Focus: Transport Crisis: What a rotten way to run the railways

The new rail regulator, Tom Winsor, has threatened Railtrack with a pounds 40m fine if it does not improve. The company's chief executive, Gerald Corbett, insists it is doing all it can.

t last it looked as though the country's largest rail company was to be made to pay for the travel misery caused to millions of commuters. The new rail regulator, Tom Winsor, decided that time had run out for Railtrack.

He found it unacceptable that the company had failed to meet its own punctuality targets. In order "to concentrate their minds", Winsor, a no-nonsense Scot, warned the company that it could face a fine of more than pounds 40m unless it "raises its game" over delays. It became the row of the week.

Gerald Corbett, Railtrack chief executive, would have none of it. The two men appeared, separately, on Radio 4's Today programme. Winsor was on first. When challenged by John Humphrys later in the programme, Corbett took refuge behind a welter of "facts" and "statistics" which could serve only to confuse further the long-suffering commuter.

Even the experienced Humphrys could find little light in the replies. Extracts from the exchanges with both men are printed here. The Independent on Sunday sent both men the same list of questions on behalf of its readers, so that they could judge for themselves who was right. On Friday evening, although their offices had earlier intimated agreement, both men refused to reply. On the face of it a strange decision for them to arrive at separately.

The piggy in the middle is John Prescott, the Deputy Prime Minister, with special responsibility for transport. Prescott is desperately trying to reinvent himself as the commuter's friend. But he has a dark secret. While publicly welcoming the rail regulator's high-profile "enforcement order" against the company, the Deputy Prime Minister harbours fears that Winsor might eventually go a touch too far.

Superficially, the regulator's decision to administer a boot up Railtrack's corporate bottom was good news for a man trying to impress his cabinet colleagues and the public with his mastery of the transport infrastructure. Clearly Prescott was able to bask in reflected glory over Tom Winsor's "demand" that Railtrack get its act together. It gave the Deputy Prime Minister a timely boost to his political fortunes. The Old Labour bruiser has been on the ropes of late, seemingly unable to deliver on the Government's grandiose plans for transport.

Winsor's insistence that Railtrack improve train punctuality by 12.7 per cent by next March was tangible evidence that a Prescott appointee was getting to grips with the rail system at least. The Deputy Prime Minister congratulated the watchdog for using his powers to ensure that he "not only barks, but bites on behalf of the passenger". The decision of the regulator, himself a long-suffering passenger on Connex South East, went down well with the commuting classes of Middle England, a key target for Labour in the next election.

Those who listened to Radio 4's Today programme on Thursday will have heard Corbett, seemingly in a deep hole and continuing to dig furiously. The Railtrack chief executive traded statistics with his interviewer rather than show a modicum of contrition. He contended, for instance, that delays had been cut by 40 per cent in three years. He neglected to point out that by far the biggest proportion of this improvement had come during 1996-97, in the first flush of privatisation after the chaos of the transition period. Only 2 or 3 per cent has been achieved since.

There are strong grounds for believing, however, that in future John Prescott might prefer the regulator to bark long and loud before contemplating the taste of corporate flesh.

While he may well feel there is a conflict between public service and private profit, Prescott needs Railtrack to make money. The company's ability to borrow in order to invest in the railway infrastructure is enhanced by a high share price. And the share price depends upon the bottom line.

Significantly, the influential credit-rating company Standard & Poors has already revealed that it will be reviewing the status of the business because of the possibility of a "harsher regulatory regime". If the rating goes down, it will be more expensive for the company to raise the pounds 4bn it intends to borrow up to 2002 because it will be considered a higher risk. In total, Railtrack intends to invest pounds 27bn in the system over the next 10 years, but it is under mounting pressure to spend far more.

The Deputy Prime Minister needs a healthy Railtrack to make a fist of its potential interest in London Underground. The company is negotiating to run the infrastructure of the least troublesome "sub-surface" Tube lines. Railtrack will be expected to link the network to the national rail system and pay for much-needed improvements. It will also need deepish pockets to extend the Channel Tunnel Rail Link through Kent and into London. The group has been given first refusal on the project. Its ability to fund such new ventures will depend crucially on the results of a review of its operations being undertaken by the rail regulator which is due to be completed by 2001.

In appointing Tom Winsor as watchdog, the Deputy Prime Minister may have let a rather frisky genie out of a particularly high-octane bottle. There is nothing so frustrating for a minister than an inactive government-appointed regulator, but nothing so potentially embarrassing as one who always follows every dot and comma of his brief.

Appointed last month, Winsor is an incorruptible, fiercely intelligent Scottish lawyer who clearly believes that, unlike his predecessors, he is on a mission to prosecute his duties to the letter. Asked whether he paid due regard to the sentiments of those who may be called upon to lend Railtrack money, he observed that he could not conduct his business on the basis that he should refrain from "frightening the horses" in the City. In case there was any doubt, he declared: "The time has come to take action to make the privatised railways treat the travelling public with the same respect as they treat their shareholders."

He also made it clear that if the company simply cut back on investment in order to pay the penalty, retribution would be "swift". He believes there are a thousand and one ways in which the present service could be enhanced without millions of pounds' worth of investment.

He contends that passengers are often treated with "ill-disguised contempt". Is it so difficult to provide accurate and informative explanations of delays and cancellations, he asks. Is it an insupportable burden to treat passengers with courtesy? Is there an insurmountable problem in providing the right facilities at stations? Is it not possible for Railtrack and train-operating companies to co-operate rather than blame each other for the industry's shortcomings?

Nobody, least of all the Deputy Prime Minister, is yet contemplating the ultimate sanction against Railtrack. Removal of its licence would create far more problems than it solves. And even Tom Winsor regards such a move as "extremely unlikely". There is little doubt that John Prescott would like to renationalise the whole shooting match. Yet the Treasury would not countenance the billions of pounds of compensation that would have to be paid to shareholders. In any case, Tony Blair won't let it happen and so his deputy has to make the best of it.

More fat controller than commuter's friend.

THE REGULATOR SAYS

PERFORMANCE

Tom Winsor: Railtrack has been getting away with it for long enough, the days when Railtrack said it would do something and then failed to do it are now over ... I think they are giving passengers a poor deal.

TW: In January 1999 they told my predecessor they were on course to meet their targets. Ten weeks later they discovered they had made 2 per cent against a target of 7.5 per cent. That's just not good enough.

TW: The financial penalty is a graduated one, Railtrack's profits last year were pounds 428m, so if Railtrack improves performance at the same rate as last year, the financial penalty will be just over pounds 40m. And it gets less the better the performances are.

TW: This is not a matter of giving more time, they have had a lot of time already. They have failed to meet their targets, the public expects action, that's what they're getting. We are watching them month by month in any case in all their activities.

RAILTRACK SAYS

Gerald Corbett: We have to get it right for the travelling passenger, but the actual facts of the matter are that Railtrack's measured performance has improved by 40 per cent over the last three years.

GC: This morning 95 per cent of the trains in this country will be on time: 2 million passengers that are on the trains as we speak, 95 per cent of them will arrive at their destinations on time. The average delay per train is only 40 seconds.

GC: Without the profit, we couldn't have doubled the investment, fantastic growth, better safety. The profits are the lifeblood ... [for] a better performing railway ... actually safer than it has ever been.

GC: I'm not saying everything's fine. But I am giving you the facts. We are not complacent. We are on the case, we are totally committed to giving a better railway, we're going to give our best shot to meet this target.

THE VIEWS ARE DRAWN FROM INTERVIEWS BROADCAST ON BBC RADIO 4'S TODAY PROGRAMME.