Posted 4th November 2010 | 7 Comments
Stagecoach chief condemns wasteful job duplication
THE chief executive of Stagecoach Group has made a strong plea for vertical integration to be restored on the railways. Speaking at the annual conference of the Derby and Derbyshire Rail Forum, Brian Souter said the present division of responsibilities between train operators and Network Rail leads to wasteful duplication of jobs.
Mr Souter said his group had stripped out £90 million of unnecessary expenditure at its rail franchises over the past two years, although he conceded that his company had made mistakes in the past.
"When we first took over South West Trains in 1996, we treated it like a bus company. Our reduction in the number of drivers and the resulting disruption scared us skinny, and after that we backed away from widescale economies.
"But we have learnt that there are substantial savings to be made, particularly among some middle managers who neither have a grasp of strategy nor know about the detail.
"However, we need to go further, and a major source of waste is the division between us and Network Rail. Everything takes so long: there are so many different people involved. Network Rail should not be operating the railway, but be reduced to a property company. We need a return to vertical integration if Sir Roy McNulty's ambition of a major reduction in railway costs is to be realised."
Mr Souter also accused the Department for Transport of helping to waste money.
"Instead of getting on with the job, we find we have to write essays for the DfT. We're not particularly good at writing essays: we run trains and buses. We reduced the number of reports we were supposed to produce by 40 per cent, and nobody questioned why they weren't being provided.
"innovation is very difficult, because there is no incentive. We introduced Megatrain discounted tickets, although they were technically illegal under the rules. When it succeeded everyone signed up to it.
"We are also proud to buy British whenever we can, and we have been buying British-built double deck buses that are world leaders. The railway supply industry needs to be at the cutting edge -- and sometimes it isn't."
Reader Comments:
Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.
Christopher Thomas, Burton on Trent, U.K.
Dont make me laugh, my local Station, Burton on Trent, is a East Midlands Trains (Stagecoach) looked after Station. Stagecoach have spent nothing on the place except for a new car park sign when they put the parking charges up!The station is a discrace. Most of the year the toilets have been out of order, No real time departure board, no refreshments, staff not replaced when they have left so station is often unstaffed with no waiting room after 16:00 hrs. The station is a 1960s concrete slum. Fares keep going up with nothing to show for it. God help us if TOCs like Stagecoach look after the infrastructure. Yes Vertical Integration ASAP but with the whole entity nationalised again.
Railwaylad, Glasgow, UK
The money thats been wasted on TOCS & FOCS if given to BR in its day then we would have a world class railway.
Instead as Mr Souter says we have bus companies trying to run the railways with their method of workings that results in less staff and long distance trains being cancelled when there are no train crews.
The fragmentation of the railway is just not working how many more millions of pounds needs to be spent on different FOCS and TOCS painting stations and trains in there wonderful liveries when underneath its the same brand no matter who is in charge.
We have an electrified railway on both west and east coast and what happens they buy in canadian diesels scrap the electrics put them back to the ROSCOS who flog them to Bulgaria!!
philip russell, carlisle, united kingdom
Its a bit rich mr souter being so critical of the inefficiencies in other parts of the industry when his south west trains franchise commendably does run mostly clean ,modern and punctual trains but has made no progress at all on efficiencys such as driver only operation and virtually none on smartcard ticketing and runs D.M.U.s on services which should be run by the more efficient regenerative electric traction this leads me to believe this franchise is largely operationally an anacronisim
mr merton, london, uk
Cut down the number of train train companies to less than three [ a single company might be best ] and fully integrate the entire system . The current arrangement is not delivering good value for money to passengers . Every government seems to think it can fool the public. Just like in the story "The Emperor's New Clothes" the public are told we must be able to see the 'improvements' or we are blind . The truth is that with sky high fares and old, overcrowded trains the trappings of improvement are scant if not totally illusory and teh travelling public know it despite all the hype of the TOCS.
H Harvey, Birmingham
Many rail schemes are justified on a cost benefit analysis basis.
Many of the benefits are savings that do not appear as revenue as the scheme is introduced and throughout the life of the scheme.
Similar arguments apply to road schemes. The difference is that a road scheme has no specific balance sheet and is lost in taxpayer funding of roads.
H Harvey, Birmingham
Mr Souter has clearly stated the premier reason for the high cost of the railways that is job duplication or should he have said trplication or perhaps multiplication.
Under BR this occured but not to the extent it occurs under a franchised privatised railway.
We have about twenty TOCs thus twenty seperatee sets of lawyers, accountants etc. Then there are the vehicle leasing companies with all their finance and legal sdepartments and then Network rail with all its legal finance and engineering departments and then there is the D(a)fT and all its hangers on.
All produce reams of paperwork and take profits/income from the railways and frontline operations. Add to this the virus of ambulance chasing lawyers, consultants (McNulty etc) its no wonder support for rail has increased.
Then we have the enormous cost of engineering work with each scheme requiring 'loss of earnings' paid to the TOC and the cost of replacement buses further payments to the TOCS (most are bus operators) all without a penny going in to real rail improvment.
To any rail capital project the Treasury (D(a)fT by another name add the optimism (surely the wrong word) adding 60% to the cost of the scheme before it goes to bidding by contractors who are 'guided' by this figure and consequently there is inbuilt cost inflation for all schemes.
When BR was 'abandoned' controls were disbanded, then TOCS and Railtrack/Network Rail set up seperate 'controls. Progressively Network Rail and TOCs are setting up controls 'in the same room' and claiming they are a fantastic innovation of the privatised railway.
Historically rail has been deprived of real investment whilst ita competitors have benefitted from enormous investment in roadsand airports all subsidised by the taxpayer. Ny engineering based industry will confirm that if investment/maintenance is cut then what cost a penny yesterday will cost a pound tomorrow. Firebrigading will increase and service quality deteriorate circo Railtrack.
Much of the investment now going into rail should have been made in the closing decades of the last century. That we are having to do them now rather th than then results in projects that would have cost hundreds now costing thousands.
For instance the WCML upgrade cost £10billion a 60% bias (I think it fair to include this) would have taken the cost down to £4billion. Take away engineering cost inflation would probabl take the cost down below £1billion the figure BR first thought of. Then we have the 'sillies' created by the HSE and railway 'overengineering' (look at the steel used in the marvellous modular car parks where in principle two cars weighing perhaps 4t require 3 massive gsteel girders or am I wrong) A similar argument could be udsed for other rail projects in particular some of the cross platform bridges and ramps that make station access look like a penetentiary in the USA..
One could go on and on but now we have one more McNulty of aviation fame under a Transport Minister of 'no more war on the motorist' fame is being tasked to indentify these costs, Whats the betting privatisation, government interference (privatisation made it worse) safety stupidity will not be identified as major problems.
John, Luton, UK
Think I've perhaps got a better idea, Dump Scouter and his fat-cat "shareholder value" values, strip Stagecoach of its Franchises and return the lot to a public operator who's not out to make a quick buck by running down asses & stripping services. Clearly the unwashed Scouter has not tried to travel from Luton to the north lately..... his lot have removed all the through trains so increasing journey times on the mistaken belief that everyone wants to go to Corby..... that place at the end of a branch line from Kettering!