Carne’s vision for a Digital Railway

Carne has set up a Digital Railway Group, led by Network Rail Group Asset Management Director Jerry England, to come up with some answers over the next two years.

“We need to have those answers within two years - before we have to submit the Initial Industry Plan for CP6 and CP7. We must identify all the barriers that we would have to overcome in order to achieve that kind of programme and let’s see if we can develop an alternative for Britain’s railways for investment in the next ten years.”

But who is going to pay for this? Surely it will mean operators having to shell out for equipment on trains that might lie unused for years? Neither rolling stock companies nor train operators nor the DfT (especially the Treasury) will wear that.

“You have identified one of the challenges,” he concedes. “But I don’t believe that is the sort of challenge which actually stops us - we can overcome that kind of challenge.

“We don’t currently have a supply chain capable of delivering this sort of change programme - we don’t have enough people with the skills to do it.  These are plenty of challenges we have to overcome, but I honestly don’t think any of them are insurmountable.

“If the prize is big enough for the railway as a whole, then one of the hurdles we have to overcome is how we distribute the benefits in such a way that they compensate for the additional cost that some operators will incur.”

But won’t NR’s reclassification last September as part of the public debt hamper such a potentially massive investment commitment? NR is already under scrutiny by the Rail Regulator and DfT for the way electrification costs seem to be shooting up - surely there’s no way the Treasury will wear this?

“Well, on one level, it’s really a statistical reclassification of the debt - so it may mean very little,” he says (although I’m not sure I share his optimism).

“We are working with Treasury and the DfT to actually describe the way we will now work with Government. They have been clear that this has been a reclassification of debt - it was not a signal to change the way Network Rail operates with Government. So we are trying to describe the way we will operate in this new world, and to enable Network Rail to continue to operate in much the same way that it does today.

“But we also recognise - and I certainly recognise - that there will be different levels of scrutiny. And, by the way, I welcome that… I welcome the transparency we should operate in because I think it’s absolutely right that customers and taxpayers should know how we make the choices that we make around investment in the railway.

“But if we don’t deliver and we don’t perform, then the Government has the means in its control now to directly influence us in a way which it couldn’t do in the previous structure.”

Precisely! And surely that’s inevitable? Experience tells us that politicians simply cannot resist meddling with railways - either with or without their officials or the help of the Treasury! I’m surprised that Carne disagrees.

“I don’t think it’s inevitable actually, because I think that politicians also know that running the railway is really difficult - really tough - and they are quite happy that there is a team of professionals doing it. I think as long as they are seen to be doing a good job, they will be allowed to do so.”

Hmm. I can almost sense experienced railway managers who have had to fend off precisely such meddling shaking their heads and wondering if Carne is not being more than a little naïve?

So after the next election you aren’t worried that the Treasury will clamp down on NR’s spending, as it tries to implement what respected economists have described as “colossal” cuts?

“I think it’s absolutely right that the country as a whole, represented by the Treasury, should make decisions about where it wants to spend money on public services,” he says.

“And the railway should not be fearful of being prepared to compete against any other form of public service for finance. Governments face choices as to whether we build more hospitals or more railways or more schools, and we shouldn’t see that as a threat. We should just be prepared to make the case for investment in railways in a better way than we have had to do it in the past.”

Doesn’t this reclassification of debt, giving the Secretary of State major new powers, render the members to whom NR is allegedly and theoretically answerable to (as a proxy for shareholders) redundant?

“No,” says Carne, firmly and without hesitation. “To repeat - this retreatment of debt has not changed the governance structure of the company fundamentally, so there is no intention to change either the board structure or the member structure.”

Does reclassification change NR’s relationship with the Office of Rail Regulation?

Again, Carne is ‘glass half-full’. He just won’t see a downside.

“No, it doesn’t change that either, because we operate in a regulatory regime where we have defined outputs defined by government and regulator. With those outputs set, we are left to decide how best to achieve those outputs and that regulatory regime remains the same. So no - reclassification doesn’t fundamentally change things actually.”

Well, perhaps not in principle. But if NR misses a wide range of its output targets, I can see this becoming a very hot potato. There’s a big difference between principle and actuality.

Carne has a way of seeing good in all areas - which is not a bad thing in principle, but I do wonder if he is either turning a Nelsonian blind eye to some issues, or whether he just isn’t seeing some unpleasant truths.

I’m fairly sure I’ll get the ‘party line’ on my next question, but I do have to ask it… what does he think of industry leadership? We have the Rail Delivery Group, the Rail Supply Group, the High Speed Leaders Group - there has traditionally been a shortage of leaders in the privatised railway and a reluctance to take any position, on anything. Now we seem to be tripping over strategic leaders, all with their own agendas and views.

Carne replies: “Yes, I’ve heard you say this in one of your previous Comment pieces. It is an industry that does have a proliferation of industry bodies, there’s no doubt about it.

“But I think RDG plays an absolutely critical role in pulling together the chief executives of the train operating companies, the freight operating companies and Network Rail.”

Like other leading figures, Carne has ‘the script’ clearly to hand. He talks of suppliers being represented in RDG sub-groups and that the RSG now exists. Like everyone else, he skates over the fact that if suppliers were properly involved at RDG, a separate Rail Supply Group would not be needed.

“We want to work very closely with the RSG. I met with RSG head Terence Watson, of Alstom, this morning, so we are working very closely together with RSG. This idea that there is some sort of schism in the industry, I don’t subscribe to it.”

In an industry too often characterised by there being as many opinions in the room as there are people, there’s an astonishing level of agreement nowadays on this subject - even to the words actually used by top executives when you ask them about it! It’s not the sort of consensus normally found and so it’s going to be interesting to see how this develops over time.

We move on to performance. I ask Carne if he thinks that the Public Performance Measure for punctuality is the most appropriate measure of how well an increasingly congested railway is serving its customers? The Tube uses a very different system that measures reliability rather than timekeeping (see panel, page 50). Wouldn’t this be better?

And a crammed railway is only ever going to seem punctual if recovery times are manipulated - which is exactly what happens, of course. Doesn’t this at least blunt PPM, if not render it increasingly meaningless?

“Yes, you could always argue that there are definitely flaws in the way that PPM is measured, and there are undoubtedly many who would argue that there are better measures of assessing overall reliability. But the difficulty is that as soon you change the method of measure then people will accuse you of massaging the numbers.”

He’s right about that. There would be a political and media firestorm whose narrative would be that the railway is trying to massage the numbers because it can’t run trains to time, so it’s looking for another, less inflammatory way to measure performance. Just like when the Government switched from the Retail Price Index to the Consumer Price Index to measure inflation. The thing is - it bit the bullet and made the switch because it felt it was right, despite the criticism. Shouldn’t the railway be equally bold?