Alistair Darling, Secretary of State for Transport, talks to Andy Milne
18 Jan 2005
Whilst in opposition, Alistair Darling became the Labour party spokesman on City and Financial affairs, charged with assuring nervous city analysts that New Labour understood finance every bit as well as the embattled John Major administration.
After the 1997 election the member for Edinburgh Central became Chief Secretary to the Treasury. Later Mr. Darling headed up Social Security and before taking on Transport was in charge of the Department of Work and Pensions.
Mr. Darling knows all about money. He represents a welcome change from the hectoring histrionics of John Prescott and the anaconda rap of Stephen Byers. A safe pair of hands, some say. A hatchet man operating on the edge of darkness, say others.
The latest railways bill is widely held to be a fudge. Look more closely and it emerges as a product right from the heart of the New Labour conundrum. After two and a half years in the job, the Secretary of State for Transport has abolished Prescott’s SRA and backed the track authority, Network Rail, over boom-boom boys at the train companies. Wrong horse? As the government owns the race course, the analogy doesn’t hold.
Won’t the new system lead to a production lead railway? A railway run by engineers impervious to passenger pleas for better services and more trains?
‘Let me just step back a bit and deal with the question more broadly. What I set out to do last January (2004) was to simplify and streamline the structure of running the railways. There were far too many people and organisations involved in it - trying, but not pulling in the same direction. We needed to simplify it.
I took the view that the public and private sectors can work together provided that we can get the relationship right. The government, under any regime, whether it’s British Rail or the regime that’s just coming to an end, is the only body that can decide how much money it’s going to spend on the railways.
The amount of money you spend is pretty fundamental in determining the strategic direction. Civil servants will not be running the railways. Operational control will go to Network Rail but in this department there will be a new railways division which we announced a couple of weeks ago.
It will be headed by a director general and we are advertising that post at the moment. His sole purpose is to set the strategic direction. Day-to-day operation and decisions in relation to enhancements and so on, will lie with the railways. Network Rail has been given the operational responsibility for time-tabling. It will be working in partnership with the train operating companies who are the main interface with the passengers.’
Mr. Darling believes Network Rail will have to evolve into a front line railway company dealing with the public.
‘Network Rail will need to go through a change. Until now the focus has solely been about the track production side of things. They will be making changes to their own organisation and also to their culture because they have to be more outward looking now.
Their customers are no longer the train companies but are also the passengers. There is actually a difference between them.
Equally the way we have structured it (means) I hope, you have a situation where you have a common objective, (where) train operating companies and Network Rail maximise the number of people using the railways, making sure that they have a decent service.
Yes, it will mean cultural changes, but cultural change was necessary anyway. I think what you’ve got now, is a far more sensible arrangement than what you had in the past.’
How do you resolve the conflict between a train operating company, which is responsible to its shareholders and Network Rail, whose loyalties lie elsewhere?
‘It is perfectly possible to align their objectives. The train operating companies are in the business of getting more passengers on board because that’s where they make their money.
Network Rail is in the business of making sure that it can provide a service that will allow for more trains to run and for more passengers to use them. So they have a common objective, the fact that tocs have shareholders is neither here nor there. Yes, it gives them an incentive but then an incentive to provide a better service is no bad thing as far as I’m concerned.
What we’ve done, though, is recognise that they have distinct roles. Network Rail has responsibility for time-tabling. We have also, in parallel with this, set up joint operation rooms across the network.
It’s interesting, the one at Waterloo has seen a 35% increase in reliability. That shows you what can happen when track and train companies work together for operational reasons. Now, it’s in both their interests, and it’s perfectly possible, for them to work together.
Delays attributable to Network Rail are falling quite dramatically and it’s getting its costs back under control. So there’s a lot of good things happening.
What we need to make sure now is that we translate what we set out to do in the white paper into action on the track. We all have a shared objective of being able to carry more passengers on time as well.’
Yes, but how under closer supervision do you preserve the energy and vitality of the entrepreneur and would you want to?
‘I think some of the good train operators are making a real difference in terms of making travelling by train more attractive and more enjoyable. Yes, there have been other franchisees that have had their problems with cost or in terms of service, like Connex.
What I wanted to do was firstly take responsibly for what is my responsibility any way, which is money. Then make it much easier for the trains to run by removing and streamlining the structure. The structure is arranged so that train companies have every interest in maximising the number of passengers.
They take revenue risk, for example, so they have an interest in making sure they provide reliable, safe comfortable, trains and I was very clear as I went through the review that I wanted to preserve that.
Look at GNER which has done a very good job. Look at the service now, compared to what it was when BR had it. OK, it was well maintained and had relatively new rolling stock, but they’ve attracted many passengers, offered new deals and done all sorts of things. That’s (what) I want to encourage.
Similarly I know Chiltern is one of the smaller franchises but the way they have gone about recruiting passengers, offering park and ride and mini-bus services - that’s what we want to encourage. It’s all possible and the structure I have put in place will encourage that.’
How can you promote this commercial flair if in fact any serious strategic decisions are taken by civil servants at the new rail office?
‘I’ve seen this argument in your paper and in others, this idea, this attack on civil servants. The SRA, for the most part, is staffed by people who are doing civil service type jobs. If you take the Highways Agency, which is respected throughout the world for its expertise, they are civil servants. They happen to be employed by a non-departmental government body.
I think that what is important is that within the organisation there are people who know one end of a railway engine from another. I am confident that we will staff this organisation with people who have got the right skills.
Certainly as far as strategy is concerned, we do need someone who knows something about the railways. At the end of the day, only the government can decide how much it is going to give to the railways, whether it’s giving through this system or through a nationalised corporation.
In relation to expertise, we’re more than capable of getting advice on running the railways. Take the aviation industry. The CAA (Civil Aviation Authority) has people doing civil servant type jobs. Equally there are people there who have a lot of airline experience.’
Philosophically are you arguing that people can run businesses responsibly and effectively within the public sector like, for instance, South Eastern Trains?
‘What I’m saying is, there are people in the public sector who are highly competent and highly skilled. Obviously in an area like the railways, there is a specialism and you’ve got to have people who understand how the railway works.
Like the railway timetable, take that for example, that will be the responsibility of Network Rail. Ministers have never decided whether the 8.21 should run or not.
Looking at franchise awarding we will have to have people - a lot of them will probably come from the SRA - who understand the technicalities of it. This will be a much smaller unit but they’ll be doing a different job. They won’t be out shunting trains.’
So no micro-management, in fact you will leave the rail industry freer to operate on its own?
‘The railway industry will be free to do what it does best; that is the operational day-to-day running of trains. We in here, are responsible for strategic direction.
Only the government can decide on the shape and size of the railway. If a future government gets elected and says OK we’ve had enough, we’re spending half what we’re spending just now, that is a consequence. But that’s properly the decision the ministers make. The voters decide if they want us, or want somebody else.’
Frequently throughout the interview the question of cost and management of money comes up. Mr. Darling also spells out his commitment to value-for-money.
‘If we’re paying for (new rolling) stock we want to know what we are paying for. At the moment, when we buy new rolling stock, it is different from the stock we had before. There is an incredible amount of different rolling stock on our lines if you compare it with the aviation industry where basically there are three types of aircraft.
It is entirely proper for the government to say, look, we will pay for a rolling stock replacement programme but what we want is to get as much commonality as possible.’
Mr. Darling cites light rail costs as being ‘out of control.’ The ECML catenary system is similarly poor value where the ‘pylons are further apart than they ought to be.’
‘If you look at some of the problems on the railways just now, you can see what happens when you get penny pinching; where operational considerations were given second place to financial considerations and it’s a short term fix.
Some of the rolling stock that came on to the lines in the mid 1980s has had a lot of problems - they were built at a time when we wanted a very cheap option. Contrast that with the 125 stock and the HSTs which were extremely well built and are 30 years old now. They are pretty good trains....we have got be sure we spend our money wisely and get the best deal and do things properly.’
It is estimated that Network Rail’s debt interest repayment alone will top £800 million a year in two years time. You can see the interest payments alone eventually outstripping the one billion a year subsidy to BR.
‘Network Rail is debt financed. It’s got no equity, it’s debt financed. It’s not uncommon for governments to borrow - in this case it’s Network Rail that is borrowing. We finance it through the access charges and the reason it’s got that, is the amount of work it’s doing.
Last year it renewed 850 miles of track. BR used to do about 500, I think, then it was down to about 200 or so. It’s doing a lot more work and that’s one of the reasons its incurring more expenditure.
There are also historic levels of debt it acquired from Railtrack. RMT aside, there is not a great clamour to nationalise. I don’t think there’s any appetite out there on the part of any political party to (re-nationalise). Network Rail is probably the best model we’ll get for the railways.’
Do you travel by train?
‘Flying is quicker but you’ve got the hassle of going out to the airport. The ECML service is very good and I like it. You can get a lot of work done on the four and a half hours it takes to come down.
I’ve noticed the difference in the last few years or so. It’s much more reliable, some trains arriving ahead of time. I use the trains quite a lot. If I’m going out of London I use the train, I hardly ever take the car.’
Do you think your running of transport will contribute to your prospects at the next election?
‘I think what people understand is that successive governments did not spend enough money on the railways. They also understand that privatisation was completely botched. I think they also understand that the railway suffered some pretty traumatic accidents, Hatfield especially.
What’s interesting is you do hear people now acknowledging that it’s getting better. They’re not saying it’s fixed, because it’s not fixed yet, we have some way to go. Progress is frustratingly slow and I think if anyone stood up at the election and said I can fix transport for you tomorrow morning, they just wouldn’t believe them. People are frustrated, this is a frustrating job.
For the changes I need to make, the lead time here is much, much longer. The CTRL, for example, we rescued that in 1998, it’ll be fully operational in 2007 - nine years later. If you take money going into the Tube (the London Underground) - over 15 years - the first few years a lot of money will go in, and a lot of work will be done.’
Mr. Darling stresses that investment takes a long time to come out as demonstrable improvement on the railway.
It is said you were brought in, to calm the situation down.
‘I was brought in to stabilise the situation. I came in at the back end of Stephen’s difficulties. We now have a transport strategy which I think is credible and will work.
If transport is on the front page, it’s usually for the wrong reasons. What does annoy me is a lot of commentators especially people who (claim to be) professional commentators on the railways, saying there is still lots to fix.
But there are a lot of good things: Fact, the industry carried a billion passengers last year, the highest total for over 40 years. Fact, there are more trains running. These are good things and a credit to everybody who’s working in the industry. And that goes unreported by and large.’
Railways do not seem very good at communicating their triumphs do they?
‘Where the railways are not good enough and where they need to be far better, is actually telling people what’s going on. Not spinning it, but telling people if there is a problem what is the problem and what they’re doing to sort it.
For example, in an aeroplane when you arrive at Heathrow early the pilot will tell you. When the trains are early - well they should say so. Heathrow Express is actually very good at communicating with its passengers. I suspect that is part of the culture of the airlines. They will tell you very quickly if the train stops what the problem is within 30 seconds.’
The industry launched a campaign against assaults on staff. Yet staff tell us some managers are reluctant to prosecute. What’s your view on that?
‘I think there should be zero tolerance of assaults on staff. People are working in the public interest, doing a difficult job and deserve to be supported. I think their management should have no hesitation whatsoever if someone assaults someone; they should do something about it.
I hope the courts take this seriously, because I know it’s frustrating for managers if they go to court and the guy gets a discharge or a warning. I am very, very clear - somebody looking after the safety of passengers, is entitled to the protection of the law. It is the duty of an employer to look after their own staff.’
Alistair Darling is a slim, nimble, 53 year old. He keeps fit walking the hills in Scotland and gardening back home at weekends in Edinburgh, plus the occasional ski trip.
Does he follow a particular diet?
‘Watch what you eat and eat a hell of a lot less of it!’ Presently he’s reading a Tom Sharpe novel and a book outlining the history of Scotland in the 16th and 17th centuries.
Do you have a new year’s message for rail staff?
‘If you look back, a great deal has been achieved and that is to the credit of everybody who works in the railways at every single level. The challenge for 2005 is to make sure that we increase reliability and increase the service that we offer the public.
I am very optimistic about the future of the railways. I believe Britain’s railways can be restored and be up there with the best of them. We run a lot of trains and they are heavily used. It’s a tribute to all the staff.
Two big things - reliability and costs. We are spending an awful lot of money on this. It’s skewing this department’s budget. Cost control is absolutely central.’
At the heart of New Labour is a basic difference in world view. For the Blairite, the market will always be right. He inclines to the commercial, private sector, view of the world: Leave us alone to get on with it and we will deliver you goods and services cheaper and more efficiently than the state sector can.
The Brownites, so they say, accommodate a traditional socialist value system. The state needs to lead. If people are released to do their jobs well, the carrot-and-stick of the capitalist system matters not.
Alistair Darling holds a job wherein we can watch these ideologies play out. He is a man well versed in Brownite post-millennial treasury thinking. He who pays the piper calls the tune.
Can a not-for-profit Network Rail operate efficiently? Certainly BR did, offering us Europe’s best value railway. Yet the sheer energy of the private sector train companies continues to drive up ridership. Darling understands this.
Freight companies have had a similar oxygenating effect. However, in the other corner sits Railtrack. Such a disaster, in government eyes, that the unvoiced conclusion is that never again should a public limited company be let loose with something as important as a national railway system.
Can corporate state control aid and abet private sector flair? Is private-public partnership really feasible? The most interesting aspect of Darling’s rise to power is his apparent ability to reconcile these two schools of thought. The implications of such a success go far beyond Marsham Street.
Mr. Darling continued, ‘The big problem is that Railtrack lost control of unit costs. Think about it, if you say to a company - come and maintain my track and then tell me how much it costs - you will get a very large bill. They just farmed out responsibility.
There are good reasons for why costs go up. If you replace a third of the rolling stock, then you’ve got to pay for it, because it costs more than the 1960s stuff. Power supply south of the river - it costs you money. But I am optimistic about the future of the railways.’
Barely solvent readers at RailStaff will readily agree.