RAIL 797: Low-key report, big potential

I usually try to find a topic here that is markedly different from those chosen by Wolmar and Insider - but there’s no chance of that in this issue. It is impossible to focus on anything other than Nicola Shaw’s conclusions as to how Network Rail should be financed.

Christian concludes that while Shaw’s comments are not unwelcome, she has “hardly set the world alight” while failing to deal with the division of infrastructure and operations which he believes continues to hobble the railway. Insider provides his usual masterly summary of how we’ve ended up where we are and gives his view as to why Shaw avoided radical reform. Readers are invited to read, digest - and then form their own view!

In advance of such reviews we usually see prophesies of extreme outcomes (in this case the sale or break-up of NR) while post-publication there are critical descriptions of damp squibs, missed opportunities and, more often than not, rapid shelving of the report by ministers. Will it be the same this time?

Probably not, because while Insider is correct that Shaw has not advocated radical reform and therefore, by definition, Wolmar is equally correct that she has not “set the world alight” it would nevertheless be wrong to conclude that this is not an important set of conclusions at a critical moment.

While the report itself is not radical, that is not to say it does not pave the way for some radical outcomes. Some easily-bored newspapers who are satisfied only by the opportunity to make overblown claims about NR being “stripped” of this or “broken up” by that, relegated the story into single columns on inside pages and thereby missed the point.

And that centrally important point is that not only is there no policy recommendation that would see NR funding cut back, there is also clear alignment of NR’s long-term future with the radical current political devolution of power to the regions. This not only maintains NR’s funding but it also paves the way for our railways to benefit from the same type of regionalised decision-making that has resulted in such great local railways in federal Germany and - closer to home - Scotland.

What’s not to like about potentially giving Northern England the sort of oversight, planning and policy which gave us Larkhall, Airdrie-Bathgate, Stirling-Alloa, the Borders reopening and an electrification scheme at Paisley Canal which slashed the original budget from £28m to £13m?

It’s been clear to me from the start - and this was made explicit in Shaw’s scoping report last year - that NR devolution would be a cornerstone of her conclusions. Also, NR Chief Executive Mark Carne’s concurrent accelerated devolution through his new Route Services Directorate made the consensus on trajectory very clear indeed. Carne’s policy, which picked up pace following Sir Peter Hendy’s appointment as chairman last July, both reflects and dovetails with the Government’s policy of devolving power . 

History has proved time and again that great local railways enhance social mobility, economic activity, home provision and job creation. The erstwhile SRA was scathing a fifteen years ago about the proposed Borders railway reopening - yet in just four months it has carried 500,000 people - 20% ahead of forecast. Next stop, Hawick?! Transport Scotland Commercial Director Bill Reeve consistently describes Borders not as a railway, but as an economic development tool for the area. In his time at Transport for London, Sir Peter Hendy used similar language about jobs, houses and the economy, rather than talking about trains and infrastructure. He is now doing the same at NR - but this argument is best implemented regionally, not through Whitehall.

But there are pitfalls which Hendy and Carne must avoid. Devolution works in Scotland  precisely because of people like Bill Reeve and NR must make sure it has the right people to devolve authority to. Hendy told me personally that NR must stop doing “stupid things” and must stop “pissing money down the drain” - and he is right. If those things continue to happen then as sure as night follows day we will see a re-centralisation of power, just as we did after NR emerged from the wreckage of Railtrack. So Hendy, Carne and the new generation of Route Managing Directors must move quickly to end crass stupidities like the construction of pointless new footbridges at Gainsborough Central and Brigg at the cost of £800,000. Or the installation of new bi-directional signalling and a shiny new point into a long-dismantled yard at Gainsborough Lea Road for which there is no prospect of relaying at a cost of £250,000 - while the station itself is near-derelict.

Then there’s NR’s standards-obsessed obstruction to the reinstatement of the seven mile Wisbech branch at a cost of £100m which even ORR (which NR erroneously blames for this fenland deadlock) says is outrageous. 

Such nonsenses were unacceptable even under national management - they will be untenable when local management has responsibility. NR must act quickly to ‘get real’ on stupidities like Gainsborough and Wisbech if devolution is to succeed rather than be discredited as the latest failed reorganisation.

Likewise changes will be required - as RAIL has said many times - at ORR which needs to shift its focus from an obsessive (and clearly flawed) economist’s view to a more broadly based regulation of eight routes. And for that it must follow NR’s example and boost its railway brain, not least on its board where Director of Rail Safety Ian Prosser flies the flag virtually alone for railway expertise. ORR urgently needs at least another three non-executive directors with railway expertise. 

ORR’s  aim should be to stimulate ‘competition by emulation’ among the RMDs in order to boost efficiency. Because if NR and ORR cannot successfully manage and regulate matters locally to a much higher standard then the aim of securing funding from local authorities and the private sector will fail. Everyone accepts that railways are a good thing but they are expensive and a major reason for this review was to establish on a national basis the principle that those who directly benefit from better railways should help pay for them.

None of this is new. I went through all these arguments in Comment pieces in RAIL 788, 790 and 794. Times have changed since the Conservatives unexpectedly won a majority in May 2015 and had to deal with a problem they probably thought had been handed on to someone else. Hence the review. But following the appointment of Sir Peter Hendy and other board changes NR feels rather more under control at the top - although the challenge remains of forcing those crucial changes right down through the organisation.

If ORR and NR respond appropriately and effectively they could yet produce radical results from a review which on the face of it appears anything but radical. 

Comment: RAIL 797: March 30 2016 - April 12 2016