The tide is turning at Network Rail

If I was to ‘simplify and exaggerate’ what Carne is saying, it is that scoping was rudimentary, costs were of the ‘finger in the air’ variety, and that as costs increased as the job progressed, NR could simply borrow more on its credit card to meet rising prices, and ‘move the job to the right’ on the spreadsheet to deliver it later than planned. 

All this was, in fact, forecast by previous CEO David Higgins, and he warned of precisely this outcome in a letter during his tenure. Reclassification aggressively ‘pulled the rug’ on this arrangement - the Treasury immediately put a stop to credit card borrowing on the one hand, while on the other NR came under increasing pressure for the late delivery that was an inevitable outcome of the previous regulatory regime. And it all happened with a whole load of work ‘planned’ in this way already stored in the pipeline. He doesn’t take issue with my summary. 

“The point is, the industry - and by that I mean not just Network Rail, but the industry - didn’t behave and act like a normal company with normal capital discipline and constraints. That’s the crucial, fundamental point. And that’s why - and I’ve said this before and I’ll keep saying it, even though some people are surprised - I actually welcome NR’s reclassification in many respects. It has forced NR to actually start behaving like a normal company, with proper capital discipline.” 

Rather than planning it poorly, borrowing more and keep ‘moving timings to the right’ more and more? 

“Yes. I’ve spent my whole life delivering projects all over the world, and I can promise you I have never worked in an industry that approved projects on the back of an envelope like the railway did.” 

But the GRIP process was supposed to be anything but the back of an envelope, wasn’t it? So, was GRIP just not being observed, or…?

“No - GRIP is being observed, Nigel.”

I’m talking about previously.

“No - GRIP was being observed then, too.”

Excuse me? It was either back of an envelope or GRIP - it surely can’t have been both? Carne concedes the point.

“Well, GRIP wasn’t observed in the case of Great Western, you’re right. The project was initiated and approved at essentially GRIP 1 - the trains were bought at GRIP 1.”

That powerfully illustrates his point that NR is not alone in creating the problems that overtook it. The Government ordered trains right at the start of the assessment and approval process, rather than at a more appropriate later date. NR can hardly be blamed for the DfT getting the cart and horse in the wrong order.

“The NAO report is very clear that the commitment to the decision to do that project was given at a very early stage, before any design had been properly done and before… …that’s what we have to change,” he concludes. 

While he’s careful (and absolutely right) to contextualise them, I admire how he doesn’t seek to evade or excuse NR’s failings. Has he never gone home at night, poured a scotch and thought: “This isn’t all my, or our, doing by any means - and I’m getting my arse kicked for it!”?

He smiles: “To be honest, it is SO frustrating to get beaten by the same stick all the time, when actually what we’ve done over the last two years is try to sort out the problems, which I honestly believe we’re doing.

“We’ve put in place an organisation which is not only capable of delivering, but IS delivering. As you quite rightly say, there will still be issues that will come through because those older poorly-scoped projects still have to be delivered, and throughout the rest of this Control Period we will still have issues. But going forward we are on a very different footing, and if you look at the performance of the company today actually we are delivering some amazing stuff.”

And yet… the prevailing winds in the media remain cold. The GW upgrade, even in Hendy’s own words in the Sunday Times interview, remains “a nightmare”, while in Scotland Transport Minister Humza Yousaf is demanding full NR devolution north of the border. 

The Scots are particularly irked by what they see as £100m of general costs being exported to Milton Keynes, and they want it back - with full control. Carne counters that the majority of this is fixed costs which would simply be invoiced in Edinburgh rather than London, so this is an argument that has some way to go.

He is adamant that devolution is not only working already, it is gaining momentum and starting to deliver, and that the rest of us will notice this soon. Hendy, by the way, raised the same point with me in a phone call, while I was writing this interview.

“It’s like standing on a beach waiting for the tide to turn,” he explained. “For ages you can’t tell whether it’s going out or starting to come in - you only see gradual progress.”

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