Shadow transport secretary Chris Grayling talks to Andy Milne

January 16th 2007

Friend or foe? That’s the question most career railway staff ask the new Conservative team under David Cameron.

Ten years ago the John Major administration privatised Britain’s railways. 25 train companies, almost 400 supply companies and Railtrack Plc. emerged from British Rail. Despite brave words most analysts believed it was a non-too-subtle plan to get the rail industry and its massive subsidies off the government’s books.

Many who sailed under the double-arrow logo still mourn the passing of BR. Much to everyone’s surprise the new rail industry flourished, notching up record ridership and a big increase in freight volumes. Unhappily the structures bequeathed by the Majorettes proved inadequate to the task of increasing capacity and maintaining assets. The contractual nature of the emerging industry served it ill.

Chris Grayling, Conservative shadow transport secretary, shot to prominence last year, when he admitted that separating track and train might have been a mistake. Both he and Cameron want to draw a line under the past and the successive night shifts that have bedevilled Conservative fortunes since Lady Thatcher’s departure.

Focus is on the future

He’s a tall, quiet man, yet speaks bluntly. ‘It is no more sensible to blame David Cameron and myself than it is to blame Tony Blair for the Winter of Discontent,’ insists Chris Grayling. ‘The truth is today’s Conservatives have come to prominence since 1997, since rail privatisation and my focus is on the future not on the past. I am not going to get into the debate over what happened ten years ago.’

More startling still is his avowal of the railway cause. What, he asks, is going to be, ‘right for the passenger, the travelling public and those who work on the railway. How do we ensure our railways are successful?’

Rail review

As a preliminary the Conservatives are conducting a rail review. Normally these are seen as excuses for putting off hard decisions - usually about spending money. Will he have another one should he and his friends win the next election?

‘My aim is to have done the reviewing already. That’s why we’re doing this work now. I’ve ideas tucked away of things we can do straight away and how they can be funded.’

His emerging strategy is a two-stage process. First go for quick-wins, gauge enhancements, bottleneck relief, longer trains and platforms and all those things railway people tell him should be happening now.

‘My focus in the first parliament is on things we can deliver within five years. I don’t want to have studies that give us grand ideas for the future, I want to get things done. A lot of the work I do between now and the general election will be on shaping a quick-win strategy and looking at how best to finance it.

Again I think the resources for a quick-win programme are there within the budgets the rail industry already has. People around the industry I talk to say costs are too high and everything is too complicated and too convoluted. The point of the rail review is to offer a blueprint for a more streamlined, more joined-up industry, that can get some of these things done quickly and can generate the efficiencies that will free funds for some of these things to happen.’

Decide what you are going to do, and do it

Grayling is coy about committing to long term major projects like high speed rail. ‘I have a self-denying ordinance that I am not going to commit to any individual transport project whatsoever until after I have seen the spending review next year and I have a clearer idea of how much money is in the kitty.’

There are in fact two main reasons for the ordinance. First, as he says, public finances are in something of a disarray. The fiasco in Iraq and the wider bill for re-equipping the armed forces and better funding the war on terror has yet to be paid.

Secondly Grayling represents Epsom and Ewell, south of London. In his maiden speech to the House of Commons in 2001 he alluded to the proposed path of the freight-only Channel Tunnel Central Railway. It cuts right across his constituency and although it is never likely to be built, the proposal itself has depressed house prices there.

Time and again in our interview Grayling talks about quick decision making. Decide what you are going to do and do it. No dithering. Already existing government ministers appear to want to see planning application procedures speeded up, whether for airports, roads or railways. He is in no mood to fling out ideas for high speed rail links and scupper housing markets throughout the Midlands. Having said this, he wholeheartedly commits his party to expanding railway capacity.

Improve capacity

‘Longer term there is no doubt in my mind that we are going to have to do things that significantly improve capacity. We are going to need some bigger projects and again part of the work we are doing now is to look at what we should be doing.

I’m not certain what I will inherit. Will the government back Crossrail next year?... Will we inherit Thameslink in construction or Thameslink on the shelf gathering dust. Will we inherit Birmingham New Street in the process of being done up or will it be on the shelf? It is difficult to be certain what that programme will look like, until you know what your are going to inherit.’

Grayling is only too well aware that doing nothing is no longer an option. Capacity is the central challenge for the next government and his assiduous engagement with the industry underlines this at every step. He has certainly taken note of industry determination to build a high speed rail link between the north and the south.

‘We will look seriously at high speed rail. We think it is much too early to write off high speed rail and we’re going to be doing a detailed analysis of a number of different options including high speed rail over the next year or two. We are not persuaded by the argument that high speed rail has no future.’

Grayling is clearly aware of the daunting price tag on high speed rail, but the sub text is interesting

‘It’s a big project and it’s a very expensive project. Our motorway network was built up over a generation. Our railway network was built up over two generations. It doesn’t have to be a big bang. For Eddington to say we can deal with all our future transport needs on our existing infrastructure I don’t believe is right. The irony is that Eddington’s brief is for 2015 and beyond. I would argue that we can cope with our existing infrastructure and some wise development of it over the next 10-15 years, but beyond that it is highly unlikely that we will be able to.

If we are going to have a greener transport strategy, we can’t possibly rule out things like high speed rail. Every other major country is either building or seriously looking at building high speed rail lines.’

HSL can be built, it can be independently funded and it can be built bit by bit as our motorways were. This is very different from simply being told to forget it for the time being.

‘The railways are facing a crisis of overcrowding. We have a situation where the official forecast shows 30% more passenger growth between now and 2014. There is no extra capacity for these people to travel on. Network Rail has put forward a programme to do something about it and that requires effectively an £8 billion cheque from the taxpayer at a time when the taxpayer is already contributing a record amount in terms of subsidy to the industry.

We have a situation where the experience of the travelling public over the next seven years is just more and more cattle truck conditions. You see the practical consequences of that in, for example, the South West Trains franchise plans which involve three things: ripping out seats on inner suburban services, ripping out toilets on trains to create more standing room and the replacement of the 2+2 long distance relatively modern express services they’ve got to the south coast with 2+3 more cramped suburban trains for long haul journeys. They get to cram more people in.

So it’s: ‘how many more people can you shoe horn into the same amount of space.’ I think as a strategy for the next seven years, that’s not acceptable.’

Improving Britain’s railway capacity

The Conservatives are now looking at three ways of radically improving Britain’s railway capacity. First is the longed for high speed rail network, a TGV style 180 mph grid. Secondly is the Maglev idea, operating in China but recently troubled in Germany. Thirdly comes the increasingly attractive idea of a freight only rail network, espoused along with HSL, by the Railway Forum’s erstwhile chief Adrian Lyons.

An openness to new ideas - although none of them are new - is refreshing after the strictures of Eddington. However, is it so much hot air? Won’t the industry itself have to radically change to move faster?

‘Do I honestly believe that the current industry structure is capable of delivering faster decision-making and better use of its money by operating in a more efficient way? Actually I don’t and most people in the industry I speak to say they don’t. I am not about revolution. I think this has to be evolution but we’ve got to get an industry that uses its money to deliver some of the capacity improvements we need and takes decisions about them quickly.

That’s my aim - if we come into government in 2009 I want to have done the reviewing already.’

Central to modern Conservative philosophy is a desire to set people free to do their job effectively.

‘I think we have to look at the industry collectively. I’m very reluctant for government to micro-manage these processes. When you look at today’s railway few people understand the fact that ministers have more operational input into the day-to-day running of the railway than they did in the days of British Rail. You have civil servants writing train timetables. You have ministers taking decisions about whether stations get Sunday services or not.

There’s much too much political involvement and it’s not a grand strategic vision of the industry. The government has lost sight of great strategic visions. They’re trying to decide the day-to-day configuration of services which is not where they should be at all.’

Should government get out of rail and let the private sector do its stuff?

Grayling argues that the debate of which sector should run industries like railways, the NHS and the education system has moved on.

‘It’s about rail professionals running the industry. You’ve got to remember the people privatising the railway were privatising a very different railway to the one that’s there today. They were privatising a railway that was in decline and not expected to grow.

Nobody seriously expected the kind of dramatic recovery that the industry has experienced. I think it is too simplistic to look back at rail privatisation and say that was right and that was wrong. There is no experience anywhere in the world of a passenger driven railway which is completely stand alone profitable and has no government support. So it’s unrealistic to say the government shouldn’t have a role; but what this government has done is swing completely the wrong way.

From a situation where government intended to move railways away altogether from the public sector, which clearly didn’t work, this government brought them back so far that they’re trying to run the details of every service everywhere on the network which is insanity.

My point is: I want the railways run by rail professionals. I want ministers there to offer a strategic vision, to provide financial support where it’s necessary, to encourage the growth and development of our railways but not to tell rail professionals how to do their job. That’s the important difference and yes we want private sector capital in the railways; we equally have to accept that rail is not the kind of business where private sector capital can do the whole job so I can’t envisage a situation in the immediate future where the railways do not require public subsidy. There is no intention on our part to stop subsidising the railways.’

Grayling sees railways as part of a wider solution to the challenges of modern Britain

‘It seems to me self-evident that we are a small island with population pressures. We probably don’t really want to carry on building endless housing estates in open countryside otherwise we’ll have no countryside left. So we have to attract people to live in our cities and regenerate our cities where they are run down.

An essential part of getting people to buy an old Victorian house on the edge of Liverpool city centre and do it up rather than go 20 miles and buy a new house on a new estate is going to be things like education, law and order and transport. Self-evidently, to get more people to live in our cities you need good public transport. So many other cities in Europe do urban and public transport better than we do.

The question I always ask government is: How come other European cities manage to make these things work? And we can’t? Why did the government say to cities like Leeds and Liverpool, yes this is the right thing to do, and encourage them to spend tens of millions of pounds on initial works and then pull the plug overnight. I appreciate that there are cost challenges but what the government has done is pull the plug on these projects and leave nothing in their place. If one form of modern mass transport in a city is not right then you’ve got to do something else. Not leave a vacuum.’

Grayling’s instinct is to create a bold railway structure that costs less and does more

‘We have to simplify structures. This is where you get back to the rail review. My view is that people want somebody to be in charge. They want an industry that can move fairly quickly and be nimble in taking the decisions that need to be taken.

I think we have to get rid of some of the nonsense that makes the industry more convoluted. At the moment we have train operating companies on one side, Network Rail on the other and a web of contracts in between and that web undoubtedly adds to cost. You discover silly little examples - the two metre rule. The permutations of a more integrated industry go from one extreme - the full creation of regional railway companies a a pre-1948 back to virtual teams operationally integrated on a day-to-day basis.

I’m not pre-judging where on the path between we would seek to stop. I am also very clear what the railway needs is evolution not revolution. No one wants overnight upside down change. A joined-up industry is more likely to deliver the kind of improvements that we need, track and train effectively coming under one umbrella.

Now whether that umbrella is a virtual joint venture or a single corporation - it’s about having the same team of people doing the whole thing. The aim of this review is to move towards a more integrated railway.’

Has franchising any future?

‘The whole franchise structure at the moment is completely flawed. It comes down to the changed nature of the role of government. Franchisees are no longer bidding to run a railway business. They are bidding to operate a timetable on behalf of government. The government specifies in minute detail what services run, where, when, how, which stations get a service and which don’t. This is micro management gone mad.’

‘You’re saying to a company like GNER - this is actually Sea Containers’ only franchise - you have to bid again blind for your current business, but this time round you have to bid against a very detailed specification so your room for manoeuvre as a business is very limited. But we want you to bid as high as you can and you need to outbid your competitors.

GNER is in the position where if it doesn’t win, its rail business disappears in a puff of smoke overnight. It loses the whole lot. So inevitably the incumbent in that position is more likely to make heroic assumptions and bid too high than would be the case if they had some degree of flexibility and a process that was more realistic.

The only way that a company in that situation has any room for manoeuvre is by pushing fares and other charges up or by finding ways to cut costs. There is no question of growing through new innovative ways because they’re not allowed to. So what happens? GNER bids high, hangs onto its business, pushes up unregulated fares, car park charges, makes heroic assumptions about passenger growth that aren’t fulfilled and lo and behold it’s in difficulties.

This is not, it seems to me, a smart way to run a railway. I would much rather have an approach where the companies are incentivised to grow the railway as rapidly as possible, to share the proceeds of growth with the public sector, but where we’re not actually putting them in a position where - as South West Trains are - they have to rip out seats to make ends meet to pay money which will ultimately go back to the Treasury.’

What will you do about the little loved DfT?

‘I think things need to change in the DfT. There needs to be a culture of decision making. There needs to be a laissez-faire culture. What we don’t want is the Railway Directorate of the DfT acting like it is in operational control of the railway which is how it behaves today.

Do I want more business experience in the DfT? I think there are some very good, very hard working civil servants - it’s as much about how they are led and what expectations they are given rather than their own personal abilities. If you create an environment where ministers say, ‘I want you to run a railway,’ which is what is happening and where they are actually in many ways discouraged from taking risks, where they are in many ways discouraged from handing out responsibilities, then you won’t get a railway that runs as well as it should do.

The DfT should be there in a strategic role, it should be there to say this is the direction in which our future transport strategy needs to head. As a country this is what we’re going to need railways to do. They should be about setting expectations, not doing the entire job.

That’s the big philosophical difference between ourselves and the Labour Party. Labour’s natural instinct is to interfere in everything that happens and try and do it themselves. Ours is to do the opposite.’

Chris Grayling is happily married with two children. He has worked for the BBC and Channel Four. Later he ran a couple of small production businesses and then went off and spent two years working in a change management consultancy to get international experience.

How does he relax?

‘Over the last two years an awful lot of time has been spent standing on muddy touchlines watching my son play football on a Saturday morning or taking him to Old Trafford on Saturday afternoons. Last season we went to about a quarter of Manchester United’s home premiership games.’

Does he have a new year’s message to people working in the rail industry?

‘My sole interest is in delivering a stronger railway that carries more passengers. The Conservative Party will champion rail because rail is necessary for what we want to do for the environment. I understand that people will look back to history...’ But he urges, ‘Judge us on what we say, the knowledge we demonstrate, and the ideas we put forward. It is not the intention of the current Conservative team to preside over a decline in the railways - just the opposite. I want to see the railways bigger, stronger, more substantial and more broad-ranging.’

Friend or Foe?

On the evening of the day we met, people from all over the rail industry went to bid farewell to Adrian Lyons, erstwhile director general of the Railway Forum, at a reception in central London. Rail people mingled with press officers, managers and journalists.

Grayling turned up, quiet and tall, as Chris Green, chairman of the Railway Forum made a final presentation to Lyons. In his reply Adrian Lyons alluded to the many friends he and the rail industry share. Grayling, it appears, wishes to be counted amongst them.

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