The transport secretary appears to have developed an enthusiasm for bringing franchises back under public control – but will it help?

Grant Shapps

It was interesting for me as an amateur Kremlinologist with a ministerial background to listen to transport secretary Grant Shapps addressing the annual parliamentary reception for the Campaign for Better Transport, which was held the other day in the House of Lords.

For those unfamiliar with Kremlinology, this was the science of deduction applied by the West to the limited amount of information about the Soviet Union that became available, and specifically the analysis of who was on the balcony, and where, for the annual display of weaponry as it trundled past Red Square. Hello, Gorbachev has moved nearer the centre this year. Where is Chernenko? How ill is Tchestikov? (I made that one up).

The speech from the transport secretary when he talked about buses sounded exactly like something written by a cautious civil servant (and they are nearly all cautious nearly all the time) with the interesting omission of any reference to the promised and much-hyped National Bus Strategy. Given that this featured prominently in the Conservative Party manifesto, it would surely have been written into Shapps’s speech, so I can only conclude the minister himself took it out. This all suggests nothing much is going to happen with this for some time.

The Operator of Last Resort is beginning to look like the Operator of First Resort.

On rail however, the picture was very different. Here Shapps came alive, speaking fluently and confidently without notes, and if he did not quite throw caution to the wind, he was not, I deduce, sticking to the script written for him. This of course echoes the surprisingly forceful pose he has been striking since the election, and the equally surprising lurch to the left in terms of rail policy. In particular, he appears to have developed an enthusiasm for bringing back under public control any franchise that appears to be in difficulty. The Operator of Last Resort is beginning to look like the Operator of First Resort.

We have already had 18 months of public control of LNER, the east coast mainline franchise, with no hurry, it seems, to do anything to return it to a private Train Operating Company. On the contrary, we are now being told how well the publicly run LNER is doing, as indeed it is. “Passenger satisfaction has risen in the 19 months it [the public sector operator] has been operating the service,” Shapps said in a recent Commons statement.

Contrast that with the reluctance of former transport secretaries like Patrick McLoughlin for whom the need to take over a failing private sector operation was something of an embarrassment, and one that needed at all costs to be reversed before an election came along.

The transport secretary made clear that he regards the franchise system as well and truly broken. On top of LNER, we have now had the evisceration of Northern and its takeover by the government. Shapps has also pulled in rail bosses from TransPennine Express to haul them over the coals for the company’s poor performance. In a tweet – this Trump habit of running government via Twitter seems to be endemic these days – he warned: “I have told them [TPE management] that they must get their act together since I won’t hesitate to escalate this further.”

You get the impression that it would suit Shapps very well if he could indeed find a reason to escalate matters further.

South Western (like TPE a company under the FirstGroup umbrella), has admitted that its contract would probably have to be terminated early due to crippling financial losses. It clocked up an operating loss of £137.8m in the year to the end of March 2019. The transport secretary has publicly warned that nationalisation could follow.

Meanwhile, prime minister Johnson suggested to the Commons that the “bell is tolling” for West Midlands Trains and said he had lost faith in the operator. This followed a call from the Conservative Midlands mayor Andy Street for the operator to be stripped of its franchise and for this to come under the control of the mayor’s office.

Already the company’s managing director Jan Chaudhry-van der Velde has stepped down. His successor, Julian Edwards, in his first media release, observed with unconscious irony that “this is an exciting time to be joining WMT”, adding that, “There is still much to do.”

North of the border, the Scottish government has announced the Scotrail contract with Abellio will end three years early in 2022, amid criticism over the level of delays and cancellations.

Then there are the legal disputes. Greater Anglia, owned by Abellio as is West Midlands Trains, is head-to-head with the Department for Transport over alleged flaws in its contract. And of course Stagecoach and Arriva have resorted to court action against the government after being disqualified from rail franchise competitions because they refused to sign a blank cheque for pension liabilities.

We will see what the Williams review brings but it is looking increasingly likely that the role for train operating companies in the future is likely at best to be the concession model, as presently operates in London and Merseyside.

When Shapps talks of “taking back control” of the railways, this appears to be code for Tory nationalisation. Am I really writing this?

When Shapps talks of “taking back control” of the railways, this appears to be code for Tory nationalisation. Am I really writing this?

You have to ask yourself: if we had elected a Labour government under Jeremy Corbyn, in what way would they have behaved any differently? Could they even have matched the hostility to the TOCs and the overt jostling to force them out? Can it be long before Shapps accuses himself of a war on the motorist?
And what does the Labour party have to say? “The Tories have refused to hold Arriva to the terms of its Northern Rail contract,” Labour’s shadow transport secretary Andy McDonald said on January 29 after Shapps had announced he was taking Northern back in house. Well to me that implies Labour would have been content to tolerate a private Northern as long as the contract requirements were delivered.

We seem to be in Alice in Wonderland territory, or at least Alice in Sunderland.

The prevailing narrative, which the government appears to be happy with, is firstly that individual train operating companies are largely to blame for the failures on the railway that we have seen, and secondly that if the franchises are replaced by direct public control, then all will improve.
Both these assertions are somewhat suspect. Let’s take Northern. The last major upgrade of their rolling stock occurred under British Rail in the 1980s and the unpopular Pacers are only now being scrapped. The new trains they did receive last year were the first on their network since 2000. Naturally, old trains need more maintenance and break down more often.

Then there is the basic assumption underlying the franchise which right through until 2016 was one of no growth. This means there was little capacity – in trains, track, or stations – to absorb the healthy increase in passenger numbers that has occurred.

To this can be added the significant Network Rail delay in delivering their electrification programme, which forced Northern to rely on a clapped out and chronically overcrowded diesel fleet. Then there was the timetable fiasco of May 2018 for which Network Rail and the DfT itself were at least as much to blame as the train operating company.

This is not to say that Northern is an entirely innocent party. Far from it. Problems arose which were solely down to them, from driver shortages to its failure to undertake the basic train refurbishment it had promised. But many of the problems that have arisen cannot simply be solved by the government taking the franchise in house.

The Office of Rail and Road has begun an investigation into Network Rail and its poor performance on the infrastructure used by Northern and TPE. Network Rail has apologised for its “very poor service” in the Midlands and the North, which together is a pretty big swathe of the country.

On the South Western network, much of the problem can be attributed to the epic strike action taken by the RMT in pursuit of their determination to ensure that there is a conductor on every train, and that he or she should have a “safety critical” role.

It is the government that has by and large pushed the train operating companies into trying to end what used to be called Spanish practices, though no doubt the phrase has now been retired as not politically correct. But it is the TOCs that have had to deal with the counter-reaction from the RMT, and then take the blame for the consequent deterioration in the quality of service.

Of course from the point of view of the RMT, if the consequence is that the credibility of the private companies involved in running the railway is brought into question and they then end up being nationalised, well that would be a good outcome, wouldn’t it?

The Williams review will soon be public and it seems the government intends to take this straight to a White Paper. Grant Shapps certainly seems in control and keen for radical reform. It will be interesting to see how he squares his clear desire for hands-on involvement with his stated aim to create an arm’s length body, like the old Strategic Rail Authority, to take decisions away from ministers. He can take the TOCs back into the DfT but unless he has a speedy answer to the poor performance of Network Rail, a quick way to enhance rolling stock, a plan to quickly increase network capacity, and a strategy for dealing with the unions, he may find he is being blamed for the problems currently ascribed to the TOCs.

This article appears inside the latest issue of Passenger Transport.

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