ORR - qui custodiet ipsos custodes?

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The Sunday Times today features Anna 'Pollyanna' Walker as its page 5 girl.

Perhaps not a surprise that in the accompanying photo Pollyanna has such a big grin.

As the Sunday Times notes she left the Healthcare Commission with a bung of £250k plus pension payments before gliding into the ORR on £120k a year.

Not bad for someone whose knowledge of railways is limited to rail journeys from Paddington to Ludlow, supplemented by occasional visits to hear Iain Coucher's excellent and balanced views on how the railways should be run.

Meanwhile, as We Are All In It Together, anyone care to speculate how much Pollyanna has trimmed from ORR's budget and headcount over the last year?

Selling off NR - Cui bono?

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Interesting that two very similar stories (Alistair Osborne in Friday's Daily Telegraph and Tom Winsor in the Times today) suggest that the Government could trouser £12bn by selling off Network Rail.

This is based on the accounting wheeze that the Regulatory Asset Base is really 'worth' £36bn.

The figure is arrived at by deducting the debt of £23bn which supposedly leaves an equity of £12-13bn.

Complete fantasy of course as the RAB is not a realistic asset valuation in commercial terms and it conveniently overlooks the question as to who would want to invest in a business that has such huge debts, which can only be propped up by massive government subsidy and borrowing that, in part, goes to cover normal running costs and paying debt interest.

Network Rail is a complete dog's breakfast of a business and is only viable with huge levels of taxpayers' moolah.

The only people who can have any possible interest in selling off this business are the huge army of bankers, lawyers, consultants and general hangers on who are experiencing thin pickings at the moment.

It is certainly not in the interests of the taxpayer or those who want a properly run and cost-effective railway.

Eye opens museum of Couchiana

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Eye is delighted to launch its new museum of Couchiana with this oddly drafted ATOC press release:

ATOC responds to Network Rail Chief Executive stepping down

In response to the news that Iain Coucher is to step down, Tom Smith, Chairman of the Association of Train Operating Companies, said:

“Iain is a major figure in the rail industry and a positive force for change.

“He has made an exceptional personal contribution to a period of sustained improvement on the railways, which has seen punctuality and passenger satisfaction reach record levels.

“We wish him the best for the future and will of course continue to work with Network Rail’s management to make the orgainsation more customer focused.”

ENDS

Punctuality and even more passenger satisfaction are only part of NR's remit, what about his day job of running the business?

And what is the last para trying to say?

Surely it is not suggesting that Coucher was not customer focussed? Perish the thought.

Meanwhile any Eye readers know what an 'orgainsation' is?

Perhaps it describes a not for profit company where you make pots of money?

UPDATE: This from eastwestdivide...

I suggest asking the reader who lives in Tophsam (2 articles up).

Muphry's rule - anyone correcting spelling will themselves make a spelling mistake.

Railway industry signs away destiny - again!

Bulldog Drummond gets to read Sir Roy McNulty's Scoping Study...

The DfT and ORR issued the McNulty Value for Money Report Scoping Study today without explaining why it had taken ten weeks to put the it into the public domain (it is dated 31 March).

Lots of good stuff and well worth a read but throughout a depressing response from the industry where the general tenor of comment is to acknowledge that there are problems but it is really for others to get a grip.

Statements that should have appeared in the report but, depressingly, did not (unless Sir Roy is playing his cards exceptionally close to his chest) include:

'Many senior members of the industry we met were just bursting with ideas how to create a better deal for customers but felt thwarted by current circumstances.'

'We were impressed by the overall strategic view that many of our respondents took and their acknowledgement of the need, if required, to reduce profits to make for a better railway.'

'We were highly impressed with the personal responsibility that many we met took for the current, largely undesirable, state of affairs and their desire to put things right as quickly as possible.'

'We were told of a number of carefully thought through ideas that could be implemented immediately and which would reduce cost, produce great efficiencies and demonstrate the commitment of senior management to the industry as a whole.'

If you're not part of the solution...

A 'mixed' performance from Network Rail...

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It started with a lacklustre performance by Iain Coucher on the Today programme at 07:20.

The Network Rail chief exec seemed to allege that ORR were using the 'wrong kind of efficiency measures'.

Then there was the ORR press conference, well described by Nigel Harris on his blog, called to discuss the Regulator's robust and pointed letter on Network Rail's performance last year.

Another self-serving piece of work was Network Rail's Preliminary Financial Results for the year ending 31 Mar 2010.

Although not easy to read the story is depressing.

There is some improvement but it is being bought at too high a price and taking too long and, anyway, ORR is clearly not convinced that many of Network Rail's claims add up.

It is instructive that Coucher only mentions six new projects in the Preliminary Financial Results:

• Airdrie to Bathgate – a new line being built in Scotland, scheduled to open in December 2010
• The programme of work for the London 2012 Olympics continues; this includes new lines, new stations, better facilities and new rolling stock on the North London Line and East London Line in addition to works to support and enable the transport links being developed in the Stratford area
• Construction is well advanced on the Thameslink programme
• Also as part of the transport strategy for London, the Reading project has advanced, as well as key development work now underway for Crossrail
• The Birmingham Gateway project to redevelop New Street has attracted a significant amount of third party investment

Yet half of these are being driven by others.

Rolling stock procurement is nothing to do with Network Rail.

Property investment should not be the main focus of our national infrastructure company.

Highlighting Newport station as a major initiative seems to indicate so little is being achieved that a £22m project, which is partially funded by the Welsh Assembly, gets top billing.

Meanwhile signalling problems on the North London Line and ORR's intervention into Airdrie Bathgate appear to have been glossed over.

The fantasy that Network Rail is a sound and effective business is best left to the words of the hapless Group Finance Director, Patrick Butcher:

"Network Rail is maturing into a company that is strong and sustainable."

Does anyone in their right mind really think this is the case?

He tops this Pooterish statement with the complete nonsense that:

"Our financial performance means we generated operational cash flows 80% greater than required to pay our net financing costs. Our gearing ratio [debt to regulatory asset base] of 64% shows that our debt is at a sustainable level and gives the business a significant buffer to absorb unplanned costs."

This is the world of Micky Mouse accounting.

Interest on debt can only be paid out of net income, not total cashflow.

The RAB is a completely meaningless basis for borrowing, particularly if sufficient income cannot be generated to pay interest and start to reduce the principal outstanding.

The reality is that Network Rail is slipping into a morass of debt and that too little is being bought for the huge sums being borrowed.

The Prudential affair has shown that corporate activism is now much in vogue.

Eye is certain that the Members of Network Rail will make it their primary business to stop this corporate muddle at their AGM next month and direct the Board as to how the business is to be run in future.

King's Place expects a visitor...

This from Bulldog Drummond...

Apparently Sir Alan Budd from the Office of Budget Responsibility is very keen to pay a visit to Network Rail's King's Place HQ.


As Sir Alan takes the Tube from Westminster to King's Cross no doubt the following questions will pass through his mind:

• Need the Government be concerned that the publicly underwritten debt of Network Rail will rise from some £23bn today to in excess of £31bn by April 2014 (equivalent to 35% of Ireland’s present sovereign debt)?

• Are the Government right to back a business model that supports a company that has to roll up interest due every year into borrowings? Although with a keen eye for detail Sir Alan will of course note that in 2013/14 it is projected that a small excess of income will make almost a £400m offset to an interest bill of £1.7bn in that year.

• Is Network Rail’s business model right to assume that after spending record sums on infrastructure over the next five years income will only rise by a projected 15% (from £5.9bn in 2009/10 to £6.7bn 2013/14).

• Is the ORR's reliance on the Regulatory Asset Base (RAB) well placed as a measure for calculating Network Rail’s soundness as a business. Or might it be better to have a system based on balancing current expenditure against future income as a means of assessing whether borrowing is prudent?

• Is it wise that only 25% of Network Rail’s current debt is in conventional UK Sterling bonds, whilst nearly half is index linked and the remainder is denominated in foreign currencies. Happily short term interest payments are low for these classes of debt, but a longer-term deterioration in the UK’s global financial position may hit hard an exclusively Sterling based business with such a borrowing profile.

No doubt upon meeting NR's Board such trifling concerns will be instantly swept away.

Or perhaps not…

UPDATE: This from Ithuriel...

But Network Rail's debt is incurred to pay for enhancements requested by Government.

So you can't blame the company for doing what it's funder specifies.

UPDATE: This from Bulldog Drummond...

Ithuriel, when not flitting around doing jobs for Gabriel in Paradise Lost, doubtless has had time to look at the Companies Act 2006 which requires directors of companies, 'to promote the success of the company for the benefit of its members as a whole.'

It sets out a number of factors which directors must take into account to promote success.

Of particular interest is the need to take into account the likely consequences of any decision in the long term.

To say that 'Network Rail's debt is incurred to pay for enhancements requested by Government' misses the point.

If Network Rail is a company it must have a duty first to its own success and longevity and getting into massive and unrepayable debt doesn't look too smart a strategy.

Unless of course Ithuriel is suggesting that Network Rail isn't really a 'proper' company...

People on the railways I would like to meet...

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The Person who Helps Test the Fast Track Ticket Machines

Although most Railway Eye readers, being lucky recipients of concessionary travel, do not use ticket machines they may want to pause for a moment to think about the extraordinary person who helps test the Fast Track ticket machines.

The main screen is ideally designed for someone around 5 feet tall and the module where payment is made is clearly designed for someone around 3 foot six inches (this screen is also very hard to read with anyone possessing normal eyesight).

To add to the challenge the main screen and payment module are so far apart that the traditionally shaped human being does not have sufficient reach.

So where do they find a five foot high individual with a double length right arm and the matching rubber neck required to read the small screen?

UPDATE: This from Captain Deltic...

Might I add to the list of Desiderata, the ability to touch type on credit card key pays with the numbers worn away.

Alternatively, infra-red vision able to see the outline where the numbers were.

UPDATE: This from The Major...

The Major suspects that that Fast Ticket machines have been designed to be suitable for those in wheelchairs.

He's not yet in one (the day cannot be too far ahead...) so would welcome views from anyone who is and has used these machines.

Before then doing battle with barriers and all the other impediments train operators put before their passengers...

UPDATE: Bulldog Drummond responds...

I note the Major's comments but the TfL ticket machines (the big ones are very similar to Fast Ticket) are much better laid out.

I cannot believe that TfL would do anything that is not DDA compliant.

Bulldog's book review: A century of Change

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Bulldog's flinty old heart was warmed by Mike Horne's and Jonathan Roberts' launch of their book 'A Century of Change - Britain's Railways and the Railway Study Association' at the German Gymnasium Kings Cross last night .

It is a packed hamper of a book bursting with nuggets skillfully gleaned from the RSA archives by Mike complemented by some crystal-ball gazing by Jonathan.

Bulldog, who wishes to make absolutely clear he is not in any way related to Orlando Figues, was genuinely impressed.

The Railway Study Association may be struggling a bit to make its voice heard in an industry where many bosses take a Year Zero view of the profession they have joined. In this rather dismal environment Mike and Jonathan have significantly added to RSA's credibility and produced a great read.

Make a stand, be a thinking railwayman. Go out and buy this book!

When choice and competition doesn't matter

Telegrammed by Bulldog Drummond...
Nick Hassell in his Times Tempus column today does quite a good job analysing Stagecoach's recent (fairly creditable) performance.

But he ends up talking, as most analysts do, of upcoming sector consolidation.

Have any of these deep thinking hacks paused for a moment to think what the Competition Commission response will be?

The Government contracted passenger transport industry is already reduced to a handful of serious players.

Any fewer and CoCo will, rightly, see huge conflicts of interest.

What buses and railways want are more varied and interesting players rather than the present narrow field dominated by European nationalised railways and Scottish bus bandits.

Monster Raving Loony - Policy achieved!

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Disappointed to see that the Monster Raving Loony Party (MLRP) has no manifesto commitments for rail in this election.

Past elections has witnessed the MRLP making special commitments to pretend branch lines are reopening, insisting timetables are sold as works of fiction as well as insisting on humane and gentle treatment for gricers.

This can only mean that the MRLP already considers the industry to be safely in the hands of loonies...

UPDATE: This from Boombasket Phasinggear Ftang Ftang Legg-out-of-bed Smythe, who is allegedly the MRLP railway spokesman...

Can I point out that our policies are firm and clear.

They include:

• Removal of electrification within 15 years to be replaced by hydrogen fuel cell powered self propelled trains.
• All intercity and outer-suburban services to be operated by ultra-lightweight Intercity Express Programme trains
• Level 3 ERTMS.

And all of which are based based on DfT Rail's own Rail Technical Strategy. (Stuart, is that you? Ed)

UPDATE: This from Lord Toby Jug of the Official Monster Raving Loony Party...



If only we could get Lord Toby included in Thursday's Leaders Debate...

Industry bust by 2020? Eye told you so!

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RAIL (issue 640) breathlessly reports a shock meeting on 14 March where Dr Mike Mitchell told railway chiefs that the industry faces economic meltdown by the start of CP6 (2020).

Of course this won't be news to Eye readers who were told this was going to happen wayback in December 2008.

The CP4 settlement exacerbated the problem and by 2014 leaves Network Rail with a £31.5bn debt mountain costing a cool £1.7bn to service.

If this goes on to 2020 DafT has come to the conclusion that NR's debts would cost £4.5bn a year to service and that 'urgent, radical reform is needed to slash costs generally.'

What was even more surprising is RAIL's description that eighty ashen-faced industry chiefs 'listened in shock' to this news.

What do these guys do all day?

They certainly don't read Bill Emery's vivid prose, look at what passes for Network Rail's company reports and, crucially, don't understand that even gravy trains can hit the buffers.

But Eye readers can relax.

RAIL reports these comforting words from a Network Rail spokesman: 'Our debt payment charges are more than manageable and only increase by affordable investment that's supported by a business case which delivers a positive return over time. By 2014 Network Rail will be amongst the most efficient rail infrastructure providers in the world, having cut 50% of its costs...'

So that's all right then.

UPDATE: This from Ithuriel...

But that doomsday debt scenario is dependent on DfT using the Network Rail credit card (aka the RAB) to the max and ORR letting them do it.

And ORR is already questioning Lord Adonis flashing the plastic on electrification.

So the real message from Mike Mitchell is 'things will get really nasty if my Secretary of State carries on spending money he hasn't got and ORR hasn't budgeted for'.

UPDATE: This from our man at 222 Marylebone Road...

It's all very well Bulldog calling RAIL's cover headline 'breathless', but if you had a scoop wouldn't you be a bit up front?

What is more interesting is that the meeting was held on 4 March, yet there was absolutely nothing about it in Informed Sources published three weeks later.

No doubt Captain Deltic will try to cover up being last with the news with a smokescreen of brain numbing analysis.

Whatever happened to boiling frogs?

The Great Detractor?

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Tom 'pile of bile' Winsor ranted away in The Times on Friday that Buy-us is responsible for the threatened railway strike.

Not sure that, however alluring the honey trap, even Stephen would claim this.

Most of the article is the predictable Groundhog Day stuff about Railtrack going into administration and the 2003 settlement and it not being Tom's fault etc... etc... etc...

But in a new development Buy-Us, Ali D and The Thin Controller are described as the Marx Brothers of national rail policy.

If this is the case step forward Tom as Charlie Chaplin.

Not because of looks, Harry Potter is still our favourite, but because in every Chaplin movie the hero causes absolute chaos and he doesn't notice.

But is there another motive in all this Labour bashing?

Is the one-time LP card holding member turning into... Tory Boy?

Jarvis old joke corner

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So farewell then Paris Moayedi.

A very exotic specimen in the dull as ditchwater-alongside-the-cess world of senior railway maintenance bosses.

Even during the dazzling smoke and mirrors rise of Jarvis in the nineties he was always short of the readies.

One outcome was to regularly visit Railtrack House shortly before the end of the Jarvis company year in April with imaginative bills to drum up extra cash fast.

Railtrack staffers used to call these visits 'Paris in the Springtime'

Boom boom! (shouldn't that be bust bust? Ed)

TOCland issues clarion call in The Thunderer

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With all the excitement of yesterday's 'Lobbygate' an extraordinarily wooden and otiose letter in The Times may have gone unnoticed.

Signed by the great and the good of the passenger railway it ends with a clarion call designed to raise the spirits of all railwaymen, as well as admirers of the reckless use of the infinitive:

'We call on them (the main political parties) to commit to the investment to continue improving the railways making better use of the talents of train operators and creating an environment which makes rail a more attractive investment for the private sector.'

It is certain that this demand for lots more lovely lolly to go straight to TOCland will be seriously entertained by Whitehall in these straitened times.

And one can only imagine the gloom that has settled over Network Rail's Kings Place HQ, knowing that such powerful forces for change and naked self-interest have been released. Even now Iain Coucher is reported to be barely able to contain his white hot anger, having been so effectively outflanked.

Strangely one significant owning company was conspicuous by its absence from this ATOC led epistlefest.

Step forward Byers' 'client' - National Express!

UPDATE: This from Ithuriel...

What world are these people living in?

Everybody knows that the current cost of the railway is unsustainable.

The DfT Rail Director Technical & Professional has said in public that at current costs the railway is unsustainable

DfT and ORR have commissioned a review into Value for Money across the industry.

ORR is concerned about cost pressures on the full Thameslink programme.

DfT Rail has just decided that lengthening the rest of the Pendolino fleet does not represent value for money.

Engineering costs on Network Rail are reported to be double those of European Railways.

We face a period of unprecedented austerity in public spending.

Despite there being a war on even the Ministry of Defence has been ordered to determine the cancellation costs of every programme.

And yet here are these purported leaders of the industry asking for MORE money?

Sergeant Markoff, late of Fort Zinderneuf has advice for this multination legion of train operators.

"De merde toi Legionaire"

Which translates as "Not with my taxes"!