Chiltern Railways: The Inside Story

By Adrian Shooter

The transport executive who led the successful privatization of Chiltern Railways offers an inside look at the process and the company’s team dynamic.

In this book, Adrian Shooter provides rare insight into one of the greatest successes in British Rail privatization. He discusses his strategic approach to the managed buyout of Chiltern Railways, as well as many of the ‘behind the scenes’ jobs which are essential to keeping the operation running.

Shooter demonstrates that a railway is, above all, a team effort. Every employee is just as important as the boss. Illustrated with copious photographs, this volume offers an engaging narrative of British transport at a time of great change. It also offers valuable insight into how today’s railways might be more efficiently organized and run.

• Language: English
• Publisher: Open Road Integrated Media
• Release date: May 5, 2022
• ISBN: 9781526792501

Adrian Shooter

UK

Book preview

C

HAPTER

1

INTRODUCTION TO RAIL PRIVATISATION

It was a sunny afternoon in late August 1993 when, with my newly acquired Chiltern cab pass, I joined the driver of a train at platform 4 in Marylebone station. I explained to him that I had just been asked by British Rail Chairman, Bob Reid 2nd, to become designate Director of the planned Chiltern Train Operating Unit (TOU) which was to come into existence on 1 April 1994.

Before we even left for Aylesbury he told me he was very worried about Privatisation.

‘Why is that?’ I said.

‘I don’t know whether I will have a job.’

‘Do you think there will be any trains?’ I asked and then added:

‘If so, they will need drivers so I think you have got just about the safest job there is.’

‘If anything goes wrong..........’

I drew my finger across my throat, ‘It will be people like me that go.’

This was a conversation to be repeated many times over the next few months as, gradually, the penny dropped that it would not be as bad as the Trade Unions and others were predicting.

For the previous year or so, I had been working for Dr Peter Watson, BR Board Member for Engineering, helping to put together some of the arrangements that would be necessary to implement the Railways Act 1993 when it became law. This included leading the team that created the Rolling Stock Leasing Companies (Roscos) which were set up to own all the passenger trains.

Whilst the Railways Bill was still being written, I and a couple of other senior BR managers used to get phone calls from civil servants on the lines of:

‘You know we are not allowed to talk to you, but do you fancy a coffee?’

Since we had no such instructions I was happy to oblige.

This subterfuge was as a result of the negative and unhelpful posture towards Government that the BR Board was adopting with regard to Privatisation. Indeed, the Chairman had misjudged things so badly that he went to the Conservative Party conference in autumn 1992 with the express objective of lobbying ministers to give up the whole idea. Unsurprisingly he was humiliated by being totally ignored and the Civil Service were told to get on and produce the necessary legislation without advice from BR. Instead, they were advised, for the most part, by aviation lawyers. This flawed approach led to all kinds of problems further down the road.

Over the coffee I would be asked my opinion on how to deal with some aspect of BR’s business that the civil servants did not understand. One such example, that I recall, was to do with the way that train maintenance depots were to be defined and regulated. I can recognise my words, dictated over coffee, in part of the Railways Act 1993.

The Government had decided that, under their Privatisation plans, there would be 25 ‘Franchises’ and that these would, between them, carry out all of British Rail’s passenger business. It was not envisaged that they would own anything as the trains were to be owned by Rolling Stock Leasing Companies, Roscos, which were to be sold. The track, stations, signalling and other infrastructure were to be owned by a Government owned company to be known as Railtrack.

These franchises were to be let competitively, initially for a period of 3 years, according to the Treasury. This would ensure best value for the public purse, or so it was alleged.

There was much public debate about these plans as they emerged little by little. I remember, for example, being at a conference where a Treasury official was promoting the 3 year franchise idea, without having the first idea how this would work in practice. Next on was the flamboyant Jim Sherwood, one of the pioneers of the deep sea container business and owner of Sea Containers Inc. By then he already owned the luxury all Pullman train which BR hauled for him from Victoria to Folkestone. This gave him more credibility than pretty much everyone else in the room. Jim did not mince his words and strongly advocated 50 year franchises because that would give operators the incentive to invest long term in the way that is needed in capital intensive businesses like railways.

This, of course, is where the aviation lawyers came in. They were used to a world where airlines, large and small, tended to lease aircraft which were to a large degree homogeneous and transferable worldwide. This meant that the barriers to entry for new airlines were quite low as they did not have to fund airplanes or infrastructure.

This model was quoted extensively in discussions I and colleagues had with the architects of BR Privatisation. What they refused to understand, despite having it spelt out to them many times, was that whereas a Boeing 737 can be flown into pretty well any commercial airport anywhere in the world using internationally agreed protocols, BR’s trains were, to quite a high degree, bespoke according to whether they were for commuters, long distance or rural routes. They could also be diesel powered or electric with two different and incompatible systems. This was important because it meant that the premise that the Roscos would enable a free market in trains was flawed.

This was very well demonstrated when the Department of Transport lodged a vexatious claim against the Roscos with the Competition and Markets Authority alleging that they were guilty of price fixing. I was one of those called to give evidence and was fully in agreement with the eventual findings, published in 2009, which were to the effect that the high cost of train leasing and lack of choice at the time of franchise changes was totally down to the incompetence of the Department of Transport in creating the system in the first place.

In fact, the Roscos, which have all changed hands several times, have acted perfectly reasonably and, just as you would expect of any private sector company, have maximised their profits but have cost the taxpayer, unnecessarily, many hundreds of millions of pounds totally due to a defective structure promoted by aviation lawyers and accepted by civil servants and ministers who did not understand what they were doing and refused to take advice.

These same aviation lawyers strongly advocated a system whereby Train Operating Companies (TOCs) would bid for individual timetable slots. It was quite clear that they simply had not thought through the consequences of this on a busy railway.

Railtrack was set up, initially as a subsidiary of British Rail, and it was intended that it would continue to be State owned although this was changed at the last minute when the Government decided, instead, to float it.

The first chairman of Railtrack was Bob Horton who had, earlier, been appointed as deputy chairman of BR in preparation for this role. Presumably the Secretary of State thought that Horton was exactly the right person to sort out BR’s infrastructure costs since the organisation was perceived to be deeply inefficient. He had been fired from the chairmanship of BP in 1992 because, amongst other things, of his over aggressive cost cutting and his arrogance. This came very soon after he is reported to have said:

We inherited a new fleet of superb DMUs, the best in the country. Many of the stations, like Stoke Mandeville, had been tastefully restored. This was the legacy of Chris Green’s ‘Network Southeast’ at its best.

Denham Golf Club was one of several unstaffed stations. This was a minimalist railway.

‘Because I am blessed with a good brain,

I tend to get the right answer rather

quicker and more often than most people.’

Unfortunately his ‘good brain’ failed to equip him with the rather obvious fact that the first consideration in running any transport business has to be the safety of the public and your employees. The fact that it was well known that he was an alcoholic did nothing to enhance his reputation. His Chief Executive, long term railwayman John Edmonds, should have corrected this but, for some reason, had a totally irrational dislike and distrust of engineers. Thus, Railtrack deliberately got rid of almost all of its senior engineering people with entirely predictable results.

I remember, a few months after Railtrack took over in April 1994, asking David Moss, one of its non-executive directors, how often the board discussed safety and punctuality. I was met with a blank stare of incomprehension and was told that this never happened because most of the time was taken up with examination of various property opportunities.

Had they taken a little time to study what was actually happening on BR’s infrastructure, they would have discovered that the civil engineering part (track, bridges, tunnels, etc) was still being managed more or less as it had been in the nineteenth century. Standards were laid down which set out what ‘good’ looked like and there was a whole hierarchy, very military in structure, which checked and then re-checked. Each length of track, for example, was patrolled by the local man. Some of his work was checked by the local manager who, in turn, had a percentage of his work checked by the Divisional Engineer. Finally the Big Cheese, the Regional Civil Engineer, would walk a small amount of his region.

The whole system relied on this unmechanised military inspection system with ‘pep talks’ administered to those who were deemed to need them.

There was a total absence of any form of computerised record keeping which should have been the foundation for a proper asset management system which would have enabled management to plan and budget for expenditure as well as to start to predict performance and the likely effect of alternative interventions. Much critical information about how things actually worked in practice existed only in the brains of the better local staff.

Equally, there was very little use of modern measurement processes which might have been able to predict some of the horrendous catastrophes that subsequently occurred.

The vital Signal and Telecoms function was in paralysis because the report into the 1988 Clapham Junction accident in which 35 passengers had been killed revealed that the entire department lacked the proper processes and controls that such a safety critical activity requires. It had, in reaction, gone down the road of surrounding itself in rigid and costly bureaucracy.

By contrast, the maintenance of trains, which was largely to be in the hands of Train Operating Companies, was much more attuned to modern best practice as the BR Mechanical and Electrical Engineers had a much stronger tradition of seeking out best practices and continually improving.

In fact BR had realised, much too late, that modernisation of infrastructure management was long overdue and had commissioned a project led by my Rolling Stock colleague Ray State. He had a test train equipped with GPS, sensors and high resolution cameras and set up in such a way that it could produce a digitised map of the track together with links to all available drawings and maintenance records. He completed a pilot scheme covering the 30 or so miles from Wolverhampton to Shrewsbury and was able to demonstrate how you could have a driver’s eye view of the track whilst being able, for example, to touch on a bridge and see a scanned copy of its nineteenth century construction drawing together with all the bridge inspectors’ reports.

As part of the modernisation a new small maintenance depot was built at Aylesbury. It replaced the original GCR shed at Marylebone which was much better located but was sold to part fund the new order. Later, we had to re-create a London depot.

At the time this was absolutely ‘state of the art’ and would have been a fantastic tool, capable of much further development, which would have enabled Railtrack to have become a world leading company.

In practice, however, the incompetents in charge of the company scrapped the whole project and embarked on a misguided process of dividing and sub-contracting all infrastructure maintenance.

This was done because Edmonds was determined to break the power of the trade unions.....rather than tread the more difficult path of trying to get them on side.

To be clear, I am not against sub-contracting this activity, just the deeply unsatisfactory way that it was done.

I was able to follow this slow motion car crash at close quarters because the unfortunate individual, Bernard Westbrook, who had been given the task of arranging it all ready for the start of Railtrack on 1 April 1994, travelled to work on the same train as I did from Bedford to St Paneras. I had known him since 1970 when I was a BR management trainee and he was a junior staff elerk. He did not realise that, in setting up 2 year geographically defined maintenance contracts, he was creating the conditions for subsequent disaster. When these contracts changed hands, as was inevitable because re-appointment was to the lowest bidder, the outgoing contractor enticed the best supervisors and managers, the ones with all the vital local knowledge, away to run whatever other Railtrack contract they had won or, alternatively, employed them on other business altogether. After a couple of such iterations, there were many areas where important information about the infrastructure was simply not known or sufficiently understood because there were no proper records and the former experts had moved on.

This dire situation was, to a large extent, responsible for many of the subsequent accidents and serious loss of control of costs that occurred over the next 25 years.

An important, and excellent, part of Chris Green’s NSE plan was that every train was to be washed every day.

As I was quite close to much of the decision making I was in a prime position to ask, in the new order, which part of the new industry would take the initiative in proposing and delivering new investment in a) Infrastructure and b) New trains in order to improve the railway. Consistently I got the same nonsensical answer which was that new Infrastructure investment would obviously be initiated by Railtrack and new trains by the Roscos.

Why was this nonsense? First, one had to remember that there was an unstated premise behind the whole Privatisation idea which was that it was about arresting the inevitable decline in the size and scale of British Railways. It was not that you heard Ministers or officials actually say this but just that the idea quite obviously suffused all their actions. Having been on the inside of BR for about 25 years at this point, I had seen a great many reasons why passengers had been actively or passively discouraged. Furthermore there was ample evidence that if you actually started to consider transport as a facilitator of economic growth and well being, the railway had a great deal to offer. This rather obvious concept had not flourished either within BR or in Government circles.

Returning to the question of initiating investment. One of the few things I can remember from my ‘O level’ economics is that the purpose of capital expenditure is to maintain or enhance the profitability of a business. Railtrack was, as explained above, unable to even manage what it had, let alone think about creating more infrastructure which would, inevitably, increase its costs.

The Roscos, as I knew from my work in setting them up, were going to be owned by banks or bank like institutions. When did you hear of a bank