics would say that costs have not come down enough - and that costs aren’t under control?

“Well, they are under control,” he insists. “They may still be higher than you’d like them to be, but they’re incredibly well-controlled.

“I’ve been very clear that the best way to reduce costs, particularly if we’re talking about projects, is to spend more time in the early stages. Getting scope and the specification right will save millions, and (of course) that was not what was done on many CP5 projects.

“Look, I’m hugely in admiration of NR and the industry team of CP4 for persuading government to invest so heavily in CP5 - it was an amazing achievement. The problem was: we over-promised massively as an industry as to what could actually be delivered, and then with reclassification the financial safety relief valve was removed. And that led to the problems that emerged in 2015.”