Sam Sherwood-Hale, spoke to Chris Cheek about his time in the transport industry, what a post-Covid railway will look like and how to fix the system.
Transport consultant Chris has worked in the public transport industry for over 48 years, spending the last 33 as an analyst and consultant. He is Managing Director of 2FM Limited and Managing Director of Passenger Transport Intelligence Services, and a regular columnist in this magazine. Three years ago you wrote about the end of Virgin Trains East Coast.
Three years ago you wrote about the end of Virgin Trains East Cost. Could you have predicted the current situation back then, with the Emergency Recovery Measures and the overall state of disarray?
I think I said at the time that the Virgin problem was the result of DfT inflexibility and that had been building up for a while. If you look at the two previous East Coast problems they were of a different order, the second GNER franchise came to an end because the parent company was in financial problems and the same is probably true with National Express. The reason Stagecoach felt entitled to be annoyed, was that the government specifically said in the franchise contract that they recognised there were many uncertainties ahead therefore this agreement will be flexible. And then all these accusations about over massive over-forecasting came out, but once you look back at the numbers from the previous three years you can see that they missed the forecast by about one and a half per cent. Now if you told me that I had to forecast to within one and a half per cent and if I missed the target that I would face a fine of millions of pounds, then I wouldn’t do the job either. The idea that you could predict the future almost exactly and build a business on that basis, with no flexibility whatsoever, was frankly ludicrous. That was the moment that everyone realised that the franchising model was dead, if you had to have that level of inflexibility.
When do you think we will have an idea of the kind of society the railway will be serving in a post-Covid world?
People of my generation were brought up to own things. Whether it was singles or LPs or videos, part of life was going to a record shop and coming out with an LP and taking it home to play. Nobody is bothered about that anymore, future generations won’t own all this stuff behind me. And I think that is beginning to change people’s attitudes towards car ownership. So whatever happens with the way a car is fuelled, it is still a hulking great piece of metal taking up space on the road. I suppose this is what Mobility as a Service is all about, as much as I hate buzzwords!
Do you anticipate less travel as more people work from home, or are those predictions overblown?
I think there will be less travel overall, but the danger is it all becomes less predictable. So you’re no longer see legions of commuters travelling down to the station in bowler hats looking like Reggie Perrin travelling on the same train everyday to the same destination. Public transport is good at corridors, we’re not good at diverse trip patterns, which is almost an inevitable consequence of what we’re discussing. In terms of the future, I have been looking at the numbers and if you take into account all the different jobs that won’t be able to be done at home, or a hybrid system where some of us do three days in the office and two at home, then you would probably lose about twenty per cent of existing commuters – and all that would do is take you back to 2014 levels of demand.
Do you believe there is more of a case for HS2 now, or less?
The big elephant in the room here is net zero. Particularly the latest carbon budget which the committee on climate change produced just before Christmas, they are now talking about reducing car mileage by nine percent by 2035 and by 17 per cent by 2050. The way the maths work means that nine per cent is 66 billion passenger kilometres, which is roughly what the railways carry at the moment. So, what you’re saying is you’re going to take the equivalent of the current patronage of the railways off the roads and onto bikes, onto the public transport network, or staying at home because there is no longer a need to travel for work. If all that 66 billion passenger kilometres switched to railways, that would double patronage. If you think that it is politically feasible to get people out of their cars to that extent, that is what is coming down the track – and it will happen roughly when HS2 is due to open. So there will always be the opportunity to gain more patronage, and if we are to deliver the commitments on climate change laid out by the committee then we are going to need much more capacity on public transport – and that’s the argument that’s still in favour of HS2.
What do you make of the anti-HS2 movement, that is mostly online only? Is it an example of ill-informed media causing confusion or something more nefarious?
We are as a country, adverse to big projects – we’re suspicious of them. I’m just old enough to remember people saying the Victoria Line would be a white elephant. Can you imagine life today in central London today with it? So there is always this discrepancy between saying ‘oh we don’t need anything’ and people saying that we need dynamic new modes and all the rest of it. So actually, it is all about opinions and how you view the future.
Do you believe we are going to return to a single, vertically integrated, publicly owned railway?
I wouldn’t go that far, but a reform to the franchising process. They haven’t published the Williams Review, it has been imminent for two years now, if Williams recommends the recreation of the SRA and contracting out operations to the private sector still, then it is not going to be a single integrated railway as we had prior to 1993, it will be a series of operating contracts, with the government taking the financial risk. But that is a modified form of franchising where the risks lie with the government and not the operators. The Treasury is not happy about that and frankly, I don’t blame them. This is the difficulty with any essential service, you can contract it out to a certain extent but ultimately there is an overriding necessity to keep providing the service so if the operator does fall into difficulty somebody has to step in and do it. This was recognised in The Railways Act in 1993, the detailed procedures for step-in in the event of insolvency were laid out in the legislation right from day one, and arguably have operated quite well. All of the transitions from private sector to public ownership have happened relatively smoothly. One of the highlights of my consultancy career was helping two light rail bids in Nottingham and Croydon, and my favourite memory in each case was the party to greet the first tram. For a consultant to see the physical representation of what you’ve been working on for months is a big moment. The lesson from Croydon was that you can’t have the private sector taking the revenue risk if the public sector is setting the fares. In Croydon as soon as it opened London Transport (as it was then) decided to have a premium between bus and tram which blew the revenue forecasts out of the window and caused all sorts of financial problems for the operator, which ended with TfL buying the contract out. So there are all these complexities and incompatibilities, so if you want the private sector involved then you’ve got to recognise that somewhere along the line the private sector needs to cover its costs and that requires flexibility.
If we do end up with a hybrid system, what incentives are there that should be carried over and what new ones can we introduce?
I think the ultimate incentive at the moment is that the operator is the one taking the revenue risk, if that is taken away there has got to be an enhanced penalty system for poor performance. Which means we go back to the very early days of attributing blame for every incident and spending huge amounts of time arguing over whose fault a delay was. You’ve got to introduce some element of revenue risk as an incentive for the operator to perform well, one of the weaknesses of this system is that the tendering authority becomes the customer and not the passenger. This means you’re going to have a revenue sharing mechanism which will cause all sorts of arguments over revenue, so it will be just as complicated as franchising.
You have 50 years of experience in the public transport industry, do you see any parallels between the current upheaval and other periods in the country’s history?
Typically, in life change is much more incremental and you don’t notice it happening. In transport terms the biggest moment of change might be 1994 when BR was split and then fragmented, – but the actual process took four years from White Paper to legislation to actual implementation. So to do it in literally the space of weeks and to not know what life will be like when we come out the other side is scarier.
Do you think a passenger or someone who is not involved in transport policy would have experienced the change in the same way back then as they are now?
From a public point of view, both those big changes didn’t really affect them – the train continued to turn up and after a few months it changed colour. I suppose the only historic equivalent would be wartime, but then the war didn’t destroy demand it just made it impossible to cope with.
You graduated in History; how did you first get interested in transportation?
Transport was always there, I took the train to school everyday and it has been a lifelong thing. I initially wanted to do economics because there weren’t any transport courses back then really, then at the end of the first year I switched to history as that was a safe option. At the age of 14 I learned about the bus industry management training schemes, then run by British Electric Traction (BET), later by the National Bus Company, and that became my ambition.. So, transport has been a lifelong thing, and I count myself lucky that I’ve always done what I loved and loved what I have done. It’s taken all different forms like consultancy, PR and journalism and running award schemes but it’s all been about transport.
You’ve published four novels since 2018, are you working on another?
There is a fifth one due out any minute! One is a series that is very related to transport, it’s about a Yorkshire bus driver who moves to London. But I’ve been writing fiction since I was 17 and in many ways all my work in journalism and PR and consultancy has been about telling stories.