Comment: The complicated route to reorganising the railways

Philip Haigh examines how British Rail restructuring in the 1980s throws up similarities and contrasts with today’s plans for Great British Railways.

Charing Cross station in London hummed with old friends greeting each other on the morning of February 25.

The occasion was the public unveiling of Southeastern ‘Networker’ 465908. This otherwise humdrum, inner-suburban electric train was now resplendent in its original Network SouthEast red, white and blue colours - repainted by Wabtec in Doncaster to celebrate 200 years of railways and paid for by Angel Trains.

And, as the icing on the cake, Rail Minister Lord Peter Hendy pulled back the curtains to reveal the nameplate Chris Green, flanked by the man himself.

It was Green, back in 1986, who pioneered NSE’s brand with its bright tricolour of red, white and blue. Speaking at his naming, he recalled the need for a brash and bright image as the glue to hold Network SouthEast together, as the public face of London and south-east England’s rail services.

NSE was one of three British Rail brands - the others being InterCity and Provincial.

This meant that NSE covered a large territory, running west to Exeter, north to Banbury on the Chiltern route, to Northampton on the West Coast Main Line, to Peterborough on the East Coast Main Line, as well as to Kings Lynn. Ipswich sat on its eastern arm, and NSE also ran trains into Kent, Sussex and Wessex.

The ‘Networker’ was NSE’s primary new electric train. They were, Green said, “high-tech” trains made of lightweight aluminium, with AC traction motors, regenerative brakes and dot matrix indicators.

From signing the deal to build them in 1989, it took NSE until December 1992 to bring them into passenger use, with a launch at Cannon Street station. They’re now working towards the end of their careers, with Southeastern keen to replace its ‘Networkers’ with a new generation of trains that will (according to Managing Director Steve White) feature level boarding for passengers using wheelchairs.

While much of the ‘Networker’ NSE event at Charing Cross was bathed in nostalgia, Hendy took the opportunity to look forwards. He spoke without notes, and it was the first time I’ve heard a minister involved with reorganising the railways speak with real passion.

He said: “I want someone to wake up every morning and think that this railway is mine.”

That’s the nub of his reorganisation. He wants a single person responsible for track and train at each level. That’s one person at the top, and one person at each level until the lowest.

Hendy wants accountability. With one person in charge, it is that person’s responsibility to fix problems, drive up revenue, reduce costs, and improve performance. So, that’s not the train operator blaming the track operator and vice-versa.

That might be easier said than done. Back in NSE’s early days, British Rail organised itself as track and train. Operations and Engineering Managing Director David Rayner had the engineering directors under him, and the regional general managers. Vice Chairman (Railways) David Kirkby had the sector directors, which included those for freight and parcels as well as the three for passengers.

This changed from 1990, as British Rail implemented its ‘Organising for Quality’ changes.

This created five train operating businesses that would own their infrastructure, a Central Services business, and BR Property (responsible for non-operational and surplus property).

The train running parts sat under BR’s chief executive, while other board members looked after finance of BR as a whole, operational standards and safety, engineering standards, and the remaining major overhaul centres. BR Property and Central Services were tucked under Group Services.

The train running businesses were: NSE, which had nine profit centres under it; Regional Railway (previously Provincial) with five centres; InterCity also with five centres; Trainload Freight divided into coal, construction, metals and petroleum profit centres; and Railfreight Distribution with a UK and a Europe profit centre.

The passenger profit centres were geographic, and they remain recognisable today. NSE’s South West profit centre, for example, is readily seen as South Western Railway today. And InterCity East Coast directly maps to LNER.

OfQ (as it was abbreviated) saw the end of BR’s regions. In many ways, this was a natural consequence of earlier ‘Sectorisation’, which gradually shifted power from regional general managers to sector managers as the latter became more involved with what BR called production.

Sectors bore the costs of their infrastructure. This sometimes led to arguments and nonsenses, with BR’s electrification of the ECML north of Peterborough a good example.

This was an InterCity capital project, eventually leading to Class 91s and Mk 4 coaches running between London, Leeds and Edinburgh.

It made little sense to only electrify the Fast lines between Peterborough and Stoke Junction, and to leave the Slow lines without wires. But InterCity just needed the Fast lines to run its services. Meanwhile, Provincial ran no electric trains on this stretch of line. It didn’t need any overhead line equipment at all, so could hardly be expected to pay.

Of course, sense prevailed. All four lines received overhead wires and LNER remains their prime user.

Thus British Rail moved from being fragmented geographically by regions, through the hybrid of Sectorisation to OfQ, which split it functionally. And under those functional business sat profit centres which for the passenger businesses were geographic.

There’s no getting away from boundaries. And there’s no getting away from paying. OfQ included trading mechanisms between profit centres for track access.

Yet as Terry Gourvish notes in his book, British Rail 1974-97: “On a significant portion of the network the process involved asset sharing on a basis which required goodwill as well as strictly commercial transactions.”

Fast forward to today and Lord Hendy’s Department for Transport consultation into the shape of Great British Railways.

It says: “GBR’s own operators will not pay access charges, as GBR will be exposed directly to the cost implications of running its own services, and legal obligations to make quasi-transactional payments within GBR would act as a barrier to simplification and integration.”

However, GBR will allocate costs. And it will charge third-party train operators such as freight and open access operators.

Not paying wooden dollars between different parts of GBR makes some sense, but GBR will need to account for the way real cash makes its way from passengers to the workers maintaining tracks and signals, as well as to the companies supplying the materials they use for that maintenance. Money must cross the wheel-rail interface.

We still don’t know how GBR will be structured to face passengers. Will we see, for example, ‘GBR by GWR’ or ‘GWR by GBR’ at London Paddington? Or just GBR?

Privatisation took forward OfQ’s set-up. For Paddington, this meant that its InterCity services became Great Western Trains and its NSE service became Thames Trains. Later they were merged into First Great Western, which also added what had been the ‘Western’ part of Regional Railways’ Wales and Western operation.

This gives today’s GWR as the prime (almost sole) operator of trains from Paddington.

Merge that with Network Rail’s Western route and you have an integrated railway. Of course, whoever leads it would probably rely heavily on their two subordinates responsible for track and train, unless they opted to break out smaller geographic areas as direct reports.

Ultimately, there is always a split between the part of the railway that mustn’t move (leaving aside points) and the part of the railway that must.

Inherent in Hendy’s Charing Cross comment is that managers must be able to get their arms around their railway at whatever level they sit. If they are to drive up revenue, they must know where it comes from. If they’re to drive down costs, they must know where those costs lie.

Control sits separately. Rail’s income has always fluctuated with wider economic success. Meanwhile, not every cost sits under direct management control.

When BR’s InterCity was under pressure to be profitable back in the 1980s, it was not averse to suggesting that it might transfer loss-making services and expensive infrastructure to other sectors.

Nor was it shy about taking in profitable services from elsewhere. Attempts to take on services from London to Portsmouth, Brighton and Bournemouth came to nothing, but InterCity did take from London and South East (NSE’s immediate predecessor) express services between Victoria and Gatwick Airport.

This InterCity oddity transitioned through privatisation to be franchised as Gatwick Express in 1996.

It survived as a standalone franchise until the DfT rolled it into the large South Central operator from 2008, and then merged that, Thameslink and Great Northern into one in 2015. Even though it retains its brand, there is little to distinguish Gatwick Express from other services at the airport.

As BR moved into OfQ, there were plenty of vocal critics warning of potential problems with safety, complexity and performance. Privatisation later in the 1990s brought similar complaints.

Today’s managers appear largely in the dark about what’s coming. Beyond Hendy’s headlines of integration, revenue, costs and performance, there’s considerable work still to do to bring Great British Railways into life.