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Freight Network Rail Planning Politics Trade unions Train operators

McNulty’s ‘Damp squib’ still offers valuable lessons

Jumping on a train the other day, I found a Transport Focus questionnaire abandoned on my seat.

I can guess what passengers will say in this latest survey. They will want punctual trains with spare seats and they will want a ticket that gives good value for money.

Next year marks a decade since Labour’s last transport secretary, Andrew Adonis, commissioned Sir Roy McNulty to compile a report into value for money. When it was published in May 2011, RAIL 671 carried the cover splash ‘McNulty – Dynamite or Damp Squib…?’. I think it’s now safe to conclude that the answer to this question is ‘damp squib’ with his work largely forgotten. Stumble across any references to it today and they’ll likely by in a trade union press release which is curious because they attacked it from day one and would surely prefer to see it forgotten.

The shortest summary of McNulty would be to say he concluded that Britain’s railway cost 30% more than it should.

There were many reasons. Too many costs rested with government with little responsibility passed to rail companies. Train operators took short-term views and Network Rail took centralised views that were remote from customers. McNulty found little evidence of best practice and whole-system perspective in managing assets, programmes and projects, supply chains, standards and innovation. In addition, staff costs and numbers were higher than they might be. 

There was one particularly damning passage: “Despite considerable thought on the matter, the Study remains uncertain as to whether the industry’s culture causes the lack of leadership at industry level, or whether the lack of leadership has contributed to the problems in relationships and culture. On balance, we think the latter explanation is more likely.”

If McNulty thought the railway was poor at managing projects the next few years would provide evidence by the depressing trainload. Network Rail’s enhancements portfolio would spectacularly collapse with rocketing costs and missed deadlines.

The Department for Transport was in no place to criticise Network Rail’s failings because it had helped prompt them with an impossibly ambitious programme imposed in 2012. The same year saw DfT preside over a collapse in its own franchising programme collapse, driven by its own mistakes.

This all conspired to make irrelevant McNulty’s calls for lower costs.

One of his advisory board was Andrew Haines who was chief executive of the Civil Aviation Authority. Today he is Network Rail’s chief executive. He could usefully order a reprint and send copies of the report to all his senior team. McNulty’s figures may be a decade out-of-date but the principles behind his recommendations remain true. Ministers might usefully read it too as well as managers at train operators.

The latest review team under former British Airways boss, Keith Williams, should stick with an electronic copy. This will make it easier to cut and paste McNulty’s recommendations into their own report.

And what of the trade unions? The RMT reacted strongly against Mc Nulty’s recommendation that driver-only operation become the default way to run trains with a second member of crew only provided where there was a commercial, technical or other imperative. At the time Bob Crow was the union’s general secretary and McNulty noted: “If Bob Crow and others insist that nothing changes then passengers will continue to pay 30% more than they should.”

It was clear from the off that implementing McNulty’s DOO recommendation would lead to industrial action and strikes. It certainly has. The RMT insists that a second member of crew is guaranteed while train operators that want to switch from driver and guard operation claim that they will roster a second member but run rather than cancel a train for which that second member is not available. Southern has managed to do this, Northern and South Western Railway remain mired in strikes.

The RMT continues to paint a careful picture in which the choice is between having a guard and having no-one. It talks of staffless trains in which crime and violence can prosper. Reality is different as Southern has shown with its on-board supervisors in place of guards. The RMT’s tale has helped propel an on-line petition calling for a “second safety critical person” to be on trains to over 20,000 signatures.

London Underground meanwhile runs all services under DOO with stations manned and tickets checked by barriers. Train operators could do this or they could check tickets on trains and dispense with the costs of barriers at stations. Some busy services might need more than one staff member selling and checking tickets but there’s little justification for crewing quiet trains in the same way as busy ones.

The situation needs flexibility and there’s a real need for staff agreements to be modernised because both unions and managers would benefit from staff having clearer terms and conditions. McNulty’s report said back in 2011: “The complexity of terms of employment is demonstrated by one TOC that has 10 separate agreements governing the terms of employment of drivers, conductors, station staff and engineering staff. Some agreements contain more than 300 pages and certain conditions that refer back to agreements made in the 1920s.”

There must be scope to bring such agreements into the current century but it’s not work that can be done in a rush. With short franchises, there’s little incentive on train operators. There’s little incentive to harmonise terms and conditions for different staff doing the same job while the Department for Transport can split future franchises apart and drive a divergence from standard terms.

He noted that railway wages had risen much faster than average earnings and called for the expectation of above-inflation pay rises to cease for all staff from top management down to the frontline. Train drivers have done particularly well from privatisation. In British Rail days, their pay was appalling. It led to BR struggling to find footplate staff and it led to the staff it did recruit relying on overtime. It was entirely right and necessary that their wages rose. Drivers’ salaries are keenly sought these days with rail companies inundated with applications to join the footplate. Today, drivers rely much less on overtime but many rail companies haven’t adjusted to this and still rely on it to fill their rosters.

Senior managers have done very well. Six-figure salaries reach across the industry with some of the biggest pay packets in state-owned Network Rail. When Haines took over, he took a 27% pay cut from what his predecessor had been paid but it still on £588,000. There’s a conundrum with senior managers’ pay. The railway needs to pay well to attract good people to deliver its projects. Too many of these projects have been delivered late and over-budget. Has the railway sufficient skilled managers? Or must it pay even higher salaries to attract better talent?

Network Rail and the passenger railway remain addicted to spending. They’re in stark contrast with the commercial, competitive freight companies. When I chatted recently to a former freight manager now working for the TOC, he was staggered at how easy it was to spend money in his new job. For premium paying franchises, every penny comes from passengers. For others, it’s a mix of passenger and taxpayer money.

It’s time rail companies learnt the value of money. This needs cultural change despite ORR pushing £578 million towards Network Rail every month from next April. For how long Britain can remain this generous remains to be seen. I wouldn’t bet on record funding settlements every five years.

And in the meantime, passengers continue to rail against poor value for money.

This article first appeared in RAIL 866 in November 2018.

By Philip Haigh

Freelance railway writer, former deputy editor at RAIL magazine - news, views and analysis of today's railway.

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