Our Whitehall insider imagines what’s going on inside the minds of the mandarins at Great Minster House, home of the DfT

 

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You’ve got to admire our secretary of state’s bravado! He has told the RMT to stop playing politics with the railways over their strike action on Southern. Yet that’s exactly what Chris Grayling is doing with his resolve to overturn Patrick McLoughlin’s earlier decision to devolve responsibility for the inner suburban services on the South Eastern franchise to Transport for London – as his letter to Boris Johnson back in 2013 when Boris was still mayor, recently leaked to the Evening Standard, demonstrates. Back then Grayling told Boris Johnson that he would like to keep suburban rail services “out of the clutches of any future Labour mayor”. If that isn’t playing politics with the railways I don’t know what is!

When Patrick McLoughlin agreed to devolve the inner suburban services on South Eastern to the mayor it must have been because there was a well-made case to do so, based on officials’ advice. The case for devolution will not have changed. But the personalities have, of course. And so, because our new secretary of state doesn’t want to let a Labour mayor have control of rail services, he has rescinded Patrick McLoughlin’s decision. That’s playing politics with the railways, pure and simple.

Now I’ve had time to reflect on the secretary of state’s recent announcement on his rail reforms, it’s quite clear that this is all a bit of an anti-climax. It’s certainly well short of the biggest reform since privatisation as The Daily Telegraph reported on the Saturday before the announcement – based no doubt on a briefing from special advisers. Still, it got front page headlines, so job done! In practice all we’ve announced is that future franchises are to have “integrated operating teams”, starting with the new franchises for East Midlands and South Eastern in 2018. This is hardly radical, given that we have this kind of operation in place already on ScotRail – hardly the exemplar of a strongly performing franchise. And a similar “deep alliance” on South West Trains was brought to an end when it no longer suited Network Rail and SWT’s interests.

To be fair, the secretary of state has held up the prospect of further reforms to come in the future, including the option of joint ventures, while the plans to create East West Rail to take forward the reopening of the line from Oxford to Cambridge and to secure private sector involvement to design, build and operate the route are more interesting. But for now, I can’t get too excited by these non-reform reforms.

“How on earth do you persuade the likes of Amazon to get involved in the railways?”

What is far, far more interesting are the plans to inject new blood into rail franchising. I mentioned the other week that Paul Maynard had alluded to this in his recent evidence to the Transport Select Committee on its rail franchising inquiry, and it seems we really are determined to transform the kind of skill sets and expertise that make up franchise bidding teams and, ultimately, franchise operators. It’s no longer going to be acceptable for bidders (and therefore franchise operators) to focus on the train journey. Rather, they will have to demonstrate how they can provide passengers with a completely new journey experience. This will require marketing expertise, technical expertise and customer service expertise on a scale not seen before. Traditional train operators will merely be a utility part of a franchise that offers a far broader customer service, akin to that offered by the likes of Amazon, Google, Ocado, perhaps even British Airways. Bidders for franchises will have to promote their service as a “customer service” rather than simply a “rail service”.

This will be truly revolutionary if it all comes to pass, and it’s genuinely exciting. It really is the way we should be thinking. But I can see a problem. Given the poor reputation of the railway industry, with passenger satisfaction declining rather than improving, how on earth do you persuade the likes of Amazon to get involved in the railways? They will surely see a huge reputational risk, and I suspect companies like this simply haven’t got the railway industry anywhere close to being in their long term planning and business strategies.

But equally, there could be huge rewards. It could be a really exciting moment for rail franchising, but I’m not sure that we’ve worked out how to sell the proposition to these customer service companies. We’re in danger of promoting a proposition before we can be sure that the new blood we’re looking for is actually interested. And I suspect it will require us to take a far less prescriptive approach to rail franchising than we do today. Can you really see Google or Amazon agreeing to bid for a contract which tightly specifies everything they can do? No chance. If rail franchising is to change, we’ll have to change too.

 

This article appears inside the latest issue of Passenger Transport.

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