When Andrew Haines takes up his new job as chief executive of Network Rail, which owns and manages the UK’s railway infrastructure, on Tuesday he will be joining an organisation at a low ebb.
Blamed for a timetable debacle in May and close to its borrowing limit, Network Rail is counting on Mr Haines, who joins from the Civil Aviation Authority, to resuscitate its fortunes.
The Department for Transport (DfT), which has ultimate responsibility for Network Rail, said the public body “needs to do more to improve operational efficiency and reliability for passengers”.
Mr Haines will also need to reverse slumping public satisfaction, which has fallen from 79 per cent in 2008 to 73 per cent in 2018, according to Which?, the consumer organisation.
These are three of Mr Haines’ major challenges.
Make the trains run on time
In May, the largest timetable overhaul in years collapsed, leading to thousands of cancelled trains, several emergency timetables and the resignation of one train operator’s chief executive. Transport secretary Chris Grayling blamed Network Rail, saying it was “far too late in finalising the planned timetable changes and they have left the rest of the industry struggling to catch up”.
Network Rail bore double responsibility for this. It runs the country’s timetabling, reconciling requests from each train operator. But it also upgrades the railway, and its failure to finish the electrification of the Manchester to Bolton line on time meant that operator Northern had to radically redo its timetable with little notice.
In a July report, the Office of Rail and Road (ORR), the railways regulator, highlighted a lack of communication between Network Rail’s infrastructure projects arm and system operator (its timetabling division), as one of the causes of May’s chaos. At the time, Network Rail said the change “was the biggest in living memory with over 4m changes needed” and blamed “other factors” rather than late timetables.
Mr Haines, who will earn £588,000, worked at Railtrack, Network Rail’s predecessor, in the 1990s before joining train operating companies, so he is familiar with the system. Mary Grant, chief executive of rolling-stock company Porterbrook, called him “a very experienced operator” who understands “the pressure . . . on train operators” when the network is not running to time.
Establish new franchise models
When Mr Grayling stripped Virgin and Stagecoach of the lossmaking East Coast mainline franchise in May, he renationalised it. But he said that from 2020 he wanted the franchise to become a “new public-private partnership”, where the operator and Network Rail worked together more closely.
The idea has been light on specifics so far, however. Appearing before the parliamentary transport select committee in July, Mr Grayling talked about “joint ways of working” and avoiding “the conventional paradigm”.
Lilian Greenwood, the committee’s chair, told the Financial Times that Mr Grayling’s lack of clarity about the partnership meant he was “pinning a lot on Andrew Haines . . . to deliver this new approach”.
Paul Plummer, chief executive of the Rail Delivery Group, which brings together train operating companies and Network Rail, said the UK railway network was already effectively a public-private partnership given the role of Network Rail and the promises of £14bn in private investment into the 2020s.
Survive on straitened finances
The ORR said Network Rail’s debt increased by £5.6bn to £50.4bn in 2017-18 and it will probably “use all of its available borrowing” in the next year, namely the £4.1bn left of a £30.9bn loan facility with the DfT. “In practice, we expect that the company would need either to request additional funds from the [DfT] or defer further renewals work,” the ORR said.
Peter Loosley, policy director of the Railway Industry Association, a trade body, said Network Rail was in this position because the Office for National Statistics had reclassified it as a public sector body from 2014. “In the past, it would have been able to raise money on the markets for shortfalls,” Mr Loosley said. Now it is subject to government accounting rules.
The DfT is not expected to extend the loan facility. Works that could therefore be deferred include electrification until a new five-year “control period”, with its own budget, begins in 2019. But delays could potentially threaten timetable plans and leave train operators with the wrong rolling stock.
One way Network Rail is trying to raise money is by selling its thousands of railway arches, often now inhabited by small businesses. The portfolio could fetch £1.4bn, but tenants have objected and are vigorously campaigning.
Network Rail declined to comment on the difficulties facing Mr Haines.
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