Conservative transport policy...time to be scared?

I have been thinking a lot about the new Conservative Secretary of State for Transport, Philip Hammond. As someone interested in having better railways in Britain, I instinctively worry about Conservative Governments. They have in the past been about as useful as a bacon slicer in a cheese shop; it may do something, but ultimately you'll end up gooey and with half your finger sliced off.

This fear isn't irrational though. It doesn't automatically stem from a loathing of all things Tory, (however I do have to confess that as a disgruntled Lib-Dem I am quick to condemn them) nor does it come from a default loathing of the fee market, which history tells us they love, cuddle and, given the chance, would have coitus with. It doesn't even originate from erroneous idea that since the beginning the Conservatives have always historically been the ones to mess up the railways. Indeed, some of the greatest policy errors, including the Railway and Canal Traffic Act of 1894 and parts of the Railways Act of 1921, both of which restricted the way that railway companies could charge for their services and therefore damaged their profits, were both enacted by Liberal governments.

My worry, profuse in nature and massive in my head, is that over the last 50 years Conservative Governments have persistently damaged Britain's rail network. Now, I'm not saying that that's what Conservative Governments set out to do, but I can't help discerning a pattern of destructive policies and loathing towards the railways that was ongoing. It is my hope, however, that the new Conservative-Lib Dem Government doesn't go the same way.

The first real pain that the Conservatives inflicted on Britain's railways was installing one Richard Beeching as chairman of British Railways (BR) in 1961. He was appointed by Ernest Marples (shown), the Conservative Minister for Transport, who brought him from his position as Technical Director at ICI. It is in his new position that Beeching came to be considered a 'Railway Satan.' He was tasked with moving BR into profitability. He shared the view with the Government that BR should be run like a business and not solely in the public interest. In his 1963 report, The Reshaping of British Railways, he proposed closing 6000 of the country's 18000 miles of railway, most of which were rural and cross country lines. This would also mean shutting 7000 stations and allow BR to shed 70,000 jobs over three years. He estimated the recommended changes would make BR profitable by 1970 and as a result Marples implemented most of them.

The Beeching Report, as we now know, was terrible for many reasons. Firstly the report did not take into account the social benefits of railway lines serving communities that had no other transport links. These small communities, that still shape our view of the sleepy little English village, had existences that revolved around their railway lines. Suddenly, like a whirlwind, these services were gone. Secondly, Beeching's cuts were based on traffic figures that were gathered in the spring when some places that had heavy tourist traffic were at their quietest, such as lines on the North Cornwall coast. Therefore when these lines were closed it destroyed industry and tourism in these regions. North Cornwall, to this day, still has a failing economy. Thirdly, there was no attempt to decrease cost through other means, such as modernisation, (despite the failed BR modernisation plan of the 1950s) that would have allowed some lines to stay open. Beeching's sole cost-cutting policy was to apply the axe when a line failed to pay its way. Lastly, the cuts went too far. The plans did not foresee that roads would fill up and did not anticipate any future transport needs. These are just some of the many criticisms of the plan, and in the end Beeching's goal of profitability was never reached. What it most certainly did do was cost many people their livelihoods.

Now I am not automatically going to knock Beeching himself and I have always though that it was Marples particularly that was at fault. Firstly, Marples was a man who's background looked a bit suspect. Marples co-owned a construction company, Marples-Ridgeway, that was heavily into road building. Indeed, surprise, surprise, it was Marples that authorised the M1 be built from London to Nottingham and it was Marples-Ridgeway that built it. Further, and this is important, Beeching only made recommendations in his report, it was Marples who actually gave the order to close the lines. Therefore, when the line between London and Nottingham closed, forcing travellers onto the M1, the fishiness is plain to smell. Marples evidently used his position, and the Beeching report, to further his own business interests. Secondly, Marples brought in a businessmen in Beeching and that in itself was going to mean harsh cuts were going to be proposed. My point is that if you place a wolf in a chicken coup, don't expect that it'll imitate the chickens. Businessmen will act as businessmen if they are simply told to make something profitable. Indeed, it was Beeching's narrow terms of reference, simply to bring BR into profit, that meant he looked at things simply in terms of profit and loss. Thus, he acted accordingly. Overall I feel that it was Marples who was the man to blame for the cuts, as he was driven by a pro-road agenda. Beeching, I feel, simply did his job, even if he did it badly.

So where to next? Oh yes, the privatisation of British Rail in the early to mid 1990s. This is, in some ways, a more erroneous action by a Conservative Government that the Beeching cuts. Beeching, effigies of which railway enthusiasts still stick pins into, at least was brought in to solve a specific problem. British Railways was unprofitable, its cost tax payers money, Beeching was tasked with reversing this. However, John Major's Government of the 1990s broke up British Rail because of ideology. The free market was their God, and they worshipped it to the max. Their goal was to make Britain's railways efficient and innovative by the introduction of competition. Silly arses.

By the early 1990s British Rail was actually running very efficiently. Maggie, bless her cotton socks, had restricted BR's budget quite considerably. This had had the effect of scaring its bosses so much that the aim of Beeching, railway profitability, actually became a reality in some parts of the organisation. Certain services, such as intercity and Network South East, actually started to make money. The Thatcher Government also shocked everyone when it authorised the electrification of the East Coast Main Line and purchased new rolling stock. Everyone involved stood back and applauded. BR was, by 1994, at its most cost-effective. Then Thatcher was out and Major came in.

Thatcher, it may surprise everyone to know, was actually against the privatisation of the railways. However, Major, under the influence of the 'Adam Smith think tank,' pushed forward with privatisation in the Railways Act 1993. This created an infrastructure company, Railtrack, that maintained all the working parts (track, signals, major stations etc.), three ROSCOs that owned the rolling stock and who leased it to the 25 Train Operating Companies (TOCs) who actually ran the trains. Further, BR's engineering department was split up, as was the freight services that were now under the control of 6 private companies. This is the very basic version of how BR was split up. To go through the number of companies that were involved and the cack-handed way that BR was destroyed, would take endless Blog posts that would make me into a hermit.

The split up of BR caused many problems, and what follows were the key ones. Firstly, the track ownership was separated from the trains. This currently causes problems as there are conflicts between the operators of trains and the Network Rail. Secondly, the infrastructure maintenance was privatised , leading to cost cutting, sloppy maintenance and a string of crashes. The Southall accident in 1997, Ladbroke Grove in 1999 and Hatfield in 2000 all contributed to Railtrack's downfall. In 2001 it was placed in administration and in 2002 all of its assets were transferred to the state owned, not-for-profit company, Network Rail. Thirdly, the railways now cost the taxpayer far more money than is necessary. Because in the privatisation process someone forgot to flag up that railways don't make profit, it means that many franchises, such as South West Trains and National Express East Anglia are subsidised simply so that they have profits high enough to pay their shareholders dividends. Yet at the same time many Train Operating Companies still have to pay money back to the government as part of their contracts, and failure to do so sees them stripped of their franchises, for example National Express East Coast last year. Overall, these weird arrangements mean that we pay over the odds as taxpayers for the train services. In 1994 government funding for BR was £1,627m, approximately £2,168m in 2005 terms. In 2005 government support came to £4,593m. I could list more faults, but the general consensus is that a Conservative Government privatised the railways very badly, when they were at their most cost-effective, simply because it sat well with their ideology.

What, therefore, does the future hold with this government? Are those who, like me, are interested in having good railways quaking in their boots? Railway commentators were shocked and worried last week when the new Secretary of State for Transport, Philip Hammond (shown), laid out a possible change in direction for the Department for Transport. I wrote a few Blogs back about how I felt that Lord Adonis was probably the best Secretary of State for the railways in a long while, and how his enthusiasm for railways should be continued. However, Hammond was quoted last week as saying that Labour's "war on the motorist" was going to be ended. Is there a war? I didn't hear gunfire. All I heard were Clarksonesque individuals who like to feel victimised mouthing off. Hammond was referring to an illusory conflict and it was a worrying portent. I read this statement as meaning the new government was taking a pro-roads stance and could hear Marples' footsteps in the background. If he was going to view transport policy through a prism of pro or anti different forms of transport then he was simplifying a complex issue.

As I speak the Government's 'Programme for Government' is being unrolled through the news outlets. In the transport section there is a lot of good news for those interested in better railways. There will be longer franchises, Network Rail will be more accountable to it customers (i.e. us), high speed rail is supported, with options to expand it beyond the basic plans already drawn up, there is support for Crossrail, support for electrification (which I honestly didn't think would still be on the cardsunder the new Government), the rail regulator will become a strong passenger champion and, lastly, there is a commitment to fair rail pricing. Some things have been left out, such as improvements to Thameslink, re-opening closed lines and the Intercity Express Program. However this plan for the next 5 years is, on the surface of things, a very good result for the railways given the financial constraints of government.

History has taught me to fear Conservative transport policies when it comes to the railways, that they are essentially a destructive party in this respect. Therefore, naturally, I suspect that many of the above policies have the Lib Dem's fingerprints all over them. Yet if the Government adheres in the next 5 years to what it has set out today, then I might start to change my opinion. I wait and see...

Dugald Drummond - The South Western's detrimental manager

 ***I have now revised all of my opinions in this piece based on subsequent research - DT 27/05/2012***

One of the major issues regarding the modern corporation is how individual department heads operate. The focus is on how, when they are in an autonomous or semi-autonomous role, they may take advantage of that position to either consciously or subconsciously negatively affect organisational performance. There are a number of ways that department heads position may do this. The first is competition. Individual department heads, infused with the idea that their department is the most important and the best, may compete with other for resources and money within the organisation. Secondly there is the concept of bounded rationality, which means that department heads, only having full knowledge of their own organisational remits, make decisions from a limited perspective. Thus a department head may make a decision that affects another department in ways that his limited level of knowledge about that department cannot predict. Thirdly there is principal-agent problems. Basically, directors of a company can find it hard, impossible even, to contradict a department head's recommendation or decision because their knowledge of what goes on a department is vastly inferior to his. This is a problem exacerbated by the fact that the department heads is the one who provides them with the information about the department in question. Lastly, and I imagine this goes without saying, personality plays a role, in ways that our own experiences of work can help us to imagine. Overall these issues pose problems for organisations as department heads, in their capacity as decision makers, can potentially neglect the overall performance of the organisation in favour of their department's own efficiency.Naturally these problems were encountered in Victorian railway companies. Indeed Bonavia, in his overview of the structure of Nineteenth Century railway companies in The Organisation of British Railways, hints that the conflicts that were engaged between departments, mostly including the Superintendent of the Line and the Locomotive Superintendents. The Superintendent of the Line, who's main job was to monitor the trains while they were out on the line, had to have at their disposal enough locomotives to keep the trains to timetable. The Locomotive Superintendent, who usually also had responsibility for the locomotive works which built and maintained the rolling stock, had to make sure the staff there had a steady flow work and that costs were kept at a constant level. Therefore the two department heads may bash their heads together on exactly where locomotives were going to be at any given time. This is only one example of inter-departmental conflict, and shows the sort of issues that might arise. Overall there many department heads within the Victorian railway industry that had reputations that were less than favourable because of their actions.

Within the London and South Western Railway (L&SWR) one man exemplified the problematic department head. That man was Dugald Drummond, the company's Locomotive superintendent between 1895 and 1912. Drummond had been born in 1840 to George Drummond who worked on the permanent way on the Ardrossan Railway in Ayrshire, Scotland. After doing his apprenticeship he gradually working his way up through various grades on various railways, eventually becoming Locomotive Superintendent on the North British Railway in 1875. He then moved to the Caledonian Railway in 1882, and stayed until 1890 when he became moved to Australia to take charge of the Australasian Locomotive Engine Works. After the scheme failed he started the moderately successful Glasgow Railway Engineering Company. In 1895 he was offered the job at the L&SWR, at a salary much less than he was paid on the Caledonian railway. As a result this move began one of the most interesting periods in the history of the L&SWR's Senior Management.

Drummond at the outset was given a very free hand by the company's General Manager, Charles Scotter. The engineer used this delegated power to firstly shake up the Locomotive Works, which had previously been under the charge of Mr W.F. Pettigrew. Prior to Drummond's appointment the, Locomotive Superintendent, William Adams, was suffering from failing memory and vagueness and Pettigrew was forced to paper over the gaps in Adams' work. This had meant that the works had fallen behind schedule and repairs were undertaken slowly. As a result, and using his devolved control, Drummond brought in his chief draughtsman from the Caledonian Railway's works at St Rollox, William Urie. Drummond also instigated weekly meetings to check the progress of all locomotives under repair and construction, and another to report on the mishaps of drivers when handling trains. Within months of his appointment repair and construction was ahead of schedule and by 1896 the Nine Elms works were operating at full capacity. He also came down hard on drivers caught drinking on duty, was in closer contact with the staff and was approachable to be the arbiter of disputes and disagreements.

These were all positive features of Drummond's tenure as locomotive superintendent, however he also was a prime exemplar of a department head that focussed on his own affairs to the detriment of the company as a whole. Firstly this was illustrated through the 'bug' (shown). Built in 1899 this small 2-4-2 locomotive with a saloon at the back, was a private vehicle so that Drummond could move around the network when and if he pleased. The 'Bug,' apart from ferrying Drummond to and from work, had a habit of turning up next to drivers waiting at signals. If excess steam was detected the driver would be chastised across the gap by Drummond (who himself was a consummate driver.) The driver would then receive a notice the following day to see Drummond in his office The 'Bug' would also enable Drummond to turn up unannounced at the most remote engine sheds for an inspection. Further Drummond's frequent inspection runs would take no notice of the traffic timetable, much to the discontent of passengers. Overall its approach would alarm staff bringing with it, 'foreboding and trouble.'

The 'Bug' was symptomatic of Drummond's centralisation of the Locomotive department on him. There was not one aspect of Locomotive Department operation that did he did not know about, or had the ability to pass judgement on. In addition he created a situation whereby he was a very important presence within the company and the first Locomotive Superintendent that did things truly 'his way'. Compared with Adams, Drummond consulted the Locomotive Committee far less and took more actions by himself without their consent. As far as can be detected neither Scotter, not his successor Charles Owens, nor the Locomotive Committee (made up of directors) tried to force him to change or be subservient to them. It also meant that Drummond's suggestions when it came to major investment were endorsed far more readily by directors because of his unique and intimate understanding of the department. In 1898 the decision to move the Locomotive Works to Eastleigh was heavily influenced by Drummond. Where previously these types of decisions would have been made by a special committee or the board of directors, in this case the decision was made very quickly at the board's Locomotive sub-committee.

Drummond was certainly an autocrat in the Locomotive Department. Bonavia's argument that there were conflicts between the Locomotive Superintendent and other senior managers seems unfounded in the case of Drummond up to 1912. There seemed not to be one man in the company, neither director, nor manager, that felt confident enough to take him on. However 1912 was the year of changes. The directors brought in a new general manager, Herbert Ashcombe Walker, who was charged with reforming the company. It was at this point that the only case of conflict with another senior manager has been documented.

Walker tried to assert his authority over Drummond before the engineer's death in September 1912 and Urie's son remembered an early spat between them. During the 1911-12 coal strike Walker ordered some American coal without consulting Drummond. Angered by this, Drummond had a bucket of the coal brought to Waterloo and emptied the contents over Walker's officer floor. Walker however was not going to put up with this sort of insubordination, and on the death of Drummond, Urie was appointed Locomotive Engineer. Urie informed Walker that he had never expected to get the job at the age of 59. Walker told him not to worry, he was going to fire Drummond very soon anyway. After his death, obviously trying to assert his control over the Locomotive Department, on the advice of Walker, the Board made Urie Locomotive Engineer rather than Chief Mechanical engineer. In addition the role of running the trains, which for many years had been under the Chief Mechanical Engineers' Department, was transferred to the Traffic Department.

Overall there is evidence that Drummond was a typical isolated department head that got his own way and perused his own interests within the department. The way he ran his department, using large amounts of resources and at time building locomotives that were simply 'flights of fancy,' must have affected the costs that the department accrued. Table 1 clearly indicates that after 1895, the year of Drummond's appointment, the costs of running the Locomotive Department rose significantly. Of course other factors may have played a role in the increase, such as the costs required to make the department efficient or bring the locomotive stock up to the required quality given Adams' ailing last years. However, what is clear is that ever since 1868 department costs had risen at a steady rate and after 1895 there was a significant increase. Thus, Drummond's influence and independence did have a detrimental affect on overall company efficiency.
Sources:

Urie, J.C. 'Tips for aspiring CME's' South Western Circular, Vol.10 No. 9, (January, 1997) pp.221
'Dugald Drummond Obituary', The Railway Engineer, December 1912, reprinted in The South Western Circular, Vol. 8 No. 6 (April 1990), pp.145
Chacksfield, J.E. The Drummond Brothers, (Ringwood, 2005)

Stagecoach Rail...any chance of some profit?

Ah so it is a good day for the railway industry. Stagecoach, the firm that runs East Midlands Trains, and my local provider, South West Trains (SWT), as well as owning a very silent 49% of Virgin trains, has said that that the revenues from the railway division rose 2.1% in the 40 weeks up to February 7th. Tickets sales on SWT rose 3.4%, while on Virgin Trains revenues rose 8.8%.

Well if that isn't inflation-busting good news for their rail business, even if Stagecoach's North American Division is performing poorly and the fact that people don't want to stand in 6 ft of snow has hit the profits from their bus operations quite hard. Overall however stagecoach remained confident in its position that the cash would keep rolling in. It shows, in large part, that everything is on the up for rail travel, everything is going green in the garden of Waterloo station and, well, the economy is doing better. This said as a precaution they won't be paying a dividend in respect to the year ending 30th April.

Yet not all is rosy at Stagecoach. SWT are currently in the middle of £100 million contract negotiation (OK bust-up) with the Department for Transport over how much taxpayers money they should be given in franchise payments, including revenue support payments. Basically because railways don't make money, a basis I'd tend to say was a bad thing to base an industry on, the Train Operating Companies (TOCs) are paid 'franchise payments' to ensure the private companies stay in the business. Clearly however this isalso so that they make sure they pay dividends to their shareholders. In addition some companies have been receiving top-ups, to keep them going. But at the same time most companies pay fees to the DfT (and hence why National Express booted off the East Coast franchise...they couldn't). Thus SWT in the six months to November paid £50 million to the DfT, whereas in the previous year they paid only £5 million.

In my opinion the contract negotiation shows how a) the franchise system is about logical as jam and Marmite sandwiches (you could do it, but I wouldn't advise it) and b) that the TOCs and the DfT are consistently beating the living crap out of each other. If we consider that firstly SWT receive money from the DfT (previously £100 million but with top ups), BUT that last year they paid £50 million back, up from £5 million, this seems illogical at first glance. Well let me break the bad news, the views of both parties are entirely logical given their positions, but both are detrimental to the traveller.

Firstly the DfT being handed tightened budgets and increased costs, especially running the East Coast franchise, understandably want to reduce the subsidies they pay out to the TOCs. Now at this point I hope that Stagecoach's view is this: that if they are receiving less from the DfT, but having to pay more back, means that they invest in trains less, they have to raise ticket prices and that station facilities will suffer. Yea...we hope too much. Their 'logical' position is based, in my opinion, simply on profit. I'm not someone who blames businesses for acting like businesses, it's in their nature to want to make profit. That's why the unfettered free market doesn't work and good government regulation is required.

The reality is that the SWT-DfT slanging match hinges on the contract wording. The original contract states that if SWT's revenue falls to under 94% of projections, the Government will reimburse 80% of the shortfall (so if it is 6% down, the DfT pays 4.8%). Conversely the DfT collects 80% of any profit above 106% of the projections (so again it collects 4.8% of the 6% profit). SWT won the contract by agreeing to pay the DfT 1.2 billion over nine years, ending in 2016. The despute comes regarding when SWT believes the revenue support starts from. SWT believes, for obvious reasons such as the economic crisis, that the date should be April 2010, whereas the DfT believes it should be February 2011. Now I'm no legal expert, but you'd think that'd be something specified in a contract? So we are now waiting for an arbitrator to make up her or his mind. we think this will come in the Summer.

I'm sorry to break the bad news to you, but whatever happens though the long and the short of it is that you, the traveller, will loose out. If the economic situation declines further, and revenues drop below 94%, it doesn't matter when the contract starts, ends or finishes - you loose. An arbitrator's decision stating that the contract starts in April will probably allow SWT to use the extra money to start paying dividends again. If the contract starts later, SWT will reign in their services, raise fares and possibly let station improvements fall by the wayside, again in an attempt to pay dividends. If the reverse looks like happening, and things continue to improve and profits rise, irrespective of when the arbitrator says that the contract begins, SWT will use the money, once again, to pay their shareholders, larger, more normal dividends.

Therefore I cannot foresee a scenario, short of the DfT forcing SWT to do something, where any of the benefits of an improving financial situation may be passed on to the traveller. The chiefs of Stagecoach used this announcement to call for a reassessment of the franchise system. Tony Collins the boss of Virgin said, "The franchising model needs to change, it's not good for the Government either because they now have a lot of franchises where they are paying additional revenue support." Yes Tony...please can we scrap it, it ain't doing me any good!

Waterloo isn't what it used to be

Waterloo is a dump! There I said it. We can of course applaud the cleaners, I didn't see one Metro or Evening Standard dumped floorward today. I did see plenty loitering the train. In fact in a bit of a tangent I think it is weird that Network Rail get a good cleaning job done at Waterloo, while South West Trains clearly don't give a shit about the carriage interior. Different priorities I suppose...anyway

I think that the problem with Waterloo is that now the romance has gone. If anyone has seen the 1961 John Schlesinger film 'Terminus: 24 Hours in the Life of Waterloo Station' they will know what they I mean. Since the station's building in 1848 (with the current station being the product of a re-build between 1900 and 1921) there has always been the bustle of commuters, and the film expertly portrays individuals going to their varied occupations. Yet what I think has changed is the fact that people don't interact with the station in the same way. The film expertly portrays the station as a social arena, where drinks were served, meals were sat and eaten and lovers came together and spent time talking. Now people drink on the move, the meals are over-salted and speedily scoffed, and I see most people arguing, yelling, or moving so fast that others nearly topple like dominoes. Waterloo is now one part in people's a-b-c lives and not an interactive part of it. In short the station experience, while still essentially still about travelling and meeting, has sped up.

The biggest indicator of the 'quicker' station experience are the barriers, designed to catch those devious travellers who were moving in too fast to buy a ticket. Pesky, ugly and unnecessary is my opinion. Oh the Train Operating Companies love them so much that I bet they get aroused by the mere site of yellow circles and flashing lights. I bet every time they see one open they can just hear the money jangling into their pocket. Of course this poses problems for the majority of travellers that are 'honest.' They place anyone who previously would have very willing pay for their ticket on the train or those who make simple errors with regard to ticket buying, in the category of a fare dodger. For all those who fail to have a ticket the mantra is now no ticket...no excuse - you are getting a fine. This is a problem especially prevalent on South West Trains where many stations have been equipped with barriers, most notable amongst them being Waterloo.

Are these revenue-generating, money sucking, fare evasion instalments worth it? No. As Richard Malins at 'Transport Investigations' has just commented in the latest issue of RAIL magazine, they are only profitable at larger stations because of the extra cost of staffing them at the small ones. Thus all the Train Operating Companies have done in their efforts to slow the public down, catch fare dodgers and claim the money that is (rightly or wrongly) there's, is that they have dehumanised the travel experience and set them selves up for grief with their customers. Would it be terrible if at that at the cost of a few dodged fares and turning a blind eye to the errors of the travelling public they could have fostered good customer relations? In truth at the end of the day they just pissed us off, but then again they are monopoly Train Operating Companys with no others to challenge them. Thus this goes to show, in my opinion, that they don't really care about customer relations at all, rather bleeding our pockets dry is all that matters.