NR's Quiet Revolution

It’s just over a year since David Higgins took over the Network Rail ‘hot seat’ as Chief Executive, bringing to an end a short rudderless spell following the departure of previous incumbent Iain Coucher.

Higgins arrived as a relative ‘unknown’, although his low profile and successful period leading the Olympic Delivery Authority (where he had worked for John Armitt, Coucher’s predecessor as NR CEO) was regarded as a positive sign. 

Higgins had handled the ‘Delivery’ bit of ODA with aplomb. The massive project was seen as largely on-time and on-budget… two things NR was considered as needing urgently.

At the time of my interview with Higgins shortly after he started (RAIL 667), the industry was keenly anticipating the delivery of Sir Roy McNulty’s report into his Value for Money study. Major spending reductions were expected, which I described as “the thick end of £2 billion”. 

In the event, McNulty’s findings were even stricter, and the railway is expected to eliminate half as much again (£3bn) in costs by 2019. It is, as they say in modern business parlance, a ‘big ask’, with the lion’s share expected to come from the industry’s lion - Network Rail.

Do not underestimate the seriousness of this task. Higgins himself is keen to highlight the contradictory pressures brought about by the desire to cut spending on a congested and overworked network that is seeing 5% growth annually. 

On March 12, the Association of Train Operating Companies announced that passenger figures had soared by 6% in 12 months. A combination of ever-soaring petrol prices on the one hand and cheap tickets on the other is driving demand even faster.

The outcome is clear: NR is having to drive down costs by billions, at the same time as accommodating recession-proof growth on an over-stressed railway that in many places is suffering from ‘Heathrow syndrome’. Put simply, rail capacity is (over)-used to such an extent that there is little flexibility and virtually no resilience to disruption - at hotspots, the slightest problem rapidly causes hours of operational trauma.

Higgins has a ready example. “On Tuesday, we had a fuse failure - a real emergency that took just six minutes to fix from the time we had the failure. However, this failure blocked all the signalling to Waterloo and shut down the whole place. It took just six minutes to get the team there, replace the fuse, head back and run it. Yet it took three hours to clean up Waterloo’s disrupted traffic!

“Trains were then buffer to buffer the whole way through. On our busiest railways, it’s like a crash on the M25 - you clear it up pretty quickly, but the motorway is chaotically congested for the rest of the day. And that’s where we are now on the railway.”

We are talking once again in Higgins’ office in the black glazed building in York Way, overlooking both King’s Cross and St Pancras. 

Last time we met he was very new to the job, and somewhat shell-shocked at the large number of phone calls he received at weekends. The railway is no less busy or less prone to weekend problems now than it was then, so his claim that “it never rings now, other than in major emergencies” illustrates that he has made significant progress in at least one area. 

After years of rigidly maintained central control-freakery in general, and the particular fiasco of summer 2010 (when the Office of Rail Regulation caught NR red-handed manipulating safety and worker accident statistics), the organisation’s managers had developed a risk-averse and self-protecting culture.

In a formal report commissioned by (soon-to-depart) NR Chairman Rick Haythornthwaite, the Rail Safety and Standards Board vilified what it concluded was Network Rail’s “culture of fear” - which others now look back on as an era of corporate bullying. 

The end result was a paralysing policy of backside-covering and indecision - the fear of making the wrong decision and suffering terrible consequences led to all decision-making slowing to a crawl. Senior support was sought at every fork in the road, for the approval and rejection of decisions that should have been made much further down the management chain.

Higgins’ phone never stopped ringing, with even senior managers seeking higher permission to do the most basic things. Small wonder costs soared!

The relative silence of Higgins’ mobile at weekends now proves one thing: he has made great strides with the cultural changes needed to drive the more substantive changes we all want to see in other areas at NR - notably, high costs. But even though the phone doesn’t ring as much, Higgins has developed an acute awareness that it could… at any time… and be very bad news indeed. 

“You’re aware all the time that things happen, and I have my phone near my bed all the time,” says Higgins. 

“When it rings at two in the morning I know it’s not likely to be a global friend who’s forgotten the timezone, I know it could be something very serious. You’re always wondering, what the hell’s going on? This is just what happens every day. I checked this morning - and there were three suicides last night on the track.” 

Higgins recognises that all this is  complicated by the recession-busting growth that continues to drive railway activity. 

“I’m starting to understand what the themes are. The most obvious is that every year rail demand goes up by 5%. Gatwick Airport’s demand went up last year by 0.8%, and even that’s a challenge. But rail goes up by 5% every year, year on year, yet at the same time we have to take our costs down by 5% every year.

“We’re coping with huge growth, but we’re hitting a capacity crunch. There are two ways to deal with this. One is to build new railway, and that’s what Crossrail and Thameslink are all about. Let’s face it, they should have been built 20 years ago. 

“We also have High Speed 2 coming. But even so, I reckon when we open the bottom section of High Speed 2, you won’t have any reduction in traffic on the old line because freight will gulp up any spare capacity, and it will also be used for commuters. 

“What we really should be doing when we finish the first stage of High Speed 2 is take the old West Coast route out and spend a year fixing it up, and doing it properly. Because by then I reckon it will be really trashed.”

Blimey. That’s a bit like hearing that despite the Eurozone paying trillions to Greece to sort out debts, they still won’t be any better off in 2019 than they are now! 

And Higgins sees the problem not merely afflicting the West Coast, but also other key network sections. The culprit? Obsolete signalling. 

“It’s glaringly obvious to me now, one year in, that signalling is a major issue,” says Higgins, who clearly believes that by the time HS2 opens to Birmingham (2026), the recently upgraded £9bn West Coast Main Line will be hanging by a thread. Or, to use his own term, “trashed”.

“It will need a lot of work done on renewals,” he says. “I wasn’t here, but if I believe what everyone tells me about PUG2 I hear anecdotally that we got from a cost of £14bn-£15bn down to £9bn, by taking out scope. 

“I understand we took out major work at Bletchley and Watford Junction, we took out the upgrade of the overhead lines, remote asset monitoring, and a lot of the upgrade of traction power. Some of that’s coming home to bite now, because of the way we’re pounding that line. I don’t think any of us really understood what Pendolinos would do to the traction power.” 

Higgins has also come to understand that the WCML south of Rugby is the busiest main line in Europe, with numerous operator demands pulling in different directions. 

“Every single day you have 12 different operating companies - seven passenger operating companies and five freight companies - all trying to use the same track. 

“So you have this busy, heavily-used railway, and we’re really pounding it. You know that better than I do! I was out on the Western yesterday and you think ‘thank God for Mr Brunel’! It’s magnificent isn’t it? I really appreciate what that engineering did. It’s a billiard table. It’s straight, and the gauge clearance is wide. 

“Then I did a cab ride on a Pendolino from Euston to Bletchley, and it’s like a rollercoaster, getting under these old bridges and odd tunnels. We’ve had to come up with an engineering masterpiece - the Pendolino - to keep the train on the tracks.”

Higgins repeatedly returns to capacity in our conversation. He points out that a single late-running train can ruin a day’s timetable for a company such as Chiltern, for example, and that a range of solutions must be pursued. He “cannot fault” the Government for its commitment to investment, but says the railway needs to look at other avenues to seek improvements.

“We have to look at capacity, and the resilience in the timetable,” he explains. “In Scotland we’ve worked out that we can get at least another per cent or more by just cleaning up the timetable. And that’s not by making journeys longer, that’s just by making things work better.”

I ask if that means benefits for so-called ‘end-to-end’ passengers, while passengers at intermediate stations suffer. Passenger groups and others are already voicing concerns that services from intermediate stations are losing out in the drive to boost end-to-end performance. 

Higgins is clearly aware of the sensitivities, because he chooses his words very carefully - but offers little comfort to those intermediate passengers.

“Unfortunately there is no easy answer. There has to be trade-offs. You’re absolutely right…” he begins, uncharacteristically hesitant.

“If you’re moving very large numbers of people at peak hours, particularly on the commuter routes around London, you have to make trade-offs. You have to really decide what you are trying to do. The train path is like a flight path at Heathrow or a landing slot - they aren’t making any more, and we’re going to have to really make the best use of them.”

He again mentions obsolete signalling systems: “Eventually, when we get proper signalling systems, yes we will have more capacity. When we get electrification on Western, we estimate we’ll probably save 15 minutes or more on the trip to Cardiff, maybe 20. That’s good. That will provide some more capacity.”

Unless you live in Pewsey or Swindon, I suggest.

“Yes, frankly. These are the kind of trade-offs we need to make, but we also have to look at the peak timetables. We need fewer, longer trains, and then people can make decisions as to where they should stop. But we also simply have to accept that you can’t have everything - you cannot have higher performance, lower cost and higher capacity, because they’re contradictory.”

This theme will emerge with greater frequency as the network becomes increasingly congested. It isn’t a new problem, of course. Look at the way intermediate (and especially more rural) stations on the East Coast were eliminated at places such as Corby Glen, Essendine and Bytham… or on the West Coast at Bay Horse or Garstang & Caterall in decades gone by. Exactly the same arguments were in play, and they are even more critical now. 

We won’t see station closures, but just look at today’s issues on the East Coast Main Line. The requirement to introduce fully clockface services between Leeds and King’s Cross, for example, is putting great pressure on frequency of service at places such as Grantham, Retford and Newark. Higgins is giving notice that these problems are not going to go away.

We move on to the devolution of power and control at Network Rail - from the centre to the routes. It’s a complete reversal of the inflexible centralisation of all authority that the previous regime pursued with obsessive zeal, long after central control was needed to solve the very different problems of a bygone era.

Higgins made clear that responsibility would be devolved and shared, that partnership working would flourish, and that those who didn’t ‘get with the programme’ would be leaving the industry at some point (because the direction of travel was assured, if the pace of progress was not). So, where are we?

“The devolved structure has now been in place for just over three months, and to me it’s obvious that ops and maintenance should be together,” says Higgins. 

“But what’s more important (but less understood) in devolution is asset planning decisions. They need to be taken in partnership with our customers, because they know a hell of a lot about the resilience of the network. 

“We need to plan the work with them, and then have the flexibility locally to do trade-offs between ops, maintenance and renewals. 

“It means there’s more authority and skills put in the routes, which are big businesses. The aim is that the centre becomes more of a service facility, rather than a command and control centre.”

And has it gone how you wanted it to?

“Yes,” he answers without hesitation. “I’m really pleased that the route MDs are now really looking at the railway holistically as a business, and understanding what all the trade-offs are and decisions really mean.”

His next comment, though not seemingly provocative, shows just how much the previous regime’s ‘one size fits all and obey without hesitation or variation’ philosophy is being comprehensively jettisoned by this quietly spoken Australian. He wields authority very differently to his predecessor - but is wielding it nonetheless. He continues to stress that the company’s benefits of scale must be retained, but beyond that devolution is nothing less than a quiet revolution.

“What’s clear now is that the next stage on devolution is to address capacity within each of the routes. And one thing is obvious: each route is different. Each route has its own challenges related not only to whoever the customer is, but with regard to the physical network itself. We have to be flexible enough to deal with that. 

“The next thing that becomes clear is that as capacity use occurs of the intensity that we are seeing, then network resilience becomes really, really crucial. When you look at performance, you see that delay per incident has gone up. It started going up in 2009, and then it’s gone up and been very, very stubborn. Delay per incident is at an extremely stubborn high level, and I believe that this is the result of cost efficiencies within ourselves and the train operating companies. 

“It’s not just about instances like that Waterloo fuse problem I mentioned earlier. Bad things just happen. Suicides are tragic, but they’re not going to go away - there are a couple a day, somewhere on the network. Then there’s cable theft - I’d love it to go away, but we need stronger legislation for that, so it’s not going to disappear.

“And so it goes on. There’s only one conclusion, only one way to move from what I believe is now a very high level of performance to the yet more stringent targets that people aspire to… and that is that the railway must break down on many fewer occasions.”

Higgins is proud of the fact that the railway already has a good record, but feels it is neither appreciated nor properly broadcast by the railway itself. I agree, which is why I wrote the Comment (RAIL 691) about the industry’s current strategic PR failure. (See also Open Access, pages 38-39). 

He is critical that “we never celebrate what the railway has done”, and is scathing about a media that plays to its own prejudices. I ask if he is referring to BBC’s recent Panorama programme, which trod a tediously familiar path of pointing out known failings, offering no solutions and ignoring successes.

“I think we know that on that programme they’d written the story before they even started interviewing,” he observes drily. “In ten years we’ve run a million more trains and have half a billion more passengers, and in another decade we’ll have another half a billion, but it’s never celebrated. 

“I spoke to the Panorama interviewer on camera for an hour and tried to be open and honest. They used less than two minutes in the end.”

Sticking with devolution, was he entirely happy with the outcome? There are hardly any completely new faces in there - perhaps two, while other former regional bosses were promoted into the new jobs in their own areas or moved to a new area. So did anything really change? Isn’t this just old wine in new bottles?

“There’s nothing wrong with that,” he begins, not denying the proposition. “I’ll be clear, however. I had hoped we’d get four or five people from the wider industry to come into our organisation. I was quite clear about that, and we did recruit one new guy - Phil Verster.

“He’s great. He’s really whipping East Coast! I like that approach, and wanted it because when we bring in people from outside that challenge is the norm. But in the end, it wasn’t possible to recruit lots of new blood. So I went back into our organisation and said ‘right, we need to develop from within’. Is it old wine in new bottles? I don’t think so. We’ve moved a few around. We took a risk with quite a number.”

Higgins insists it’s working, and cites North West England, where incumbent Jo Kaye was ‘made up’ from Route Director LNW to Route Managing Director, London North Western.

“It’s bearing fruit already. I was on West Coast the other day, and Jo Kaye is clearly heading what is obviously a good team. It was clearly a team - it wasn’t maintenance on that side of the table, with ops over here and asset management over there, it’s much more integrated now. 

“They all sit round the table, addressing their own challenges, which is what we always wanted it to be.”

So, it’s working?

“Yes! It’s working, and it’s going to bring dividends. The real issue now is that we must look at the underlying resilience of our network - physical resilience - because if we are to deal with our capacity constraints the railway must fail less often. You can’t assume delay per incident is going to come down. 

“I believe incident delay is a difficult and nasty feature of a crowded, congested railway with a difficult timetable. Better timetabling might solve some of the problems, but we simply HAVE to get points failure from 8,000 at the start of the control period down to 3,000.”

What’s the answer? New equipment? Better maintenance and reporting?

“There’s no doubt remote condition monitoring is good. A device tells us by wireless: ‘I’m not as good as I used to be, I’m feeling increasingly sick, if I don’t do something I’m going to fail.’ So we’re getting a lot more intervention in advance now, and that’s starting to pay dividends.”

So get to it before it breaks?

“Well, yes, but my question is also about why it should break!”

A good point. Why, for example, do axle counters that work all over Europe have such a bad reputation here? And do we have too many different types of points?

“Yes, there are too many different types of points,” he agrees. “We have certainly driven cost in - and that’s an issue. Now we have to call a halt. We can make an impact in project costing by asking what the long-term consequences are for maintenance. In future, we’ll only do it if we can build in the long-term maintenance resilience”.

So if devolution is working, are you actually driving visible costs out of the railway already? After a year’s effort, what’s the proof that you are moving in the right direction?

“Well, it’s only been going for three months,” he replies cautiously. “It’s early days. Remember it’s not until April 1 that they get control of the renewals budget. We’ve been very concerned about just dumping the entire central control on the routes in one go, so we give them a chance to think and then they can make those trade-offs and save money.”

Are we going to get Roy McNulty’s 30% savings? A whopping £3bn by 2019?

“I’ll come back to Roy,” he answers, again with caution. “The final area in terms of our railway needing reform is our front line, on which I’m focusing this year.”

Higgins is convinced that successive regimes and Governments have piled far too much process, monitoring and reporting on the front lines. So much time is spent ticking boxes, filling in forms and observing ‘due process’ that they don’t have time to actually get out there and do the job. 

I suspect he will meet no resistance from those swamped by such bureaucracy, but will meet resistance from those in the ‘safety and compliance mafia’ who are usually responsible for this paper tsunami and the risk-averse paralysis it too often induces.

“I think we’ve gone too far in the pendulum,” he says. “We’ve allowed too much on process. Some of it you can concede - following Grayrigg, of course we had to focus on putting much more process into the organisation. But in so doing, we’ve managed to take away from our frontline planners (in particular, our engineers) the ability to plan. 

“Our safe system of work, of getting access to track - it’s too slow, too bureaucratic, too process-led and too paper-based. And it takes up too much time. You cannot afford to do that nowadays, we have only small windows of four hours to get onto a track.”

So, are you going to slash that red tape and banish that bureaucracy?

“We have to.”

Is ORR pushing back against this?

“No, ORR is fine.” ORR says: ‘you have the procedures, you have the 1,500 standards. You tell us how many times you’re going to inspect something, all we do is check whether you do what you say you’re going to do. We can’t say it’s ORR’s fault.”

I meant, is ORR pushing back at what it may see as the erosion of safety procedures?

“I don’t think we should use that as an excuse. I think most of the problems are self-imposed. In the end we’ve let this process build up in our organisation to give us comfort.”

That’s another elegant way of condemning NR’s previous policy. I then remind him of his comment last year that a lot of NR were paid good salaries to exercise professional judgment that is currently not being exercised. You told me: ‘I will have that judgement from them or we won’t have those people”.

“Correct.”

Is that changing?

“I’m going to change it. Indeed, it’s one of my favourite subjects.”

Part two of this interview will appear in the next issue of RAIL. It will cover asset management and the question of whether NR really is 40% more expensive than France and Germany; McNulty savings; the fatal Elsenham level crossing accident of 2005; how long it will take to eliminate the bullying culture of fear within NR; job losses; how the mysterious Rail Delivery Group is working; and the potentially game-changing alliance with South West Trains, where NR staff will work in a team headed by SWT Managing Director Tim Shoveller.