Peer review: Adrian Shooter
Chairman, Vivarail. Former Chairman & MD, Chiltern Railways
The origin of the confused situation that Paul Clifton describes can be traced directly back to the way in which the Railways Bill was put together in 1992.
I had a privileged position in that I was working for one of the BRB Members and was charged with helping to get some common sense into the proposals.
Unfortunately, the relationship between the Board and the Department had deteriorated to the extent that the civil servants tasked with drafting the Bill had been specifically instructed not to solicit any advice from BR. Much of their advice therefore came from lawyers - in particular aviation lawyers, because the notion existed that railways were conceptually very similar to airlines and that the best way to introduce competition (and thus break the ‘inefficient BR monopoly’) was to model the future of rail on the recently deregulated airline industry.
From time to time the drafters got stuck, at which point I, and a couple of other managers in similar positions, got a call that went something like this:
“You know that we are not allowed to talk to you, but do you fancy a coffee somewhere quiet?”
“Yes, if you are paying.…” was my answer. (I had no such instructions.)
At one of these sessions I became aware that train leasing companies were to be set up and sold off. They would be closely modelled on the international aircraft leasing companies for which the lawyers acted. There would be a totally free market in trains, which (like aircraft) would be completely portable and be deployed where the market dictated.
Deep breath…”in which case you should know that there are a few issues that you need to understand.”
I spent a fair amount of time explaining that while some trains are fairly “portable”, many are not for a variety of technical and commercial reasons. For example, a Class 321 EMU looks very similar to a Class 319, but you cannot use it on Thameslink.
Subsequently I was instructed to take a leading part in a small group within BR that created and prepared for sale the three ROSCOs. I hope that I succeeded in mitigating some of the wilder propositions that were being discussed.
It is worth remembering that the underlying assumption in rail privatisation was that railways were on their way out, and that much of the legislation was framed in a way that contemplated a gentle wider decline with a smaller and commercially viable core being defined and served by market forces.
There was absolutely no concept that railways contributed to the economic wellbeing of the country, other than a grudging acceptance that congestion in London might get a bit worse if there were no trains. Does this mindset result from the proponents all living within a cab ride of the City or Westminster?
This assumption was behind an insistence that train leases entered into by the pre-sale train operating units should have 15% of trains on short-term leases, the idea being that many of these short-lease trains would be returned to their lessors and that a genuine competitive rolling stock market would thus be created.
Having seen (from the inside) the many ways that BR wittingly or unwittingly drove passengers away, I could see that this would not happen. Equally unrealistic was the idea that the ROSCOs would initiate investment - it was always obvious that they would be owned by banks or bank-like institutions. And how often do you read about banks making speculative investments?
This was, of course, at the same time that the equally dotty idea was around that Railtrack would initiate enhancement investment.
It can be seen that the institutional framework set out in the Railways Act, containing as it did fundamental flaws, was going to set the scene for many problems in the event of (shock horror) railways becoming successful.
History teaches us that things tend to work rather better if civil servants concentrate on devising policy and leaving the delivery to a suitably incentivised private sector. The fairly frequent, often high-profile Government embarrassments can usually be traced back either to civil servants meddling in the detail, or their failing to have contracts which adequately describe to their private sector partners the outcomes they are looking for.
The privatised railway is full of such examples. Look at the recent Public Accounts Committee report on the DfT-led procurement of the Crossrail EMUs and IEPs, where the Department was heavily criticised for wasting huge amounts of public money.
Contrast this with several successful TOC-led train procurements which have resulted in fleets of excellent trains procured at very competitive prices and with very low procurement costs.
For example, South West Trains’ order for Siemens EMUs. Just to put this in context, this was the biggest train order Siemens had ever had, and the biggest order of any sort that the company had received for 20 years. Southern pulled off a similar trick with the acquisition of a fleet of Electrostars to replace its Mk 1 EMUs.
Virgin’s Pendolino fleet has (very cost effectively) transformed the West Coast Main Line, and the fleet of Voyagers has similarly changed CrossCountry out of all recognition. The fact that these Voyagers are now often very overcrowded on many routes is the result of a policy failure by the DfT, who (by their actions) made it impossible for any bidder for the current CrossCountry franchise to win if they included additional trains in their offer.
Anticipation of this type of problem was the reason for Chiltern lobbying in 1999 for a provision to be included in the ITT for the 20-year franchise that overcrowding must not exceed a set level. This has meant that Chiltern’s passenger satisfaction and growth has been much above average and has enabled the company to contribute substantially to the economic wellbeing of its hinterland. This benefit has far exceeded the theoretical risk the DfT perceived in underwriting “unnecessary” additional trains.
This provision explains why Chiltern has used its ingenuity to obtain small numbers of extra vehicles at frequent intervals. New Turbostar orders have been for as few as six cars, while the opportunity was taken to tag an order for eight Class 172 cars onto the back of an order for its sister company LOROL. It also explains why Chiltern has five rakes of Mk 3 locomotive-hauled coaches that it owns and why it did a deal with Porterbrook to acquire several Class 170 DMUs when their lease to First TransPennine Express comes to an end.
This latter has, of course, resulted in a degree of consternation in “the North” - a place far beyond a taxi ride from central London.
The moral of this story is that interested parties should lobby for all they are worth, to keep the DfT on the straight and narrow in that they should specify outcomes and not inputs, and that these outcomes should include a seat for everyone, except for very short journeys. Whatever happened to the ‘Boeing 737’ train? Well, there are nearly 500 of them - they are called Turbostars of Classes 168 , 170 and 171.
