“Any kind of vision or strategy therefore must be based on evidence from industry players, customers and end users, and to this end the report team recommends that the DfT carry out extensive consultation with the supply chain, TOCs, FOCs, trade unions, the TUC, ROSCOs, local government, the Welsh Government, other devolved bodies, passenger representatives, freight customer representatives and Network Rail’s routes and central team to inform this work,” records her report.
Devolving more power to route directors will help the railway close the gap between it and its customers. Giving them the power to plan how to maintain, renew and enhance their networks should allow them to work with train and freight operators for customers’ benefit.
Yet even here there will need to be co-ordination between routes and relative assessment of plans, in order to determine which best deserve funding. Even if route directors have local funding pots provided from central funds, there will need to be some assessment of plans in order to decide how much to give each route.
NR already does something like this with the Rail Delivery Group. To be consistent with arguments elsewhere in Shaw’s report, she dismisses the idea that NR should continue this role.
“Another body will therefore need to undertake this co-ordination role,” she writes. “To discharge this role effectively, the co-ordinating body will need to be responsible for co-ordinating and prioritising plans and proposals put forward by routes and other stakeholders in a clear and transparent way, confirming affordability, flagging any obvious conflicts across routes, and securing the wider social and economic benefits generated by enhancement projects.
“To strengthen the position of the co-ordination function and maximise credibility, it should be coupled with appropriate levers to incentivise good behaviour at route level. One way to achieve this would be to link the co-ordination of route plans with the process for allocating government funding to routes, so that funding can only be unlocked via the consolidated plan, which itself could only be overturned following an explicit steer from ministers.”
Shaw argues that this new body should be able to hire and retain staff with industry and technical expertise. It must be perceived (an interesting use of the word, because it implies the body need not be in reality) to be open to route and third-party proposals. It must work transparently. And it must be able to stand up to major players such as NR.
She argues that it must be close enough to government to be able to make decisions in the expectation that government funding will follow. Conversely, it must be independent enough from government to manage political expectations in day-to-day business and to expose ministers to trade-offs.
That sounds very like the Strategic Railway Authority that government created in 2001 and abolished in 2006. Son of SRA would satisfy civil servants’ ambitions to run the railway, and create the perception of independence from government. With better external relations and engagement than the SRA, it could succeed.
It also sounds like parts of the Office of Rail and Road. It already has a role in holding NR to account for its enhancement projects (although the role many assumed it had in checking whether these projects were feasible for the money the Government was offering has proved to be illusory). Were it to be formally charged by government to deliver these checks, a revised ORR could fulfil this role of refereeing competing schemes.
Shaw sees a role for ORR in adjudicating between NR and funders of third-party improvements. This could lead to some conflict if ORR takes on the national assessment role. Some schemes might be fully funded by third parties, which would leave ORR with its dispute adjudication role. Others might be partially funded and need government money, in which case ORR might be arguing with third parties about money and then arguing for third parties with NR in case of a dispute.
Shaw’s final recommendations relate to railway staff… or rather a looming lack of them. For NR this lack centres on engineering, technology, strategy, leadership, financial management, and planning and asset management. That pretty well covers everything the company does.
Shaw reckons that today’s route directors are paid too little when compared with TOC managing directors (the latter can be on salaries of around £300,000). NR lists its best paid route managing director as John Halsall on the Wessex Route, with a salary around £215,000. Lowest paid is Richard Schofield (Anglia) on around £180,000. NR’s list of senior salaries starts at £142,500. It lists no freight director.
“Network Rail needs to review its remuneration and benefits package to ensure that it is capable of attracting the right calibre of people to lead the autonomous elements of a highly devolved organisation,” writes Shaw. She then notes that pay for route directors will need to be balanced with their position in the public sector.
Shaw criticises zero-hours contracts because they return limited loyalty from staff. She calls for railway companies to introduce experience from other industries, to deliver leadership programmes to cope with today’s challenges and those from a digital future, and to deliver graduate schemes that engender experience across the rail industry so that tomorrow’s leaders understand passenger and freight operations as well as infrastructure.
She notes that NR employs 13.5% women, while the wider industry had a slightly higher proportion (at 16%). Change is under way, with NR’s 2015 graduate intake comprising 31% from Black, Asian and minority ethnic groups. Of the intake, 29% were women. Reliance on entry-level changes would mean a lengthy journey to overall change.
THE RAILWAY FAMILY
But once the railway recruits people, there’s a strong feeling of family. Shaw writes: “The report team has observed that the identity of ‘belonging’ to the railway is very important to people who work for Network Rail and in the wider industry. This is often epitomised by people wanting to ‘do the right thing’ for the railway - but without (through any fault of their own) any great sense as to what the railway brings to the country and what the railway should be striving for. If the industry can harness this enthusiasm and power - particularly linking staff actions to positive outcomes for customers, the economy and society - then the future will be very bright indeed.”
Yet she also notes: “Elements of culture include history and legacy, ways of interacting with each other, language, style and rules of behaviour. As with all organisations, some elements of Network Rail’s culture are to be celebrated, and others will need to evolve and adapt, to enable the organisation to transition into a more devolved structure with increased emphasis on accountability to its customers and end users.”
Throughout Shaw’s report, which was published in March 2016, there are many references to Network Rail and the need for the company to change and be changed. Yet when RailReview approached NR to talk about the report nearly two months later, NR declined, saying that it didn’t feel the time was right. “We wait for DfT to decide what to do,” it said.
That’s a clear sign that NR would rather stay close to its owner and funder, than change to be the company its customers would wish.
