On a mild, wet February morning, a work gang of 10 men moves around a stretch of railway line near the village of Goostrey, between Crewe and Manchester airport. Against the extreme green of fields and the whipped grey of rainclouds their synthetic orange work suits shine out violently, like figures in a psychedelic episode. It’s hard work. Using thick, weathered, yard-long metal-capped staves, they crank jacks which raise a stretch of rail, along with its concrete sleepers, up off the bed of stone chips the railway rests on. A bulldozer on rail wheels purrs up on the other line and begins pawing at the stones. The men are to pack fresh ballast in under the rails with hand shovels.
These railway workers are engaged in the single most expensive non-military task ever undertaken by Britain alone: the modernisation of the west coast main line. A project that was supposed to cost roughly £1.5bn will, by the time it is finished in about 2008, two years late, have consumed almost £10bn, much of it from the taxpayer. That is £3bn more than the White House considers Nasa will need to send men back to the moon.
The bizarre story of those multiplying billions, reconstructed here from dozens of interviews and documents, some never before made public, ran parallel to the bloodier history of fatal accidents on the railway since privatisation, and contributed, in equal or greater measure, to the ignominious end of the Railtrack era. It is a tale of incompetence, greed and delusion, driven by the conviction that profit and share value is the only true measure of success; and that the ability to chair a meeting or read a balance sheet is always worth more than the ability to understand how machines and materials will best serve human needs.
It is a story, too, with wider implications about the kind of country that Britain has become: a country that has lost faith in its abil ity to design, make and build useful things; a country where the few who do still have that ability are underpaid, unrecognised, and unadmired.
Politics and consultants
Watching over the Goostrey work gang, dressed in cleaner, newer versions of the same orange suits, are three of their bosses, all American, from the US construction firm Bechtel, brought in two years ago to rescue the project from the incompetence of the collapsed rail company Railtrack. No British company seems now to have the skills required; nor, after Railtrack’s systematic efforts to gut itself of in-house specialists, does Railtrack’s quangoid successor, Network Rail.
As an extreme measure to try to bring the final bill down, the rail industry agreed to shut the entire stretch of railway we are standing on, from Crewe to Cheadle Hulme, for four months, forcing thousands of travellers on First North Western railways to use coaches while 600 orange-suited men and women work on the line 24 hours a day, seven days a week. Without such radical steps, says Tom McCarthy, the Californian who leads the Bechtel west coast team, the project could have ended up costing £13bn.
It could have cost much, much more. The project now being built is a stripped-down version of a fantasy railway Railtrack locked itself into a brutal contract to build with Richard Branson’s Virgin Trains in 1997. I sat one day with Stuart Baker, the man brought in by the Strategic Rail Authority to survey the wreckage of Railtrack’s plans for the west coast in 2002, and read out to him the sequence of growing price tags: £1.5bn in 1996, £5.8bn in 1999, £7.5bn in 2001…
“None of those numbers delivers the contract,” he said. “You could talk about numbers six or eight times that. It is into 30 to 40 billion if you were actually to create the infrastructure necessary to fulfil [Railtrack’s original] obligations.”
At Goostrey, I try to encourage the Americans to talk about why the project turned out to be so much more expensive than its creators thought. Bob Brady, a Texan from Houston who is managing the reconstruction of this part of the route, begins to answer. “I think part of the issue was the politics when it was privatised -” McCarthy interrupts him. “Don’t go there,” he says.
Brady is right, which is why McCarthy doesn’t want him to go there. The problem with the west coast project is not that it is going to cost £10bn, but that the original bosses of Railtrack thought it could be modernised at a fraction of the price, and sold this ideology-driven delusion to the public and the City.
Friday December 23 1994 dawned foggy and almost freezing in central London. The papers reported on Yeltsin bombing Chechnya, on new developments in the Guinness scandal, and on fresh Labour attacks against the millions of pounds made by directors of recently privatised utilities. On the fifth floor of an office building in Hanover Square, London, a group of 15 consultants sat in a room carrying out a strange task. They were writing numbers by hand, in red ink, in the top right-hand corner of a secret 182-page report.
The red numbers were a device to stop the report being leaked, as so many documents were in the course of rail privatisation, the most controversial of all the Conservatives’ state sell-offs. That spring, Railtrack, a new organisation, had taken over British Rail’s responsibility for running and maintaining tracks, bridges, signals and tunnels. It was due to be floated on the stock market. It was essential that it now convince the public and the City that it could finance and organise the modernisation of the west coast line – something BR had never been given the money to do – and the report was going to tell Railtrack how it should do it.
Five years later, when the consequences of the report’s recommendations became clear but the report itself had been forgotten by the media, a subsequent generation of Railtrack bosses tried to blame it all on BR. In fact, BR had nothing to do with it. Railtrack was determined to prove that it didn’t need BR’s expertise, so it commissioned a consortium of consultancy firms to do the job.
That Friday, two days before Christmas, the consultants were in festive mood. They had been working on the report since March and as soon as they had finished with the red numbers, off it would go to the government and Railtrack, the job would be done, and the holidays would begin. “We had to get it finished by noon, and we finished by 11,” one of the consultants recalled. “I think we all went down to the pub afterwards – the kind of jolly, end-of-project thing that happens.”
On the face of it, the consultants had every reason to celebrate. They had approached a gigantic problem, and come up with an elegant solution.
150 years of decline
For a culture that has been under constant attack from the public and the media for almost two centuries, the rail industry has a surprising love of misleading jargon. The west coast main line, usually known in the business as the WCML, is a case in point. It doesn’t run along the west coast, and it isn’t a line. It’s a 690-mile network of routes between London and Glasgow, connecting them to Liverpool, Manchester, Birmingham and scores of other large towns in the West Midlands and north-west of England.
It is almost the oldest inter-city railway in the world. It was built higgledy-piggledy over three decades, starting in 1833, by entrepreneurs and hard-drinking, red-waistcoated navigators who, if they died on the job, were sometimes buried where they fell. Its narrow tunnels, lines squeezed together, tight curves and eccentric kinks reflect not just the geography of the land but the speed of contemporary trains – 40mph max – and the reluctance of powerful landowners to have clanking, smoky iron horses hauling the proletariat across their estates. Robert Stephenson, son of George, who built the London-to-Birmingham stretch, had to make some of his measurements secretly, by night, to avoid being run off the squireocracy’s property.
Between 1833 and 1994 the line was modernised, of course, but never rebuilt. Anyone who has lived in a 19th-century house will be familiar with the problem. The arcane wiring when electricity came along, the subsequent clumsy rewiring; the cheap flat conversion in the 1960s; the constant saga of patch and mend from occupants who never have the money or vision to remake the whole thing from scratch – all this, and more, was paralleled on the WCML on an enormous scale.
When the consultants came in, the WCML had been starved of investment by governments for some 20 years. The only significant reconstruction was in the 1960s, when the railway was modified to take electric trains. Repairs and the skills of Georgian and Victorian engineers enabled train speeds to increase until the mid-1980s. Then the network began to deteriorate quickly.
The greatest problem was the signalling. It had to be replaced, but to remake that system, with its thousands of miles of cables, coloured lights on poles and elderly signal boxes, would be staggeringly expensive.
A 1992 document, the Hesketh report, classified at the time but later slipped without publicity into the House of Commons library, recounts in bald language the horrific state of WCML signal boxes, on which the safety of passengers depend. They read like despatches from a war zone. Stockport signal box 1 was “installed 1896. Roof of relay room lets in rain. Cable route heavily damaged … very few spares. Signal structures have severe corrosion. Power supplies are suspect.” Brewery Sidings: “Installed 1894 … severe structural problems … incapable of modification … signal structures have severe corrosion and access by staff is by special arrangement.” Miles Platting: “Installed 1890 … box and relay room have serious structural damage with propping by the civil engineer to prevent collapse.”
How could Railtrack do it? How could they do what BR had not done and rebuild this tottering railway? The consultants came up with a remarkable scheme which would, besides modernising the WCML without costing the Treasury a penny, enable trains to whizz between London and Glasgow at the unprecedented – for Britain – speed of 140mph, and make the west coast line the envy of the railway world.
The miracle solution
A new idea was being discussed in rail circles in the 1990s. It was called “moving block”, and it was supposed to do away with conventional signals for ever. It was based on the technology used for mobile phones. Normally, trains run on a fixed-block system. A line is divided into stretches called blocks, with signals controlling the entry and exit to each block. If a block has a train in it, the signals prevent another train entering that block and crashing into it.
Moving block abandons conventional signals in favour of computers, track-mounted radio beacons and a cellular radio network. With these, train drivers always know where they are in relation to other trains. They still have a protective block of space around them, but it moves along with the train, and shrinks or grows according to how fast it and the trains in front and behind are going.
Once Railtrack’s consultants fed moving block into the equation, the miraculous happened. The numbers made sense. They wouldn’t have to remake the signals; they would simply demolish them, and replace them with a few mobile-phone masts and black boxes in existing train cabs, which would be far cheaper to install and maintain. Thanks to moving block, they would be able to squeeze more trains on to the line. The trains would be able to go faster, which would not only justify charging passengers higher fares, but would mean the train operators could run more services with fewer trains. As the final cherry on the cake, the cost of upgrading the route to take 140mph expresses could be defrayed from the extra profits the express operators would make. There was only one problem with moving block, but it was a crucial one: moving block for main-line railways did not exist.
Even now, almost 10 years later, there is not a single main-line railway anywhere in the world, no matter how sophisticated, which uses moving block. It is used only on a few specially built urban transit systems, such as the Docklands Light Railway, a single metro line in Paris, and a new line in Singapore. For full-scale railways it remains where it was, on the drawing board. The consultants did not allow this detail to stop them, and nor did Railtrack.
“When I heard about it from outside, I thought: ‘Wow, they must have had some amazing breakthrough which means this is now a proven bit of kit.’ And it wasn’t,” said Chris Green, now head of Virgin Trains. “It was a wish list. To put that wish list on Europe’s third busiest railway really was outrageous.”
A wing and a prayer
Of the four teams of consultants that prepared the feasibility study, Booz Allen & Hamilton was responsible for coming up with the recommended signalling system. No one from the company would comment for this article, but one of the consultants involved in 1994 did talk. Of the eventual core team of eight consultants, only two had experience of British main-line railways, one at a very junior level. Four of them were American or normally based in the US. Not one had expertise in moving-block signalling on railways like the WCML; most of the experimental work on moving block was being done in mainland Europe.
The consultant asked for his real name not to be used. I’ve called him Arthur. He said of some of his colleagues: “My personal view was… they hadn’t got the knowledge to try and do this in any sensible way. Coming from an intensely professional railway background, I was appalled by this. You can imagine. Not knowing what other railways of the world were up to, the consultants did a write-round. “We did a trawl,” said Arthur. “We wrote to manufacturers and asked them for information … We asked the Japanese what they’d got [in terms of moving block] and they said: ‘Well, nothing, really.’ Which amazed us.” Indeed, this would, a lay person would assume, have given the consultants pause for thought. Neither the Japanese, with their 160mph bullet trains, nor the French, with their 160mph TGVs, used moving block in 1994: they still don’t.
Yet despite this lack of knowledge, the fact that no railway in the world was using the system, and the fact that the equipment needed was not being made by any manufacturer, the Booz Allen team ended up recommending moving block. Why? Arthur did not say so specifically, but hinted that the remit was not to find the most practical solution and find out how much it would cost, but to find the solution that would make privatisation financially possible. The cost of conventional signalling, had they known it, would have frightened investors off and halted privatisation in its tracks.
“The thing that everybody always theorises is, why did you recommend such a highfalutin-type system for the WCML? And that’s a fair question,” said Arthur. “But it’s not a fair question when you actually look at what the remit was. The remit was to come up with the most cost-effective solution.”
The Booz Allen consultants came to another conclusion which, in retrospect, seems extraordinary. Even though they knew what the privatised railways would look like, with Railtrack owning the infrastructure, a horde of private train operators running services, and dozens of other private outfits all taking a cut and all trying not to step on each other’s contracts, they based their estimates of how much the WCML modernisation would cost on British Rail history – the bargain-basement modernisation of the east coast main line, and the development of a new type of conventional signalling 20 years earlier. It was as if a western oil company based its cost forecasts in free-market Russia on the way things were done in the Soviet Union.
“What I hadn’t understood,” admitted Arthur, “was that the restructuring of the railway was going to bring a complexity beyond my wildest dreams.” Nor could the consultants have anticipated that the bosses of Railtrack would go on to cherrypick their conclusions.
Railtrack was led to privatisation by two men, its chief executive, John Edmonds, and its chairman, Robert Horton. Edmonds was a former senior British Rail executive, Horton the former chairman of BP. Yet it was Edmonds, the former public-sector boss, who was the private-sector firebrand. Far from being loyal to BR’s way of doing things, his experience on the state railways had inspired in him a scepticism towards in-house engineers and safety experts bordering on contempt. They were, he considered, overcautious, conservative, stuck in the mud. It was this which led him, at Railtrack, to shed the nucleus of in-house expertise that left the company unable to understand what its myriad specialist contractors were up to.
Edmonds declined to be quoted for this article. A senior rail manager said of him: “He was the one who got rid of operations managers and engineers because he didn’t believe in them. He thought it could all be contracted out and commercialised.
“He had a desire to break the mould and change. He was always opposed to the traditional railway. He believed there was a golden panacea in the private world where you just free people up and new technology comes in and the markets come in and it all happens. The railway doesn’t work like that. You’re not manufacturing baked beans.”
Like Edmonds, Horton was an advocate of privatising Railtrack. But although Horton was happy to play the role of swashbuckling private-enterprise shaker-upper, he was no entrepreneur. He studied engineering in the 1950s but he was no engineering wizard, either. He was, essentially, a highly paid private bureaucrat who made his reputation in the offices of a post-imperial semi-state oil company. He did not make BP; BP made him. It was already a vast, sprawling corporation when he arrived in 1957, and it was still a vast, sprawling corporation when he was sacked in 1992, no matter how much he changed it. He did, at least, know about the oil business. But he didn’t know much about trains.
“He wasn’t close enough to the railway to know what was going wrong,” said one rail industry source. “So he was great at privatising, great with the City, good at getting private investment into industry. He didn’t understand that he’d lost all his key operators, lost all his key engineers, and was chasing technology that wouldn’t work.” Horton also declined to be interviewed for this article. In a brief email, he said: “I think it is important to understand that the scope of the project changed enormously over time as did the decisions on the technology to be used.”
In 1994, Edmonds, Horton and the latest in a blurry succession of Conservative transport secretaries, Brian Mawhinney, all wanted to hear from the consultants that the WCML could be modernised with privately raised money – by a private railway company. Yet there was still an opportunity for someone to persuade them that the risk they were taking was unacceptably high.
The key expert standing between Railtrack and the fatal decision to go for moving block at this time was Rod Muttram, the firm’s new director of electrical engineering. But he knew little about the railways either: he had just been headhunted from the arms industry, where he had been involved in developing weapons systems, including a new type of artillery rocket. He believed that moving block could work, in theory. As to whether it could work in practice, on such an incredibly complex rail network, he was entirely dependent on what the consultants told him. Muttram, declined to make any public statement for this article.
Yet British Rail still existed in 1994 and 1995, and its board thought the consultants’ ideas were far-fetched. John Welsby, then chairman of BR, told me: “I did have grave concerns about the attempt to integrate a type of technology that had no testing in real, active life in what, in fact, was the most complex railway in the country.”
Welsby was not exaggerating his wisdom after the event. A senior Railtrack figure, one of the key men liaising between Railtrack and the consultants, recalled: “There were huge rows at the time with the British Rail board, who were completely unsupportive of the project. John Welsby, then chairman of BR, was the most vociferous opponent. He said [moving block] could never be done on a railway like this.”
Welsby and his BR colleagues were unable to get the message through to their private-sector successors. “You have to remember that we were all, at that stage, unbelievably busy,” he said. “All my lads had about three jobs. Firstly, they were running a railway. Secondly, they were breaking it up for sale. Thirdly, they were often preparing a management buyout at the same time. People were working seven-day weeks, 12-hour days. Our advice was passed across but then it was up to Railtrack to take that advice or not, as they wished … of course they would have resented it anyway. The climate has to be remembered: we were big, bad BR, being broken up and done away with, because we were anathema to the government, so the new order was not necessarily going to look very favourably on us.”
Another warning came almost as soon as the consultants handed in their report. It came from Europe. The consultants’ report – a copy of which was recently released to the Guardian under the “open government” code – makes little mention of the European dimension. None of the consultants was from mainland Europe. But it was clear from speaking to “Arthur” that he had assumed other European railways were preparing to introduce the new technology as well, and that Britain, relying heavily on European research, would merely be the first to apply it.
Then, in January 1995, most of Europe’s state-owned railways – 19 of them – came to the joint conclusion that moving block was not ready to be used in the real world, and a simpler, transitional form of new technology should be the next step. Again, Railtrack ignored the warning. In fact, Railtrack may never have heard it: at this time the firm had barely any contact with Europe. It was an extraordinary situation, of which the public was ignorant: a group of Anglo-American consultants and executives took for granted European support to develop a technology which those same Europeans openly declared to be premature.
A tale of two reports
On March 22 1995, Railtrack and the government went public with their plans for the west coast main line. Despite the warnings, they endorsed, with few reservations, the consultants’ recommendations to make moving block central to the modernisation. John Watts, the Tory rail minister, spoke of an “innovative signalling and control system” which would be “at the heart of the proposals” for the WCML. (Interviewed by phone recently, Watts said he could not remember details of this period.)
The consultants’ report remained secret. On March 22 Railtrack released what it said was a summary of the report. By and large, it was. But having had a chance, for the first time, to compare the two, the Guardian can reveal that there were important changes and omissions in what the public was told compared with what the consultants had said.
The consultants warned, for instance, that if moving block turned out not to work, and conventional signals had to be used, any attempt to try to get trains to run faster than 125mph – always Railtrack’s intention – would incur “exceptionally high costs”. This fateful warning, one of the keys to Railtrack’s eventual demise, was omitted from the public summary.
At the beginning of March, signalling-company bosses had told MPs that they might – might – be able to have moving block working and installed within 10 years. In their secret report, the consultants talked, with optimism, of “a five-year programme” for the development and fitting of moving block. Yet this is what Railtrack told the public: “The development programme is anticipated to take between three and four years.”
Most surprisingly, Railtrack inserted a line into the public summary that had never appeared in the consultants’ report. “Most of the hardware for this train control system already exists,” it read, “the technology required being relatively mature.”
I read that line out to Arthur recently. He said: “Mm. That’s interesting.”
Did he find it misleading? Arthur paused for a long time. Eventually he said: “I don’t think there’s any doubt, sitting here now, that it was not as far developed as we thought it was … I’m surprised by those words, I really am … I am amazed at that statement. Because I don’t know where they had any proof of that.”
Neither Horton nor Edmonds would comment on the discrepancies. I asked another senior industry figure, with close knowledge of the subsequent attempt to make moving block work, what he thought. “To say the technology is mature – yes, I think that was a bit adventurous, certainly in 1995.”
What happened? The consultants’ report never mentioned it, but there was one other factor in the back of the minds of Railtrack and the Tories. 1994 had seen a painful strike by railway signalling workers. Bringing in the new technology would be another step towards ending the unions’ leverage, by getting rid of thousands of signalling staff.
Some in the rail industry are inclined to give Horton, Edmonds and their colleagues the benefit of the doubt. “I think dishonesty does matter, but my suspicion is that it wasn’t a question of dishonesty, it was more a question of misjudgment,” a senior rail industry figure told me. “It was assumed that technology would move very quickly, but it doesn’t. That was the problem. That is a bit of an indictment of the calibre of the people running the show at that time in Railtrack.”
Another senior rail industry figure said: “John Edmonds was keen to get the company privatised and wanted to say things that would encourage people to believe it was bold and dynamic. It was all about creating confidence, which requires bold statements, sometimes.”
Before I knew I would get to see the consultants’ report, I spoke to a senior former Railtrack executive. He didn’t have a copy of the report, and was trying to remember its conclusions. As I found out later, his memory didn’t quite reflect the report; rather, perhaps, it reflected the real back-room conversations going on in Railtrack at the time. “The basic conclusion was that it was impossible to upgrade the west coast at any sensible cost if you went for conventional signalling,” he said. “And the only way forward – whether it was feasible or not – was to bring in 21st-century signalling technology.” Whether it was feasible or not: the decision was made, and Railtrack began unconsciously to weave its downfall.
The consultants weren’t reckless. They never imagined that Railtrack should manage and finance the WCML modernisation itself. In some detail, they had outlined a scheme whereby Railtrack would get a big, experienced civil-engineering consortium to raise money for and manage the project, thereby assuming most of the risk. But when Norman Broadhurst, then Railtrack’s finance director, studied the numbers, he thought the returns looked too juicy to be given away and brought his colleagues round. Yet one member of the board told me that he had argued against the proposal. “I said at the time Railtrack did not have the management capability to bring that in house,” he said. He was proved right. No sooner had Railtrack committed itself to moving block than it began to waste time in bringing it about. In mid-1995, its rump signalling team had dwindled to the extent that it was possible for it to move office in a single taxi.The following year, a move to Birmingham caused further losses of personnel. One senior Railtrack figure at the time said: “In resources terms, two years were lost.” It wasn’t until March 1996, just a few months before Railtrack was privatised, that the firm picked two consortia of engineering multinationals to develop alternate prototypes of the moving-block system. Things didn’t go as planned. Railtrack was beginning to suffer the consequences of Edmonds’ determination to gut the firm of its in-house engineering and project-management expertise. “What Railtrack did in 1996 was quite excep tional, which was to take a really high-calibre engineering team on the BR system and destroy it,” said Chris Green.
Railtrack had assumed that the two signalling consortia would develop similar types of moving-block technology. It assumed their work could then be pooled to provide the foundation for a system that actually worked. But it didn’t happen that way. The consortia saw themselves as rivals.
“Not unexpectedly, their work tended to diverge rather than converge,” said a senior figure in the signalling industry at the time. This would not have mattered so much, except that while the moving-block research was meandering, Railtrack made a catastrophic decision. It invited Richard Branson to hold a gun to the company’s head.
In February 1997, Richard Branson’s Virgin Trains had won the franchise to run fast inter-city services on the WCML. In October, after the newly elected Labour government backed away from its commitment to renationalise the railways, Branson and Railtrack announced how the WCML project was going to be financed. They painted a wonderful picture for inter-city travellers.
Railtrack would spend £1.5bn to restore the worn-out railway to basic reliability, and, in exchange for a slice of Virgin’s profits, would lay out another £600m to install moving block and other improvements to make it a high-speed line. By 2002, new Virgin tilting trains would travel the line at 125mph; in 2005, they would accelerate to 140mph. London and Manchester would be only an hour and 45 minutes apart, London and Glasgow less than four hours.
Suddenly, Railtrack found itself locked in a contract with Virgin to deliver a non-existent signalling system on the entire west coast mainline by a firm date – 2005 – with crippling financial penalties if it failed to do so.
“They thought, ‘Oh crumbs, we’ve just signed [the Virgin deal], we’d better get on with this.’ There was a realisation the talking had to stop,” said the signalling source.
Yet Railtrack was locked in a catch-22 situation. It couldn’t put a contract out to tender to develop something if it couldn’t specify exactly what the thing was. And it couldn’t specify exactly what the thing was until it had signed a contract for somebody to develop it.
Furthermore, the two signalling consortia had made the technology look less, rather than more, certain.
“Because we went on divergent routes, because we saw ourselves as rivals, it didn’t enable Railtrack to say, ‘It’s obvious, here’s the specification,’ ” said the signalling source. “What’s at the core of this, I think, is that Railtrack did not have its own sufficiently strong in-house knowledge and expertise to be able to use industry for what it was good at, to gather their views in and make a judgment.”
Railtrack did have one ace in the hole. It had, in fact, long since recruited an expert in moving-block signalling. Way back in 1995, the then Conservative government had worried that Rod Muttram’s lack of railway experience would put off City investors. At the government’s insistence, Railtrack appointed a champion of moving-block technology to be its engineering director. Brian Mellitt was a clever, experienced specialist who had already supervised the early stage of introducing moving block on London Underground’s Jubilee line extension, then under construction.
But now, in 1997, just when his expertise was most needed, Mellitt’s pet project, moving block on the Jubilee line, was suffering a horrible public failure. Quite simply, it didn’t work. Computers that were supposed to talk to each other didn’t. Costs soared. Desperately trying to complete the project in time for the opening of the Millennium Dome, engineers had to come up with a crash programme for an old-style conventional signalling system. The number of trains an hour was slashed in half. Westinghouse, the key signalling company responsible, took much of the blame. John Mills, who in 1995 had told parliament that moving block on the west coast main line might be possible in 10 years, was removed as chief executive.
Throughout 1998, as news of the problems on the Jubilee line began to emerge, the newly arrived Gerald Corbett – who took over from Edmonds in late 1997 – became increasingly uneasy about the moving-block plan he had inherited for the west coast. He didn’t get on with Mellitt. Corbett was, if anything, even more hostile towards the engineering profession than his predecessor. Railtrack didn’t sign a contract to develop the system with the British-French company GEC-Alsthom (later Alstom) until July 1998, more than a year behind schedule. But even this wasn’t a proper contract to deliver something; it was a nine-month contract to define the thing that should be delivered.
And the signalling was only part of the WCML modernisation. Much more needed to be done. Tracks needed to be relaid, tunnels modified, bridges altered. This work, too, was behind schedule and over budget. Plans changed constantly. At one point, Railtrack paid £10m to a contractor to develop a new kind of transformer, only to abandon it later and go back to the original type. With every passing day, contractors were finding out how much more seriously the line had deteriorated than Railtrack and the consultants had understood.
At the same time, because Railtrack had shed so much of its engineering and railway operations expertise, it had little ability to judge whether the prices that its myriad contractors were charging were fair. “It is easy to understand why certain elements within the industry took advantage of that situation,” said one rail industry figure. “It would have been a great temptation.”
In a recurrent pattern, Railtrack had turned to a US company for project management expertise, but managed to botch that, too. Railtrack hired Brown & Root, a subsidiary of the US engineering group Halliburton, then run by Dick Cheney. Whether Brown & Root, which had grown fat on Pentagon contracts from the Vietnam war and beyond, could have managed the job is unknown, but Railtrack never allowed the company to try.
“Railtrack was half in bed with them and half not,” said an executive who saw the process from the inside. “Brown & Root had a lot of experience in oil and gas contracts. Railtrack said, ‘Fine, show us how,’ but they got cold feet and never signed up.”
Meanwhile, Corbett and his team were becoming horribly aware of the other set of baroque errors that had been made by their predecessors: the Virgin contract, presented to Corbett on his accession as a fait accompli.
The Virgin suicide
Despite Virgin Trains’ initial reputation for lateness, there was a general fondness for the Railtrack-Virgin plan, not just in Railtrack, but among politicians, the media and the public. 140mph tilting trains; London to Glasgow in time for lunch; it sounded good. It sounded like progress. But there was a severe problem.
Again, the lay observer would think it was obvious: other trains needed to use the same line. And these other trains did not travel at 140mph. Some of them, freight trains, for example, struggled to reach half that speed. In all, the WCML is used by 120 trains a day. Two thousand different trains travel up and down its various lines, and another 4,000 cross it at some point. They are operated by 14 private train operators, using at least 19 kinds of locomotive, a mix of regional passenger services, local trains and freight – a contractual nightmare. But contracts had been signed. And, in the course of 1998, Railtrack began to come to the terrible realisation that it could not keep to its Virgin contract without breaching some of the others.
The introduction of faster, more frequent Virgin trains on the route meant that Railtrack was obliged to carry out extra work to guarantee that the other, slower trains would still be able to do their job and earn their money. When Railtrack began to look more closely at the Virgin contract, and compared it with the work it had promised to do to the railway, it saw that it was unable to draw up future timetables without breaking at least one of its contractual commitments. Or rather, Railtrack looked, but it refused to see. It was the beginning of the end.
“They had committed to the rail regulator and said that it would work, but everybody knew it was impossible,” said Stuart Baker of the SRA. “A 140mph train still catches up with a 75mph freight train or a 50mph commuter train rather quickly. So it was a bit of an illusion. The capacity wasn’t there for the contracted service without a new railway.”
The speed issue was not all. Railtrack was gambling its future on the highly risky maintenance philosophy that said components should be replaced only when they looked about to break, rather than at fixed intervals. When specialists looked into Railtrack’s web of contracts with Virgin and other train operators on the WCML after the company collapsed, they were astonished to see that Railtrack had promised to build a railway that would not need any maintenance at all from 2005 to 2012.
“I don’t think anyone denies that the commitment made to [Virgin] was a terrible mistake,” said another senior rail insider. “It was one of the factors that brought the company down, ultimately.”
In 1999, the bubble burst. When Chris Green, who took over as head of Virgin Trains in February, went out and about to see how the epic west coast reconstruction project was going, he received a shock. “I was surprised at how little physical activity there was. There was nothing happening on the track. I was looking for the big yellow machines ripping up track and signals being replaced and wires being renewed, but everybody seemed to be in endless debate about the scope of the work. There’s no doubt that two years were lost. I think as I arrived it was dawning on Railtrack that this was going to be an incredibly expensive and complicated project.”
He quickly found out about the timetabling crisis. “The basic railway skill ought to be train timetabling, oughtn’t it? Railtrack ought to be have been able to timetable it themselves and I’m sure they did. When they found it didn’t work, they also found they were in a spectacularly tight contract, with massive penalty clauses, up to £250m, with Virgin … every time they went round that situation they found they couldn’t afford to break the contract. Which is why they had to implode.”
Heading for the buffers
By the spring of 1999, even as Railtrack shares hit a high of more than £17, the project was in turmoil. Brown & Root were dropped and Railtrack drafted in a fresh team of consultants, the Nichols Group, to investigate. The rail regulator was hammering on Railtrack’s door, demanding to know how they were going to make the west coast timetables work. Alstom’s quest to try to make moving block work was going badly. Nine months of studies had still not produced a clear design for the system, and amid the uncertainty even Railtrack was not about to give them the £750m they were seeking to finish the job. In another blow to the technology, Mellitt quit.
“With him gone, there was nobody championing moving block,” said an insider on the signalling contract, “and at this time, the Jubilee line was unravelling.”
On December 9 1999, at a meeting codenamed Black Diamond Day, Railtrack finally took the decision it had avoided for so long. It accepted that moving block, the technology on which the company had staked so much, was a mirage. The Nichols Group report was painful in its clarity. There was a no better than 5% chance that the system would be ready in time. The Jubilee line fiasco had shown the risks. Alstom had never been able to explain what would happen to a moving-block system in the event of an accident, or if there was a disruption of radio signals. One possibility was that the entire railway network between London and Glasgow would simply grind to a halt.
Nor had Railtrack ever fully grasped the enormous sums it would have to pay train operators for permission to take 2,000 locomotives out of service to fit the new equipment and retrain 4,000 drivers. The implications for Railtrack were catastrophic. They would now have to introduce a different, more conventional signalling system, at vastly greater cost. Installing conventional signalling would mean stretches of railway being closed off, which meant huge compensation payments to the train companies. All Railtrack’s contracts with train operators were predicated on moving block. The contracts would either have to be torn up – more huge compensation payments – or a costly extra programme of works would have to be set in motion to reconfigure the entire railway. Instead of the expected £2bn, the new headline figure was a staggering £5.8bn. It quickly turned out that this, too, was a wild underestimate. Without a massive taxpayer bail-out, Railtrack was doomed.
Five days later, on December 14, Railtrack sent a letter to the rail regulator, Tom Winsor. It was five years almost to the day since those original consultants had explained to Railtrack what a marvellous system moving block was, and more than four and a half years since Railtrack had so misleadingly told the public that it was a “relatively mature” technology, ignoring the warnings of British Rail, MPs and rail journalists. Now Railtrack wrote: “No system comparable with [moving block] has been implemented on a main-line mixed-traffic railway anywhere in the world … the underlying software has never been used previously for a safety critical purpose.” If moving block was installed, Railtrack said, there would be “a major risk of total disruption” to Britain’s most important rail network. At least £65m, and probably more, had been spent on trying to make moving block work, with nothing to show for it that was any use to Railtrack. The final acts of Railtrack’s role in the WCML saga, played out until the company went into receivership in 2001, saw an increasingly isolated Corbett go head to head with Winsor, the regulator, confident in his contempt for Railtrack management. In insisting that Railtrack fulfil its contracts to the letter, whatever the financial consequences, Winsor must have known he was contributing to Railtrack’s downfall. But he also knew that the Blair government, the public and most of the train companies were fed up with the company, and the City was losing faith.
Railtrack’s only ally, Virgin Trains, was full of doubt. In the summer, after Railtrack confessed that the £600m worth of Italian tilting trains he had ordered would not, as promised, be able to reach 140mph on the new WCML, Richard Branson cheerily told an interviewer: “Do you know why we’re changing the name of Virgin Trains? Cos they’re fucked.”
Winsor has published word-for-word transcripts of two meetings with the Railtrack leadership at the rail regulator’s offices in Holborn in the spring and autumn of 2000. Corbett, wordy, blustering, pleads for more money, and his company’s continued existence.
Winsor and his colleagues sit in judgment, terse and sceptical, like magistrates. “It would have been incompetent if we had just pressed blindly ahead and tried to get moving block to work,” the transcripts record Corbett saying desperately in May, trying to redefine Railtrack’s belated recognition of its problems as a triumph of good management. Corbett goes on to plead for a relaxation of contracts with the other train operators to make way for Virgin. Winsor is not impressed. “Is it reasonable,” he asks Corbett, “that a party to a contract should expect to have that contract honoured?”
“Yes,” says Corbett. “That is reasonable. In the real world” – he pauses for a moment, allowing himself a moment of regret – “in many senses, the railway is not the real world.”
How could it happen?
In June, a fresh horde of consultants, commissioned by the regulator, delivered an indictment of Railtrack’s handling of the west coast operation. Some parts of the project, the consultants said, had not been looked at afresh since the original report in 1994. All Corbett could do was choke on the irony that the consultants were from Booz Allen & Hamilton – the same firm that provided the experts which, six years earlier, had recommended to Railtrack that adopting moving block would be a splendid idea.
Away from the WCML, in October 2000, at Hatfield, a GNER express from King’s Cross to Leeds derailed, killing four people, when broken rail that Railtrack had failed to repair shattered into hundreds of pieces. It was only a year since the Paddington disaster, which had seen 31 people killed and more than 400 injured when a badly trained driver went through a badly positioned red light. By the spring of 2001, the railways were in chaos and the estimated cost of the WCML project had gone up to £8bn. In October, after one last futile attempt by Railtrack to go behind the backs of the other users of the line and renegotiate the Virgin deal, the government pulled the plug. Railtrack was finished.
As the Strategic Rail Authority, Railtrack’s successor Network Rail and, eventually, Bechtel began to investigate the wreckage, the estimated costs of the WCML continued to rise.
Twenty billion pounds was even mentioned as a final price tag. Not until October 2002 did Richard Bowker of the SRA come up with what might be the final figure – £9.8bn – to build a compromise 125mph west coast line by 2008. According to some estimates, a brand-new high-speed railway to the north of England could have been built for half that price. Those who came into Railtrack in the early days, John Edmonds’ team, like to blame the fiasco on the Corbett-New Labour era. Dithering over plans, slack financial controls over contractors, political interference, the ever tightening grip of safety regulations – these, they say, added billions to a project that should have cost far less.
Yet all the key decisions that doomed Railtrack were taken before Corbett arrived, before Labour had fully established itself in office, and before the terrible accidents at Paddington and Hatfield: the folly involved in choosing an untried new technology and selling it to the public, the taking over of the WCML by Railtrack instead of letting an experienced engineering consortium handle it, the arrogance displayed in negotiating the Virgin contract.
Throughout Railtrack’s existence, the management showed persistent traits – a contempt for engineering wisdom, and a steady refusal to confront the true decrepitude of the railway that they were running into the ground. Even if moving block had come along in time, the rest of the infrastructure would have taken many billions to set right.
“The more we get into it – and facts are still emerging – the more we know the existing infrastructure is completely and utterly worn out,” said the SRA’s Stuart Baker. In an imaginary world, if Railtrack had rejected the consultants’ advice in 1995 to go for moving block, if it had taken time to investigate the true state of the railway, what would the actual price of WCML modernisation have been? Enough, certainly, to scupper Railtrack’s privatisation. And there can be few in Britain today who think that would have been a bad thing. Without privatisation, would the money have been forthcoming to modernise the WCML? Not immediately, perhaps, but sooner or later the Treasury would have had no choice but to put the billions in that it is putting in now; and a commercially run, state-owned Railtrack would not have let £3.8bn in income leak out of the railways in dividends and interest payments over five years.
One of the most disturbing facets of the west coast saga is the failure of democratic government that it represents. Not just of a particular party, but the whole system of government. The administration of John Major was clearly to blame for creating the Railtrack monster. Yet within less than a year of the privatisation of Railtrack, the Conservatives were punished at the polls – and Railtrack, and the WCML project as originally misconceived, went steaming on. No one has answered the question of how governments with five-year terms can be entrusted with responsibility for stewardship of projects whose lifespan is likely to be 15 years or longer. In the dozens of interviews with rail industry figures carried out for this article, it was striking how few ever mentioned transport ministers or political parties. The only government they recognised was the only government that endures: the unelected Treasury.
And yet we cannot accuse our elected representatives of looking the other way. In mid-February and early March of 1995, after the consultants had delivered their report but while Railtrack and the government were still mulling over it, members of the House of Commons transport committee questioned Edmonds, Horton and the heads of some of the big signalling firms about the WCML project.
The MPs did their job well. Gwyneth Dunwoody, the hard-nosed Labour interrogator on the committee, had been briefed by Richard Hope, an expert railway writer, and knew exactly what was at stake. Accordingly, when their report was published that July, the committee gave an uncannily prescient warning of the risk Railtrack was running.
It warned: “The renewal of the west coast main line is urgent, and reliance on an as yet unproven train control system to underpin the financial case for investment may lead to unacceptable delays in upgrading the nation’s principal intercity route.”
Members of parliament had done what they were elected to do, conscientiously and thoroughly scrutinising a big plan by an unelected organisation with power over the lives and purses of the public. It had pointed out its weaknesses. And nobody paid any attention.
In 1837 Charles Greville, the racehorse owner, political diarist and intimate of the Duke of Wellington, described his first railway journey – on the west coast line between Birmingham and Liverpool – as a “peculiarly gay” experience.
“The first sensation is a slight degree of nervousness and a feeling of being run away with, but a sense of security soon supervenes and the velocity is delightful,” he writes. The train travelled at about 20mph, but Greville knew it could go faster. “One engineer went at the rate of 45 miles an hour,” he records, “but the Company turned him off for doing so.”
It is not clear when, if ever, the west coast will become a 140mph route. For the time being, all Chris Green can do is take invited guests out on short practice runs in Branson’s new red expresses to show them what might have been. “I went on the 145mph test run last August and it rode beautifully,” he said. “It was doing 125, and we said, ‘Please accelerate to 145,’ and it shot forward like a sports car … we’ve got this greyhound train which is going to be running around like a labrador for the next 10 years.”
Out in the winter rain on the shut-down Crewe-to-Cheadle line is a British engineer, Roy Hickman, junior now to the Americans from Bechtel but with decades of experience on the railway. He works for Network Rail these days: the slogan of anti-engineering Railtrack’s successor is “Engineering excellence for Britain’s railways”. It is spending £3m a day on the WCML project.
“Bechtel are bringing a level of planning we’ve never seen before,” Hickman said. “I think Railtrack, in fact the industry, never really fully understood or anticipated the sheer scope or challenge of building the west coast, and only when work started did we begin to understand just what a huge task it was. “It takes 20 years to wreck the infrastructure, and nearly as long to set it right.”
The main players in the £10bn rail fiasco
The oil man
The Railtrack chairman and former senior BP executive was a keen advocate of privatisation. “He wasn’t close enough to the railway to know what was going wrong,” said one rail industry source. “So he was great at privatising, great with the City, good at getting private investment into industry. He didn’t understand that he’d lost all his key operators, lost all his key engineers, and was chasing technology that wouldn’t work”
The Railtrack chief executive who led the company to privatisation. “He was the one who got rid of operations managers and engineers because he didn’t believe in them. He thought it could all be contracted out and commercialised. He believed there was a golden panacea in the private world where you just free people up and new technology comes in and the markets come in and it all happens,” said a senior rail manager
According to one former director, Railtrack’s finance director played a key role in convincing colleagues that Railtrack itself could handle the modernisation of the west coast main line – rather than having a civil engineering consortium finance and manage the project
Railtrack’s clever, experienced engineering director was brought in for his expertise in moving-block signalling, having supervised the early stage of its introduction to London Underground’s Jubilee line extension. Moving-block ultimately could not be implemented on the Jubilee line extension. By 1999 Railtrack’s contractors had still not cracked the technology and he quit
The fall guy
Took over as chief executive in 1997, inheriting the company’s disastrous deal with Virgin. He became increasingly uneasy about moving-block signalling. In December 1999, he presided over the company’s decision that the technology could not be made to work. In a testy exchange with the regulator Tom Winsor he observed: “In many senses the railway is not the real world”
The rail regulator was contemptuous of Railtrack management. He insisted that the company fulfil its contracts to the letter, whatever the financial consequences, ultimately leading to the company’s downfall. “Is it reasonable,” he asked Railtrack chief executive Gerald Corbett, “that a party to a contract should expect to have that contract honoured?”
How we got the report
When, in 1994, a group of consultants completed the 182-page document that made the case for renewing the west coast main line, only a handful of copies were printed. The document, distributed to Railtrack and members of the government, was intended for as few eyes as possible. On all the copies, the top right-hand corner of each page was marked in an attempt to prevent leaks. The full contents were never revealed.
The Guardian made its first attempt to obtain the report in October 2003. Network Rail rebuffed the request on the grounds that it was unable to find a copy. Three months later, in January of this year, the Department for Transport released a copy of the report to the Guardian under the Freedom of Information Act; ensuring that its contents would at last be accessible to the public.
The writer of this essay had his expenses reimbursed and was paid a fair daily rate for the work. The piece was professionally edited and fact-checked by salaried staff with decent pay and conditions. The writer was not asked to or told by those who commissioned him to follow a particular political slant. If you have appreciated the work, please continue to support paid-for independent journalism by buying or subscribing to The Guardian.