I’m pretty confident that many readers of RailReview are ‘of an age’ to recall and smile at the words: “Are you sitting comfortably? Then I’ll begin…” from their childhoods and the days of black and white television. Because those words are most certainly applicable here. This is a ‘big read’! 

I applied for an interview with ‘new’ Network Rail Chairman Sir Peter Hendy CBE back in July 2015, when he was appointed to succeed ‘invisible man’ Richard Parry-Jones. 

The latter had spent most of his chairmanship out of sight and largely silent. RAIL maintains close relationships with many (most, some might say) of rail’s ‘movers and shakers’, but I neither spoke to - nor ever even met - Parry-Jones. I heard him deliver two speeches (both incredibly unimpressive, in my view), the last of which was at the 40th anniversary National Railway Musuem Dinner in York in June 2015. 

He caused a mass narrowing of eyes when he lectured the audience about what he appeared to believe to be rail’s irrelevance to UK plc, as it only carried 6% of traffic, and that road was really ‘where it’s at’. He seemed to believe that rail’s relevance would remain unchanged  “even if it doubled to 12%”.

Coming from somone who you would expect to be an industry cheerleader, this only confirmed my long-held belief about his own irrelevance. And this view seemed to be more widely shared - within just a few weeks the DfT replaced him at very short notice with Hendy, who arrived at Network Rail with his repuation for straight talking (and not mincing his words) in robust health.

Hendy had recently weathered a media storm after some extremely controversial comments where he said Southeastern trains are  “shit, awful”, and that their revenue protection officers “look like the Gestapo, get on and fine everyone they can”. Hendy subsequently apologised for his outspoken comments (or at least for voicing them!) and that troublesome genie was thereby stuffed back in the bottle.

I was delighted to see his appointment, if completely blindsided by it - and I’m sure I wasn’t alone in that. The grapevine says it was less than a week from first phone call to announcement of appointment, and to say it caused a stir is an understatement. Hendy has had a long career in public transport, not least in buses (see CV, page 8). And he has a reputation as being a shrewd, no-nonsense getter-of-things-done whose sharp intellect is closely coupled with a grass roots understanding and intelligence that makes things happen.

You only have to look at the spectacular progress made during his nine years as London’s Commissioner at Transport for London. For anyone else, getting something like the orbital London Overground metro financed and built alone in just three years would be a career pinnacle… but not for Hendy. 

He would be the first to mutter something dismissive and Anglo-Saxon under his breath at this, but his knighthood for delivering a near-perfect transport system during the 2012 Olympics was an astonishing achievement. Yes, of course we know it was a team achievement, but all great teams can only function under great leadership. And Hendy’s leadership was inspired, inspiring and very effective. Hence the knighthood. He commands respect and is popular - and it is very difficult to be both popular and respected.

He also knows how to handle the difficult stuff. Assisted by the Mayor’s support, Hendy emerged bloodied and maybe a little bowed, but professionally and (incredibly) personally unscathed from a lurid tabloid story about an extra-marital relationship a couple of years ago. Maybe some of Boris Johnson’s well-known and now-legendary ability to not only shrug off ‘events’ that would have been a huge problem to anyone else, but also to turn them somehow to his advantage, rubbed off on Hendy. 

King's Cross and Paddington

He also confounded more than a few  ‘know-all’ commentators who predicted an end to his career, when he made a perfect, seamless and smooth transition from closely serving the left wing Ken Livingstone (2000-2008) to become the loyal and trusted lieutenant of the equally strongly right wing Boris Johnson, London’s mayor since 2008.

I like Hendy. Anybody who already has a well-nigh impossible transport job involving heavy, metro and underground railways, buses, taxis, boats and trams, and who then decides to celebrate London Underground’s 150th anniversary by pulling off a steam haulage programme using 19th century wooden four-wheelers under the streets of London, deserves respect.

I also like him for his approach to rail media. Hendy has always taken my calls, we have met and talked openly and honestly for several years now, and given that the TfL press office has no interest whatsoever in the rail specialist media (all that matters there is the Evening Standard), that friendly approach has been very useful and indeed productive for us both.

His appointment at NR came at a crucial time. To say that his new organisation was ‘on the ropes’ last summer would be an understatement. It had crashed into 2015 on a tsunami of bad news at King’s Cross and Paddington, where Christmas engineering work had been chaotically mismanaged by NR’s Infrastructure Projects (IP) division. Massive reputational damage had been inflicted on a company already on the back foot.

Further pain followed as Great Western and northern electrification projects went badly wrong, as costs soared and work fell horribly behind as a consequence of various technical issues. On the GW project, it was perceived that costs had virtually tripled from £800 million to well over £2 billion, amid reports of track possessions where either no one showed up to actually do anything or only a single mast was installed.

Finally losing patience, the Government stepped into direct control of what was now seen as effectively an arm of the DfT, and dramatically ‘paused’ the Midland Main Line electrification. NR’s humiliation reached new levels.

Confusion reigned. While Government spokesmen and ministers relentlessly used the ‘paused’ argument, no one actually believed it, and exasperated contractors were confidentially briefed in presentations by very senior NR managers where it was made clear that “the MML scheme isn’t paused - it’s dead”.

Supply chain chaos

This was the supply chain chaos and reputational meltdown into which the pugnacious but capable Hendy was parachuted by government. At the same time, career railwayman and non-executive member of the DfT Richard Brown was put on the NR Board as the DfT’s representative. 

The implication was that the Government had taken advice from around the industry that the best course was not to ‘go for the headline’ by an enforced breaking-up or reorganising of NR, but to instead boost the railway brainpower at the top of NR, which was starting to look stretched and a tad threadbare. The subsequent appointment of career railwayman Rob Brighouse as a non-executive director, once he retires as Managing Director of Chiltern Railways at the end of 2015, is further evidence of this very welcome measured and nuanced approach by the Secretary of State.

Not surprisingly, my immediate bid for an interview was declined by Hendy, but not without a sparkle. “Let me get my feet under the table - and I promise I’ll talk to you,” he said. “Blimey, full marks for trying, but I haven’t actually left TfL yet!”

Then the three reviews were announced - Hendy’s own look at what might be termed Christmas present, an internal review of NR Christmases past by Dame Colette Bowe, and then the especially important report into Christmases yet to come, commissioned by the SoS from High Speed 1 Chief Executive Nicola Shaw.

Framed as a report into NR financing and structure for the future, it was obvious from the start (and confirmed by Shaw in her own scoping study, published on November 12) that she would be looking at the railway in its widest sense - including (especially) the role of regulation. Without doing so, Shaw pointed out entirely reasonably and accurately, the job would not be properly done.

The stage was therefore set for the latest surge of structural evolution affecting our infrastructure. Then, with all three reviews yet to be published, Network Rail Chief Executive Mark Carne suddenly announced a major internal shift whereby the devolution lever was being pulled yet harder. 

The IP organisation that had dropped the ball so badly last Christmas at King’s Cross was having its wings clipped - Carne had told me personally on the day of Hendy’s appointment that in future IP would serve as contractor to the Route Managing Directors, rather than calling the tune on infrastructure work, as in the past. Carne’s reorganisation of November 2015 made that real, placing much more power and control in the hands of the RMDs, who will henceforth lead the charge. NR’s ‘centre’ of 6,000 or so people will shrink to less than 2,000 as RMDs take greater control and the centre does only what it is genuinely best placed to do - and which the RMDs want it to do.

I did wonder whether Carne had ‘jumped the gun’ on the outcome of the three reviews, and might pay a price - but it quickly became apparent that the ‘three reviewers’ are not only in close touch but are harmonising and dovetailing their work. That isn’t to say they are working to a pre-ordained conclusion (they clearly are not), merely that they are not working in silos and that a coherent, outcome is being sought. Nicola Shaw’s scoping study for her review actually included the changes Carne had announced shortly before. I think ‘joined-up’ is the word. 

This was the context in which the call finally came from Network Rail HQ. Hendy was keeping the promise he made last summer - the first exclusive interview with the new NR chairman was in the diary. Happy days.

We met at Hendy’s modest corner office  several floors up in the Podium on Eversholt Street, at Euston. It is festooned with personal memorabilia. A superb framed Underground ‘target’, with Hendy’s name where the station name would be, as a parting gift from TfL. Framed pictures of Hendy’s two vintage double-deck London buses. A network route map with some interesting anomalies, which Hendy points out with a wry smile - according to NR’s cartographer, the Okehampton-Tavistock line is already there on the ground! Odd how no one noticed before…

“I was in a fairly heavy meeting a few days ago, and was idly looking at the map and my eye settled on that,” says Hendy. Given that this was the organisation that published a map last Christmas showing lines affected by the King’s Cross meltdown, and showing the Alexandra Palace branch still in use (closed to passengers July 5 1954), it’s good to know that the new chairman has such detailed railway knowledge. Managers down the food chain would be well advised to remember that.

Hendy has agreed to meet to respond to ‘The Rail Manifesto’ last issue of RailReview. It was a thumping, detailed read of considerable complexity. Has he actually read it himself - or merely been briefed on it?

“I did read it actually. I thought there were a lot of interesting points, but the truth is that what you said at the beginning is right - the rail industry is moving on so rapidly that setting out your stall on position is difficult.

“Since you’ve published that ‘Manifesto’ issue, we’ve already had two reports - mine and Colette Bowe’s. We’ve had the National Infrastructure Commission set up. We now have John Cridland as chairman of Transport for the North. So I think it’s moving quite quickly. It might be better just to talk about this place and what I’m doing, and then if you want to fill out of that some answers to things that people raised in the Manifesto, then we could do that?” 

That sounds like a plan. Hendy’s always a good talker, so giving him free rein at first and then coming back to any outstanding points will work well. And we’re off…

Hendy starts by restating a point frequently made by Secretaries of State for Transport - that a once declining, under-invested industry is now a “huge growth industry” getting bigger by around 5% a year. Far from becoming less important, rail is now of central, fundamental importance socially and economically.

“And that’s why things are moving fast - because the politics of it demand that things are happening. It’s not hard to agree with most of the sentiments that are expressed in some of those Manifesto issue views, but it all has to be in the context of what policies the Governments are following - what the latest decisions to be taken actually are and what should happen.”

Hendy immediately links his thinking to the coming Shaw report: “Nicola has set out three things as key issues for her report… three things: growth, passengers and devolution. They all seem to me to be really good issues, because the railway needs to face up to all of those things. And the answers to them are quite complex and quite difficult, and intertwine with politics.”

I want to probe just how ‘joined-up’ the Hendy, Bowe and Shaw reports really are, as indicated by Carne’s early move accelerating NR devolution. How much co-ordination is there? Is it all pre-ordained? Or will the three reports appear like the suddenly stopping reels of the traditional fruit machine? Are we heading for three cherries and a payout? Or the disappointing clunk of a ‘no-win’?

“Well, no,” he says with a knowing smile. “I think it’s more thoughtful than that. I talked to Colette during preparation of her review. There’s a logical sequence. Her review has been in order to identify things that could have gone better about the past, in terms of planning big enhancements. My review is about the consequences of where we are with the money and the delivery of enhancements for 2019. And Nicola’s is about more than the future of NR, it’s about the future of the railway. 

“I thought your editorial [Comment, RAIL 788] was right - it’s not just about the future of NR. Control Period 4 was relatively small things, relatively cheap, and for the large part worked very well. CP5 has a much bigger and much more ambitious programme which relates to the scale of the growth in the rail industry. CP6 - there’s some really serious questions to be asked about how much you can get done and where the money’s coming from. So there is a continuum there. And actually I think they are interconnected. 

“So yes, I talked to Colette during the course of her review. We have made sure that some of the lessons which are about being joined up, both within the DfT and with NR, are carried forward to the better way of dealing with enhancements and major projects for the remainder of CP5. And then I am very close to Nicola because I think the future of NR is about the future of the railway, and it’s about how you cope with growth at 5% a year - which is huge.”

Hendy pauses… then concludes: “My history’s pretty good, and I doubt there has been passenger growth on the railway of this magnitude since the middle of the Victorian era. And coping with it on a railway that’s very largely full is quite a big issue.”

Not only full, but old. Hendy again demonstrates his historical grasp.

“And old? Yes! The oldest railway in the world actually. That’s a good quote actually. I’ll swap the oldest underground railway in the world for the oldest railway in the world. The oldest structure on NR is 190 years old - part of the Stockton-Darlington Railway.” 

Which is still in everyday use…

“Still in everyday use. So the reviews are all tied up. No, it’s not some sort of fruit machine coincidence that there are three reviews. And the reason for all of it is because Government seems very determined to do something about infrastructure in circumstances where other governments in similar times have not wanted to do these things.”

There’s that political imperative again. It’s a common refrain throughout our conversation.

“So what the railway has to do is respond to this level of interest and do the best that it can with the money. All very reasonable stuff actually. I’m not surprised at all that there are lots of people in transport who will say ‘it would be alright except for the politicians’. But the fact is that they give you loads of money and they want some bloody results.”

The NR chairman is also crystal clear that failure to do so will have consequences.

“And if you don’t respond to that, on a personal or an institutional basis, they’ll either change the people or the institutions so that they do. That’s perfectly reasonable.”

Presumably, that explains Mark Carne’s recent acceleration of devolution and the creation of the Route Services Directorate (internally labelled ‘DevoMax’)? A cynic might think he’s pre-empting the three reviews - but you’re suggesting that he’s actually moving in an agreed direction?

“The very first thing to say is that I’m not the chief executive,” Hendy begins, with particular emphasis. 

“It’s very important that I’m not the chief executive, because I’ve done one of those jobs for nine and a half years. There’s someone already here - Mark Carne - who’s good at being chief executive, and I want to support him. I also agree, for the avoidance of doubt, that nobody’s waiting for anybody to say something in a report.” 

Hendy also has what he believes is not just wider Government blessing for Carne’s policy, but implied specific support from Chancellor of the Exchequer George Osborne.

“If it’s the right thing to do then we should do it. So when Mark proposed to the board that he would accelerate devolution, we all agreed that that was the right thing to do. It fits perfectly well with a recent letter from the Chancellor that he actually wanted us to accelerate devolution. So that was actually a request from the Chancellor. It also fits with one of the three tenets that Nicola has at the core of her report, which is devolution. I think it’s the right thing to do.

“I also think it’s a good thing that it’s being done under the umbrella of a much stronger drive to produce better operational performance. My observation is that Network Rail, over successive managements, has had some wildly different policies. But by and large, I’m now seeing a really strong and continuing attempt to run the railway better, which is what Phil Hufton is working hard to do.

“The context of devolution is that you don’t stop that performance drive, you help it by giving people greater empowerment. You also look at the corporate centre of the organisation, which is by any stretch quite large, and ask ‘who’s serving who here?’ 

“Who should be in charge? Should it be the routes who actually demand services, or should it be a series of instructions from a remote, corporate centre?”

The philosophy Hendy is articulating fits perfectly with Osborne’s drive for both devolution and infrastructure investment, so it would indeed be difficult for anyone - reviewer or otherwise - to suggest an alternative plan. Hendy is cannily allying NR’s every move with Government policy more widely.  

He continues: “Philosophically, I’m entirely with what Mark is doing. If you ask anybody at TfL, top men like Mike Brown will tell you with a wry smile that if there was some policy that should be adopted for the benefit of the day-to-day operation, it was very rare that I would ever disagree with them. Because what matters is the day-to-day operations - if you screw up London Bridge, no one else gives a shit what else you’re trying to do.

“Getting day-to-day operational improvements in very difficult circumstances and driving performance is entirely right, and I’m strongly of the opinion that devolution will make it better. Giving people at the grass roots more power will produce the right answer. Mark is doing absolutely the right thing. You wouldn’t wait for Nicola to pronounce next May, because apart from any other consideration, with the railway getting full of people every day getting better performances is absolutely essential.”

So, if devolution is the accepted principle, how far does it go? Is it Nicola Shaw’s job to pronounce on whether it should be full devolution to the routes, and leave it at that? Or put a route out to concession? Or even sell some or all of Network Rail? Is Government looking to Shaw to answer that question?

“I think it’s a genuine enquiry. From talking to people around Government, I think she has been asked to say what she thinks, rather than being told what the answer is and for her to go away and produce the evidence. That is not always the case with things that Governments do. Sometimes they know what their answer is and they just want the evidence or sufficient sway to produce the ‘right answer’.

Hendy sets today’s developments in a modern historical context - and this is interesting indeed. I have seen him speak many, many times at conferences and other gatherings, and I have lost count of the number of times I’ve heard him say: “Put your hand up now if you think the current structure is optimal…!” No one ever does. So his views now are of great interest. What does the former poacher think, now that he’s the gamekeeper?

“There have been two structures since BR that brought private money into the railway. The first was Railtrack, owned by individual shareholders, and it dramatically failed. Then NR came along, as a clever creation to get private money - or rather, Government-backed money - in a context of a private company. And that’s now been reclassified on the public balance sheet. So neither of those are now available.

“So how else do you do it? History is the most powerful argument you could make for suggesting that nationalisation and being a publicly-owned company is not the whole answer - because there’s been no time in history where anybody in a company owned by the Government has ever had any investment money. Never. 

“Go right back to the formation of BR. It was created in order to compensate for the wearing out of the Big Four in the Second World War. But there was virtually no investment. Sure, BR got a big pile of money in the 1955 modernisation plan, but it petered out in 1961/62. Since then BR was hand to mouth on investment, and the great thing about the privatisation era - particularly the last 12 years of NR - is there has been quite a lot of money. And look what it’s done, at the bloody fantastic stations that have been built. Birmingham New Street… would that have ever been built under BR? Very, very doubtful.”

So Hendy (or rather, Nicola Shaw) is wrestling with the question of how to get private money reliably and securely into the railway, free of political risk, and mix it with government funding to get the very best outcome on infrastructure in particular and the wider railway as a consequence. In order to get that private money into the railway, will it be necessary to break up and Balkanise Network Rail - if only in managerial terms, if not structurally?

“It is a national network of railway,” says Hendy firmly and with no hesitation. “It is one national network and there are people who want to run all over it. If you ask freight companies, they’re very clear that they want to run over a national network whose management won’t prevent them from travelling to all the places where they can do business.

Fully cross-regional national access?

“Absolutely. Cross-country. So there isn’t really any part of NR - except for the Isle of Wight, I suppose - which is sufficiently Balkanised to be treated separately. My personal view is there are some quite strong arguments for some functions to be elegantly done on a national basis. That doesn’t necessarily tell you what the resulting structure of the company is, it just tells you there’s some very strong national functions to fulfil.

“I hope this gives you some clues about where we’re heading, without telling you what the answer is. That said, nobody here is dogmatic about any organisational solution. What I do think is absolutely essential is that whatever comes out of Nicola’s review, it has to be able to maximise third party financial input. It has to cope with growth, cope with devolution, and it has to remember that the railway’s got a load of bloody passengers on it. And those are good questions to ask.”

I can’t help feeling that whatever he says about the reviews being joined up, that statement is aimed over my head and squarely at Nicola Shaw. He adds that he is talking primarily about after 2019, after the end of CP5.

In the summer, the Government was so rattled at what it perceived as NR being out of control financially it pressed the pause button on the Midland Main Line and trans-Pennine electrification projects. Just a few months later, all was well and the projects were (ghastly word) ‘unpaused’. What made the difference? Was it just Hendy’s arrival that gave the Secretary of State confidence that the projects could be properly delivered? For the first time, the potentially thorny subject of regulation comes up.

“Where they get their advice from is an interesting question, because there must also be some interesting questions about the regulatory approach to this. But the truth is that much of the big stuff in CP5 was only at a very early stage of development when those early costs were done.”

projects not sufficiently scoped

I point out that previous NR Chief Executive Sir David Higgins said as much at the time - letters from him warning that the projects were not sufficiently scoped for accurate costing are there on record for all to see. Everyone seems to have forgotten that, and so there’s a question about NR’s wisdom in putting such vague finger-in-the-air costs out there - such as £800m for Great Western electrification, which always seemed to me to be as daft as the £2bn originally put on the West Coast Route Modenisation that eventually cost the thick end of £10bn. For the first time Hendy won’t be drawn.

“Without trying to controversially comment on history that I wasn’t there for, it’s probably best I keep clear of that.”

Blimey, a fear of controversy has never stopped you before Pete! He has the grace to look a bit sheepish.

“Well, no… but in autumn 2015 it’s much easier now to take a much better, informed view about what costs and timescales might be than it was back then. And so that’s what we’ve done. The one caution I would have is that it’s still not over yet. 

“And some of these projects are phenomenally difficult to do - even I’ve been surprised by the level of consent that you need. Great Western electrification needed nearly 2,000 individual consents from a large number of public bodies, including local authorities. It seems endless.”

That’s a lot more than the people who can dig up the streets of London, isn’t it?

“You name it, I’ve been really surprised. But clearly these projects are now in a better state than they were. And clearly going through them on a consistent basis and saying: ‘Where is this project? How much is it really likely to cost? How long is it likely to take?’ has been a really valuable exercise.”

Hendy takes a breath, and addresses the elephant in NR’s room.

“The real other issue is that until September 2014, as long as it was an economic cost or price, it didn’t really matter how much it cost because you had access to unlimited funding. Don’t miss that. If you’re exchanging a long-term ability to get as much money as you need providing someone independently judges it as worthwhile expenditure with a fixed treasury limit, it’s a huge difference. 

“I’m not used to that. What I’m used to is saying: ‘that’s all the money that you’ve got, how’s best to spend it’?”

So you agree that ‘moving projects to the right’ and sticking the costs on the Regulatory Assest Base has led to overpricing and inefficiency?

Hendy answers carefully - but it’s still a ‘yes’, in my view.

“Well, my observation is that the entire railway industry - and not excluding the Government - had all come to live in circumstances where, provided you could justify its economic basis, you could access as much capital as you like.”

So no one’s blameless in all this, then?

“My observation is that the alcohol store in the brewery has been locked up now, so we’d better sober up. But it’s not like there isn’t any money, because a fixed borrowing limit of £30.9bn is not an inconsiderable amount! 

“And on an historic basis, it’s probably more than any Government has previously put into the railways over a similar period. But no, it isn’t unlimited. And so yes, I think that everybody has to learn some lessons. There are lessons about project initiation - be very clear about what you want and be equally clear why you want it. Then be clear about scope - don’t inflate that scope, and most of all, don’t let engineers run away with inflating a job by putting all manner of bells and whistles on it. Then deliver it properly. And these are all especially important when you do have a great deal of money to spend.”

He pauses, and I surmise that he’s choosing his words carefully: “What I’m used to in projects is people coming and telling me ‘it’s going to cost more’, and I tell them ‘we haven’t got any more - go away and fix it from the money that you’ve got’.

“Be assured that culture has come here now - because you can’t go back to the Office of Rail and Road and say ‘my cost increase is £2bn… OK?’

“Really? It’s not OK! There’s no more money to be had.”

There are certainly some very clear lessons there for NR’s project managers and engineers, but what about a long-term plan? 

Electrification was off the agenda until Chiltern Chairman Adrian Shooter and NR CEO-but-one Iain Coucher famously got the DfT back under the catenary in 2008. MML wiring seemed to go on the agenda (almost on a whim) in 2012, came off it again in mid-2015, only to be reinstated again in late 2015. That sort of Corporal Jones “don’t panic” thinking surely has to be consigned to the past. If government doesn’t think long-term, how can NR deliver what Hendy says he wants? 

There’s no danger of him going off-piste today: “So here’s a different observation,” he replies. “Actually the history of the Control Period system has been really very good. Having a five-year clear investment funding plan and a set of defined outputs is quite a good thing to do.”

Yes it is - I have no problem with that. But surely, within a long-term high-cost infrastructure business such as the railway, those five-year plans have to be framed within a 30-year strategy? And that is precisely what we do not have now. Indeed, there’s a rising clamour for precisely just such a 30-year strategy.

“So that’s the point - everybody is now starting to scratch their chins and ask ‘what should we do for the IEP for CP6 and 2019-2024?’” (Which sounds like he’s in agreement). 

He goes on: “I’m used to a hierarchy in London where we have the London plan, which is a 30-year economic and special strategy for the city. You then have a strategy which has the transport elements that will deliver the London plan over 25 or 30 years. 

“You’ve got a ten-year business plan, then you’ve got a period which is funded - which is five years, similar to the railway - and then you’ve got a one-year business plan. But even within that one-year business plan, you can see where you’re going to go for a much longer period of time. 

“My observation here - and I think that Mark is happy with it and we talked about it at the board, and I think that certainly Nicola and I have talked about it - is that actually you need a longer vision than just these five years, that these projects don’t get done in just these five-year periods. And if you look at visions like the ‘Digital Railway’, which I support completely, it’s absolutely essential. 

“There’s no way you’re going to make every railway of Britain digital in five years, and you want to know what the quickest period of time is, what the benefits are, and how much you can fit into the funding period.”

Well, that sounds like agreement to me. So does he see any progress on eliminating that lack of a long-term plan?

“I do. I think one of the most important things to come out of contemplation of the recent past is the realisation that the railway needs a stronger national plan over a longer period of time.”

Does the Government now see that?

“I think so.”

Because they’re the only ones that can make that happen - either by themselves or by empowering someone else to do it on their behalf.

“Interestingly, I believe the bare bones of it are already in place,” he replies. “The route studies - the old Route Utilisation Strategies which are now called route studies - actually do go out on a longer period of time. But they’ve never been aggregated up for some sort of national plan on the railway. But if you now have to cope with 5% growth a year for the foreseeable future, you’d better have a long-term plan because you really do need to work out what the best things to do actually are. Who’s going to say no to that?” he asks with a smile. 

Hmmm! I shall be interested to watch this develop. Hendy seems to be pitching to be the architect of such a plan. And like Coucher and Shooter before him on electrification, he is framing the argument in terms against which it is impossible to argue. Maybe it all sounds so reasonable because… well, it really is. 

He warms to his theme: “I think it would be quite reasonable to work towards a longer-term plan for the railways, so you can see how it pans out and you can see where the money should go. My experience of doing it in London is that you select the projects that are ready - when you know that they’re ready, when you know how much they’re going to cost, and you know how you’re going to do them.

“You then slot them in, remembering that you can’t do any more than you have in the financial period for which you’re being funded. But you’re much more likely to get it right if you know what you are doing. Although Crossrail took - depending on your view - either 40 or 60 or 80 years to get to fruition, the one good thing about Crossrail was the day it was authorised we knew exactly what it was. We knew exactly how long it would take and we knew exactly when it was going to be delivered. And the outcome of that is that Crossrail will be delivered on time and on budget.”

So do you see a realistic chance of all this actually happening? 

“Yeah, I do. My experience is that if you try hard, then you get something done. But longer-term thinking must be inevitable. Because if you look at what needs to happen to the railway beyond CP5, some of the scope of the projects from the experiences we’ve had will undoubtedly be outside the Control Period structure. They must be. And there’s got to be several of them at once, probably, so we’d better start planning them thoughtfully in advance so we don’t make the same mistakes that we have made in the past. And the biggest mistakes have been when the railway has tried to do something which is not properly scoped, planned or costed at the outset.”

Hendy then takes me rather by surprise: “What about who the customer is? That’s a good question,” he asks.

Well, yes it is, and setting aside for the moment that it’s supposed to be me asking him the questions, I give him an answer.

“Well, Peter, a previous NR CEO was very clear to me that he believed the ORR was NR’s customer…”

He doesn’t like this at all. A frown creases his brow.

“For the avoidance of doubt , I think the customers are those who pay to use the railway.” He jerks his thumb in the direction of the neighbouring station. So, down in Euston right now there are quite a lot of customers. They’ve paid money and they’re rightly demanding a service. You can also represent a customer as the train operating companies, as they’re paying money to use the system. I do NOT think the regulator is the customer of NR.”

He points at a mound of manila. “Those folders under there are the 80 - yes 80 - regulatory targets plus the 3,700 regulatory indicators from ORR. And if we satisfied all of those, I don’t think that qualifies as satisfying the customer! 

What do the customers want?

“Simple truths are usually best - so, who’s paying? The customers. Virgin is entitled to be considered a customer, it’s paying NR to use our tracks. I think that’s really important, and I think that’s why Nicola’s right again, to ask who are the customers? What do they want from the railway? It’s really important to consider that.” 

I tell Hendy that the previous week, NR Managing Director Scotland Phil Verster had given an inspirational presentation to the RAIL 100 Scottish Breakfast Club, in Glasgow. Verster had talked a lot about customers, and in his list of priorities he said that while some would regard it as controversial, he put the ORR firmly at the bottom of his list of priorities. His philosophy is that if you do your job right and satisfy passengers and the TOCs/FOCs, then those regulatory demands would all fall into place. 

Hendy nods in obvious and vigorous agreement: “I’m not going to be too rude about regulation because if you’ve got private money involved then you need regulation. Also, there are some functions in safety regulation which are obviously crucial. But my observation is that regulation is in no way a substitute for good customer service. 

“I think the railway does need to have good customer service at its heart. And if you’re torn between satisfying some regulatory indicator and giving good customer service, Phil’s absolutely right. You should give good customer service. 

“Culturally, I think probably you’ve said everything if a previous chief executive of NR thought the regulator was the customer - that tells you why the culture of the organisation might be in a different place from where you might think it should be if you’re standing waiting for a train to Liverpool.

“Bear in mind I ran quite a very busy railway for nine and a half years - not a very big railway geographically, but it had four million people on it every day. But I never had an economic regulator. I didn’t have anybody who advised me how I should spend our money - we decided ourselves. We were quite grown-up. We knew how much we should spend on the infrastructure and we spent all that money trying to service our customers. And that was quite a good thing to do.”

One of the things that leapt out of the RailReview Manifesto was that success requires Network Rail to have strong leadership - not only at the top, but right down to the bottom. It won’t happen otherwise. 

“Yeah, that’s fair enough,” Hendy acknowledges.

So do you think you’ve got that top-to-bottom leadership?

“I think Mark is an exceptionally good leader,” he replies. “I’m really impressed by the grip that he has on the organisation, and I’m very impressed by his resilience facing up to the massively changed circumstance of public ownership. 

“And I’m very supportive. I think the development of the Route Managing Director jobs is a really good thing. And he said to them he’s looking forward to them growing into those jobs. I’ve met some of them personally - I think they’re a good bunch of people. 

“It reminds me in some ways of what happened in London buses 25 years ago, when they established the managing directors of companies that were previously divisions. It gave people the opportunity to grow and do things. I’ve seen some good people out there. 

“When I look at what Philip Verster is doing in Scotland, I think he’s doing a great job. The Scottish Government love him - as you heard yourself, he knows who the customers are. 

"Bloody extraordinary engineering"

“So I think there’s quite a lot of hope. But yes, I think it does take time to change the organisation. I also think that some of the engineering stuff that’s been done has not been celebrated because it’s all gone alright. Actually, it’s bloody extraordinary engineering!

“Look at Birmingham New Street station! I never knew all that was going on until it was finished. That’s a fantastic job. If you look at last Christmas, that was the biggest Christmas programme ever and most of it went really well. And there were some clever jobs. They just screwed up on some of them - and that’s a real shame.

“Dawlish… that was a pretty good bit of engineering. There’s that very good stuff around, and it’s very easy for the national media to say it’s all fallen to bits because one thing’s gone wrong. There’s been people working, doing some fantastic jobs here, just as they were doing on the Tube.”

Surely NR’s biggest problem is coping safely with massive and ongoing growth on an infrastructure that’s just not built for it?

“That’s right,” he agrees. “Of all the issues for the railway, growth is one of the biggest. How do you cope with it? What is it that you can do? And regardless of how you do it, the reason for doing it is because the people who can’t travel if you get it wrong are not, by and large, people going to the seaside at Skegness for the day or going to Brighton to walk along the front. They are the millions of people at Clapham Junction, Wimbledon and East Croydon who can’t get to work.

“That’s why you have to keep the railway growing. This is also true in the urban centres outside London, and that’s what the imperative is. That’s exactly the same problem we faced at TfL, which is if you don’t do this and you’re not clever technically and if you don’t have enough money, you just force people off the railway. 

“But realistically there’s no other method of travel in those areas - conceptually you could drive, but practically you just can’t. That has a damaging effect on the economy. That’s the point. That’s why you’ve got to keep going. That’s why this is a seriously big issue.

I take his point about London and the South East. But in my view the margins matter, too - even if the numbers are not as large. Rural and inter-urban railways are also important to their communities.

So how do we avoid daftness at the fringe - at places such as Gainsborough? RAIL has reported in detail about a half million pounds of NR money that’s been wasted there… with NO passenger benefit. Is this acceptable to him? Is it acceptable that when challenged about the utterly pointless £200,000 footbridge replacement at Gainsborough Central, and the closure of the foot crossing, NR dismissively pronounced that train operator Northern would have to provide taxis. This would be so that passengers could cross from one platform to another - there was no concern that this would take 40 minutes and 20 miles in a taxi. How is that serving the customer?

“What you will find is that the minutiae of some interventions come about in very curious ways. It’s a big system and not everything will go right on a big system. I can’t yet account for why some things are done in some places and why some things are not done in others.”

That’s an uncharacteristically evasive answer for Hendy. Surely how things go wrong at the fringes is symptomatic of a wider malaise?

“I don’t know enough about the history. I think one of the things is you do always want somebody to ask the intelligent questions and see if there’s a decent answer to it.

Precisely - who in the room says ‘hang on, this looks a bit silly’? Anyone? Hendy’s answer, I suspect, starts to put his finger on the cause of the Gaisnborough madness.

“What I don’t know is whether there’s some imperative driven by one of those 3,700 regulatory indicators that suggests you should do something. I’ve got no idea. But anyway, I’ve told them they can go and look at it - and find out.”

But there’s two stations there, and half a million quid of your money gone. And for no benefit to anyone?

“The only thing I’d say, in a week where we’ve just got a pasting about Elsenham which was a terrible thing to happen, actually putting in more foot crossings is not an acceptable answer.”

It’s not putting one in, it’s already there and it’s for only three trains a day - on Saturdays Only. On the other hand, there are foot crossings with mini-lights and phone control on the Midland Main Line at Loughborough (that’s a 100mph section) and at Stamford (on a blind bend). It seems that no one’s actually looking at Gainsborough, assessing the risk and taking the sensible decision. Instead, £200,000 is being wasted on a bridge that no one wants or needs! What happened to risk assessment and proportionality?

Again Hendy’s answer is, I suspect, on the money. 

“I do suspect that there’s probably a very strong antipathy to doing anything to improve a crossing, rather than get rid of it. And I would understand that. I did have a railway when it didn’t have any foot crossings, and there was a reason for that.”

I understand that in principle, but nobody seems to look at individual circumstances, and it’s burning through a lot of money. That’s why, at the other side of town, NR has spent another quarter of a million pounds on bi-directional signalling and a brand new point for a yard that will never be used again. There are processes on the railway that are just burning through money, to no benefit for anyone. Surely this sort of waste at the fringe is going to undermine whatever improvements you make at the centre?

“There’s no accounting for some of the things that go on in the railway and other really big organisations,” he replies. “The serious point I get out of it, because I don’t know what the answers are, is that is why you’re looking for decent local management to take a sensible view.” 

So devolution ought to start tackling this sort of thing?

“It should, yes. And I can find you some other examples - but I won’t tell you because then you’ll print them!”

OK, but are you happy having an RMD writing to people saying Northern will pay for taxis for passengers who want to move between platforms?

“No.” (He thinks for a moment before expanding his point). “What I would expect of a devolved organisation is that the people running it on a more local basis would make some intelligent interventions to stop people pissing money down the drain. That you can quote. Because if it looks stupid and it is stupid, it’s something you shouldn’t do.”

Can I ask you to have a look at this Gainsborough issue?

“I had a look at your Comment [RAIL 788] about this yesterday and said: ‘What’s going on here then?’ That’s what we used to do in our old job, so I’m doing it now. I do want to know what’s going on.” 

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Author: Nigel Harris