In April 2018 the House of Commons Public Accounts Committee published a report on Rail Franchising in the UK. In particular, they were concerned with the DfT’s handling of its (relatively) new “mega-franchise”: GTR.
Much of the Committee’s work involved looking at the perceived failings of both the DfT and Govia, the franchisee, during the industrial disputes that had plagued former Southern services. Read the report to completion, however, and a clear theme emerges – that whatever the merits of grouping Thameslink, Great Northern and Southern together were, they represented a bold step for a Department that did not have a good, recent record in acting as an ‘informed client’. That is, one with enough internal knowledge and experience to be capable of spotting delivery risks within the agencies (such as Network Rail) and franchisees (such as GTR) that it was responsible for.
One of the examples the Committee cited for their concerns was the DfT’s handling of fines for the passenger disruption that the 2016 disruption on Southern in particular had produced. The franchise contract included a series of performance penalties that should (and did) kick in for this, but Govia had responded by claiming each incident as a ‘force majeure’ event. Under the terms of the franchise, these each then needed to be considered individually, and many were found to be valid according to the terms of the agreement. Indeed the DfT were forced to acknowledge that this was one of the primary reasons why they had little legal grounds for cancelling the franchise, as many had demanded, even if they wished to.
In response to the Committee’s questions, the DfT were keen to point out that they had learned from this situation. Protracted negotiations over the level of fines had continued until July 2017, the said, at which point Govia and the DfT had reached agreement on a financial settlement.
The terms of that settlement are laid out in the report. Govia agreed to pay £2.4m in performance payments for previous incidents. More crucially though, the DfT also said that Govia had agreed to pay, up front, a flat fee of £10m. This would cover performance payments for any Thameslink disruption up until September 2018.
Confused, the Committee asked the Department to explain how agreeing fines in advance of services that had not yet been delivered was in the best interests of taxpayers or passengers. In reply, the DfT asserted that they felt the performance regime within the contract would actually not benefit passengers because of the amount of management time the DfT might have to spend ‘‘arguing over a huge number of detailed claims”. The DfT stressed to the committee that they believed they had made a reasonable assessment of the costs, based on what they believed would be the ‘worst case scenario of disruption’, so the amount was fair.
This did not go down well with the Committee.
“It is unacceptable” it warned, “that the Department agreed to disregard the terms of its contract and settle the level of fines Govia Thameslink will pay for future poor performance before knowing whether Govia Thameslink was performing well or not.”
As it stands, it looks like that £10m might turn out to be the best bit of money Govia have ever spent.
Playing the blame game
Nothing has highlighted better how complex the process of managing – and improving – the railway network is than the current issues caused by the May timetable changes. We have already written extensively about the operational causes of those issues (as well as the politics of them). To a large degree, the problem has been a combination of late deliveries of both infrastructure and rolling stock, and the failure of GTR to address longstanding driver training issues in time. Nor are these issues confined to London and its commuters. Indeed in many ways Northern’s passengers are now facing a situation that is considerably worse. There, many of the same driver issues found on GTR have emerged, but their impact has been heightened by Network Rail’s failure to deliver key infrastructure work.
All of these issues mean that a timetable change which should have represented the first step on a path to a better future for Britain’s railways has instead made the lives of many thousands of passengers considerably worse. Whether that impact is short term or not is, to the person suddenly left without a way to work or home, immaterial; what matters is that it has happened at all.
As in all such situations, this has naturally led to questions being asked by both the public and press as to who is to blame. Complex causes mean that there is no simple answer to this question. Britain’s mainline railways are essentially managed and operated by a ‘Holy Trinity’ – DfT, Network Rail and the franchisees. In this instance, while the proportion may change by area, the simple fact remains that all three parts of that trinity must bear some of the blame.
What has been remarkable to watch so far, however, has been the resistance of one part of that trinity to acknowledge any share of the responsibility. Whilst Network Rail and the franchisees concerned (GTR and Northern in particular) have at least acknowledged that they have failed, the DfT’s response – where one has been evident at all – has been to point out that it is everyone but the Department who is to blame.
Nothing has perhaps epitomised this more than the letter issued last week by the Secretary of State for Transport, Chris Grayling, in which he laid the blame for the current disruption at the feet of Network Rail’s timetabling department and (to a lesser extent) GTR. That we felt compelled to respond in musical fashion should perhaps be indicative of how farcical a letter it was. It is rare to see a Secretary of State so enthusiastically throw a publicly owned body (Network Rail) under the bus, let alone one over which he exercises ultimate control.
The Transport Secretary – and indeed the DfT’s – failure so far to acknowledge or explore their own role in the current issues is one of the things that will bear watching over the coming weeks. This is because although there is nothing inherently wrong with the DfT’s approach to the GTR franchise, there seems to be little doubt that in some way they have failed to perform the role of the ‘informed client’ that approach demands here, and which the Public Accounts Committee (and others) warned them they needed to be.
Whatever operational and logistical issues exist, there is no escaping the fact that it was the DfT who scoped the franchise, set Network Rail’s priorities and – ultimately – had the final say on whether these timetable changes should have taken place now or been rephased, with whatever consequences that might have brought.
All three parts of the Holy Trinity will have questions to answer in the coming weeks, all of which we will cover here. The process of learning from the mistakes that process highlights, however, will rely on each organisation accepting that they are in some way to blame.
In all three cases, the responsibility for accepting that lies as much with the leaders of those organisations as it does with those on the ground. Network Rail still have a lot to learn about delivering projects on time and to budget, the TOCs have considerable work to do in the area of driver recruitment, and – just as crucially – the DfT have a long way to go in rebuilding the institutional knowledge about the railways that will allow them to act as an ‘informed client’. So far both Sir Peter Hendy (Network Rail) and Charles Horton (GTR) have publicly acknowledged the former, but there has been little sign of the latter from Grayling himself on behalf of the DfT.
That’s a worrying sign not just for the industry and passengers, but for those working within the DfT who can see the kind of ‘informed client’ it really needs to be.