Had he become transport secretary five years earlier as he had been expected to do, he intended to introduce his own version of privatization.
If we’d kept the track public and owned by the state, I was quite prepared – and I remember saying this to Richard Branson – to let a private company come in for a period of time and see if they could run it any differently. You could have had a public East Coast line and a private West Coast line, maybe.
I wanted to see if there was any truth that a private sector management could be more efficient. I wasn’t prepared to give over the railway system but I was prepared to consider if you can get a smartarse like Branson who thinks he can run everything, let him run it on a management basis, lease it for ten years or something and see if he could do it better. How can you shake up public sector management which in many cases was a dead hand?
I didn’t want to renationalize. I knew the reality was there was so much money needed in the transport system, to spend all that money in compensation was sheer nonsense. For the first two years, we wouldn’t get the legislation. We couldn’t assume we would be in for three terms. So it was ‘let’s run it as it is and see how it goes’. The fact that the rail link to the Channel Tunnel was already in financial trouble and had to be rescued was another reason in favour of inaction.
There was another argument too, never stated publicly at the time and perhaps not even grasped by the new government until they were actually in office. The less Labour did to clear up what was perceived as a Tory mess, the less likely it was to get the blame.
Gavin Strang, transport minister for Labour’s first year, put his finger on it: ‘We would come in at Transport Questions and when someone attacked the railways, we would sympathize. It was easier to maintain this kind of distance from the fragmented network, and not accept responsibility for its failings, than to embark on a bold programme of nationalization.’
At party conferences, Prescott would excoriate the train operators for their obsession with repainting trains rather than running them, and be loudly cheered, especially in 1998 at Blackpool, when the Virgin service had a bigger stinker than usual and shunted much of the parliamentary Labour Party into a siding at Crewe. Prescott called the train companies ‘a national disgrace’.
But even within the party, the pressure to do something was slackening. The unions had implacably opposed the fragmentation, fearing the staff-cutting zeal of the new owners. And, sure enough, in early 1997 South West Trains began a ‘driver restructuring initiative’. Everyone knew British Rail was overstaffed, didn’t they? Let’s start sacking people! However, the resulting shortage of drivers led to mass cancellations, the threat of a £1million fine from the regulators and oodles of bad publicity. It also led to the realization that, for the drivers’ union ASLEF in particular, the new set-up was more of an opportunity than a threat. Twenty-five franchises meant twenty-five prospective employers. The old monopsony, whereby British Rail was the only railway employer, was dead, and this vastly improved the unions’ bargaining position. In this way, as in several others, the effect of Major’s reforms was the reverse of that intended.
For the passenger, not much changed for the first three years under Labour except that things got steadily worse. In 1998, at a time when Virgin and Connex were the most hated operators, I recorded seventeen late journeys out of nineteen on my regular Great Western run between Newport and London. We avoided eighteen out of twenty when a London-bound train suddenly gathered speed and went from eight minutes late to five minutes early between Swindon and Paddington, a stretch timed at less than an hour. This was my first inkling of a piece of railway roguery that was to become far more general.
That year, the management buyout team who had picked up Great Western sold it on to First Group, and duly collected their own millions for doing bugger-all, with Prescott fulminating helplessly. First Group repainted, stuck their own name everywhere (completely confusing passengers looking for first-class carriages) and squeezed harder at ancillary costs and charges not under regulatory control: they abolished the refreshment trolley, raised car-parking charges by thirty per cent and nipped away at the hours when cheap tickets were permitted.
One theory was that the groups now starting to dominate the industry – First, Stagecoach, National Express, Arriva – were bus companies for whom passenger comfort and satisfaction were not high priorities. They had not got big by bothering. But the nature of their contracts, the short-term franchises and their lack of control over rolling-stock meant none of the companies had much incentive to add any gracenotes to their service, especially as passenger numbers were now increasing rapidly.
Those desperate for justification claimed the rise was due to the popularity of privatization, which was palpable rubbish. Much more relevant were the clogged roads and expanding economy (and also the expanding higher education system, with many more railcard-bearing students taking their laundry home to mum). Prescott was desperate to be given a space on the legislative programme for a transport bill and he produced a white paper that hinted at encouraging people out of their cars and on to trains and buses. However, Downing Street – terrified of offending motorists – made sure this did not actually mean much.
His big idea was to establish the Strategic Rail Authority, though it was never wholly clear what its exact purpose would be. (‘What’s it actually going to do, Deputy Prime Minister?’ one insider claims to have asked. ‘Be strategic,’ was the reply.) Sir Alastair Morton, the large and combative former head of Eurotunnel, was put in charge, although strategic thinking was arguably not his strength. The upshot was another failure: ‘Not much strategy, not much authority and not much rail if they’d had their way,’ as the railway writer Andy Roden put it. There was confusion between the roles of the SRA and the regulator, which at one summit – at Prescott’s official country house, Dorneywood – led to a near punch-up between Sir Alastair and the regulator Tom Winsor.
The last part of Roden’s aphorism may be unfair: Morton did want to harness public and private money to improve the system. And he also wanted to give the train operators twenty-year contracts to give them some reason to care, though in the event only one was ever awarded – to Chiltern Railways. Once Prescott gave up transport in 2001, the Treasury reassumed total control, handcuffed his weaker successors, and put paid to any notion of major discretionary investment.
Before this happened, one problem had turned into a crisis. There were two major crashes outside Paddington, at Southall (seven dead) and Ladbroke Grove (thirty-one dead), both of them involving drivers going through red lights, both of which could perhaps to some extent be blamed on changes wrought by privatization, and both of which turned every newspaper reader in the country into instant experts on the technically complex problems of railway safety systems. Everyone had an opinion on the relative merits of such acronyms as ATP, AWS and TPWS until they got bored and forgot all about it.
But someone needed to have an opinion, because it was no longer possible to trust the people in charge of the railways. The stock market boom of the late 1990s was such that if Pilbrow’s Atmospheric Railway and Canal Propulsion Company had returned from the 1840s and added the suffix .com, its shares would have hurtled out of the atmosphere and into the stratosphere. Railtrack shares joined in the general euphoria. From £1.90 on flotation, they reached £17.68 by November 1998.
And yet the company’s failings were common knowledge. Even Railtrack knew there were problems, telling the government that the set-up of the industry meant it had ‘perverse incentives’: there was no encouragement to invest because its income was largely fixed. It was widely derided by the public as the most obese of all the fat cats (most effectively by the Guardian cartoonist Steve Bell), far more interested in its property portfolios. And it absorbed regular kickings from Prescott, Winsor, the train operators and anyone else who passed by.
Its internal culture was discussed in shocked whispers among railwaymen. A senior executive told a manager at E
uston who was trying to convey some difficult technical point: ‘As far as I’m concerned you have no more status than the person running the branch of Sock Shop.’ (This must be true: I heard it third-hand.) And in a strange way the executive was right. Under corporate law, the company’s prime duty was to maximize value for its shareholders, not run a railway or guard the lives of the passengers.
However, on 17 October 2000, the separation of the trains and the track became all too literally true. A King’s Cross to Leeds train came off the rails at Hatfield, killing four people. The death toll was miraculously low, but the consequences for the industry were greater than for any accident since Armagh 111 years earlier. A broken rail was identified as the cause, and now everyone became an instant expert on the previously arcane phenomenon of gauge-corner cracking. Except, again, for Railtrack’s management, who had no idea what they were doing.
The company immediately went into headless-chicken mode, and staged a nationwide gauge-corner crack hunt, closing the West Coast line a week later and imposing a total of 1,286 20mph speed limits within the next seven months, the vast majority, according to experts, unnecessary. Six weeks later one train from Nottingham took nine hours to do the 126 miles to St Pancras. Morton said the railways were suffering from ‘a nervous breakdown’. Tony Blair admitted that rail travel was ‘absolute hell’.
Hatfield itself was caused by an accretion of normally minor misfortunes which is almost always the cause of crashes. But these misfortunes soon began to look more avoidable than usual. Winsor, it emerged, had been nagging Railtrack about broken rails for over a year; two sets of contractors, Balfour Beatty and Jarvis, knew there was a problem with this one particular rail, and made half-hearted and wrong-headed attempts to fix it; here a speed limit should have been imposed and it wasn’t. It emerged that Railtrack had introduced a strategy known as ‘Project Destiny’ that involved replacing equipment when required rather than at set intervals. What emerged above all was the hopelessness of Railtrack’s relations with its sub-contractors and its lack of engineering expertise.
Yet the most perceptive critic was Railtrack’s own chief executive, Gerald Corbett, who even before the crash had become seen as a poster boy for the privatization fat cats. He knew where the blame really lay. Two days after the crash he told the BBC: ‘The railways were ripped apart by privatization and the structure that was put in place was a structure designed, if we are honest, to maximize the proceeds to the Treasury. It was not a structure designed to optimize safety, optimize investment or, indeed, cope with the huge increase in the number of passengers the railway has seen.’ Note the phrasing: ‘If we are honest.’
Railtrack’s destiny was to be oblivion, undone by its wretched reputation and the spiralling costs of its obligations to maintain the network and to renew the West Coast Main Line. However, everyone who went near Railtrack also seemed to vaporize, including Stephen Byers, Prescott’s successor, who forced the company into administration in 2002. Instead of being given a ticker-tape parade and a dukedom, Byers was dragged into court by irate shareholders who accused him of ‘misfeasance in public office’. He escaped that, but was forced to admit he had lied to the Commons.
His tenure will be best remembered for the email sent by his special adviser Jo Moore on 11 September 2001 (a date infamous in another context), telling the press office that this was the perfect moment to release any news it wanted buried. That, and the eloquent, erudite statement made by the department’s permanent secretary, Sir Richard Mottram, during the fallout from that incident: ‘We’re all fucked. I’m fucked. You’re fucked. The whole department is fucked. It’s the biggest cock-up ever. We’re all completely fucked.’ Byers never said anything as memorable himself.
Railtrack morphed into Network Rail, a nationalized industry in all but name but constructed in a peculiar arms-length way so as to keep its losses off the government’s books and maintain ministers’ posture of deniability. Some observers felt it was also constructed so as to avoid any semblance of sensible financial control.
Indeed, the whole industry was like that. Roger Ford, the most respected of all railway analysts, estimates that the government subsidy has quintupled in real terms since 1990 to approximately £4.8 billion in 2009–10. But, since there was no longer any headline figure for the media to grab hold of, hardly anyone noticed. You might argue that this was a kind of justification. British Rail would never have been allowed to eat so much money but, as Major said, in private hands the railway would have access to capital. He never mentioned it would be provided by taxpayers.
Where has all the money gone? ‘Wages and salaries,’ according to John Welsby, British Rail’s former chief executive. ‘Increasing infrastructure costs,’ according to Matthew Elson and Stephen Fidler in a paper prepared for Tony Blair in 2003. ‘£800m a year in dividends to investors,’ according to the Labour MP Jon Cruddas. And they all appear to be at least partially right.
‘British Rail was living on borrowed time to a huge extent,’ says Adrian Shooter, chairman of Chiltern Railways. ‘A lot of the structure – the bridges, the viaducts and all the boring stuff like embankments – hadn’t been repaired properly, in some cases since the First World War. There had been long maintenance holidays. What was privatized was a clapped-out railway.
‘Because it was privatized, government had to find the money to prop up the mess it had created. It wasn’t enough to say to BR, as it would have done, your problem. It was clearly now the government’s problem. It had to throw money at the railway, and eventually some landed on the tracks as well as in the laps of shareholders, managers, lawyers and consultants.’
By the start of 2009 trains were newer, more frequent, more punctual and probably safer than they had been ten or fifteen years earlier. In 2007 the fast route to the Channel Tunnel opened, a mere thirteen years behind the French and only 205 years since the original proposal. In December 2008 the new faster and more frequent West Coast Main Line timetable was in operation.3 There is no reason to attribute any of the improvements directly to privatization. Most could have come far more quickly if so much time had not been wasted on an irrelevance.
The trains were also very crowded, sometimes disgustingly so. The railways had been sold off on the assumption of continuing decline: instead by 2007 passengers travelled a total of thirty billion miles, up by fifty per cent in ten years, and more than in any previous peacetime year. And on many lines, trains were much slower: services between London and Bristol, for instance, took about twenty minutes longer than in 1980, under BR, a fact not mentioned in the punctuality statistics. Newspaper stories also usually omit the loose definition of ‘on time’: within five minutes for short distances and ten minutes for long.
The operators have also become rather obsessed, bullying the staff to ensure that trains leave to the second: it is considered bad form – or bad PR anyway – if anyone in a wheelchair is left on a platform glowering at a departing train, but everyone else has to take their chances. ‘We’ve become totally heartless,’ one railwayman told me sadly.
Nothing seems more important to the companies than ensuring a respectable place in the league table. ‘Punctuality is the most important thing,’ George Muir of the Association of Train Operating Companies told the BBC in 2007. It is nice to know that the companies take punctuality so seriously – but that is a remark of ineffable stupidity.
Quite obviously, safety not punctuality is the overriding objective. And as I write – touch wood – the record since 2000 has been remarkably good. Andrew Evans, professor of transport risk management at Imperial College, London, says that actually the privatized railways’ record has always been good: ‘Except in the matter of fatalities – and that was entirely due to Ladbroke Grove – the data shows that the other indicators were better than they were under British Rail and better than BR would have been on an extrapolated basis. When the data contradicts the anecdotes, you have to go with the data.’ He found it hard to come up with an explanation, tho
ugh.
And the cost of train travel is staggering. On the one hand, Britain offers frequent trains, some of them reasonably fast, which provide a theoretically excellent incentive for people to stay out of their cars. But, because the system is so inadequate, casual users are deliberately discouraged. You can get very cheap fares if you are bored enough and anal enough to know precisely where you will want to go in precisely twelve weeks’ time, and can navigate both the web and the complexities of the fare structure.
What’s the point of having four trains an hour from London to Manchester if passengers have to pay penal rates (£256 second-class return in peak hours) to use the wretched things without planning it well in advance or even if they travel a few minutes later than they originally thought? It would be more efficient to do it the French way and just run one long train now and again. In 2007 the Liberal Democrats worked out that £10 bought an average of thirty-five miles rail travel in Britain, compared to 663 miles in Latvia. These were the highest fares in Europe and presumably the highest in the world. And they have gone up at least twice since then.
There have been four post-Byers transport ministers, none of whom has so far left a single footprint (Alistair Darling did four years, possibly without waking up). They have had only two consistent policies. One is to encourage the train operators to raise fares as much as they dare to reduce the subsidy. The other is to accrete managerial power within the Department of Transport.
This has been an astonishing development, bearing in mind the weakness of the ministers involved. For the first time in the history of the railways, the precise details of service provision are determined by civil servants with no obvious training or expertise. Not much civility either, judging from the public performances of the head of the department’s rail directorate, Mike Mitchell.
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