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Justine Greening's in tray

12 December 2011

With a new Transport Secretary in post, Christian Wolmar looks ahead to the many decisions that Justine Greening will be faced with in the coming months.

greening

Justine Greening has kept a very low profile since being thrust unexpectedly into the Transport Secretary's job in October. That's hardly surprising given the complexity of the role and the breadth of the agenda left by her predecessor, Philip Hammond, who, despite his reputation as a 'safe pair of hands', ducked making many key decisions and made others for which she will not thank him.

Rail tends to occupy much of the time of Transport Secretaries even if, in terms of share of journeys, it ranks lower than other modes. That's because it features high in the public consciousness, especially among the affluent commuters in the south east who represent a disproportionately high percentage of key decision makers. It's also because Transport Secretaries these days have a much more direct role to play in the railways than ever before in their history, despite the fact the industry is supposedly privatised.

Therefore, it is hardly surprising that it is in rail that Mr Hammond has left her with a very full inbox. In no particular order, there is HS2, IEP (Intercity Express Programme), franchising reform, the fallout from the McNulty report, franchise letting, a paper on the industry structure, continuing flak from the Thameslink train order, Network Rail's next five year plan and fares.

Already, deferred decisions seem to have become the norm in the Department for Transport. The promised 'command paper' – which will be something between a white paper and a consultation paper – on the structure of the industry promised for this autumn has been delayed until early next year, with no clear explanation. One presumes that digesting the implications of the McNulty report is proving a tough task for the civil servants in the Department for Transport.

The very full franchise programme is slipping too. All three major Intercity franchises – East and West Coasts, and Great Western – are due for renewal over the next 18 months but now Virgin has been given an extension on its franchise because Hammond did not like the original specification drawn up by his department. Their original franchise was only 15 years long, so clearly there was no time to sort out the new one! Rather than rush through a deal, Virgin has now been given a 9 month extension under a deal which involves payment of a premium of £103m. While that may sound a good deal for the government, it is very difficult to assess whether it is value for money because of the rapid growth on the line due to the £9bn upgrade. It is based on an 11 per cent level of growth, but Virgin is protected by the usual cap and collar arrangements if there is more than a 20 per cent shortfall on expected income.

The only recent solid decision to emerge has been the granting of the short East Anglia franchise to Abellio, the subsidiary of the Dutch state owned railway company, but that was a decision which could not wait since National Express, the incumbent, had been ruled out of the final stage of bidding and therefore an extension would have been too embarrassing.

Train procurement was another fine mess left by her predecessor. The decision to source the Thameslink trains from Siemens rather than the Derby-based Bombardier was controversial but probably cannot be revisited. Nevertheless, it risks leaving the UK without a home-based train manufacturer, and there will be pressure on Ms Greening to cobble together some kind of deal to ensure that Bombardier's Derby factory remains in business once its current order for London Underground trains runs out in 2014.

The Intercity Express Project, the replacement for HST, is showing all the signs of being a procurement nightmare that will grace the pages of Private Eye for many years to come. Both Thameslink and IEP are private finance initiative schemes which therefore must be put into doubt by George Osborne's recent announcement that the government is reviewing funding arrangements for such projects. IEP in particular is a crazy idea which bundles up finance and manufacturing, with payments to the consortium based on the provision of sufficient trains to run the service. This supposedly puts the risk on the private sector but in truth makes the whole project fiendishly complicated and very unlikely to represent a good deal for taxpayers. Will Ms Greening, as a financially-savvy former accountant, be clever enough to simply ditch the whole thing and buy off the peg trains that would be far cheaper and pose much less risk, as suggested in the Foster review of the plan?

greening helicopter


Ms Greening will not be able to remain in the shadows for much longer. First, she will have to fend off growing opposition to HS2 when the results of the consultation process are published – due before Christmas – and then, the nightmare for all Transport Secretaries, deal with the outrage over the above inflation fares rises introduced by Mr Hammond when they come into force in the first week of January.

Network Rail's plans, and how to squeeze money out of the Treasury to pay for them is a medium term issue but again poses difficult issues for an inexperienced minister. This huge agenda facing the new Transport Secretary highlights the dysfunctional way that the railways are run. In the old days, most of these decisions would be made not by a novice Transport Secretary with the 'help' of civil servants with their own agenda, but by an experienced group of managers at British Rail. Now, since the abolition of the Strategic Rail Authority, the Department has effectively become the Ministry of Railways under the control of a politician.

If Ms Greening's decision to stay out of the limelight is the result of her efforts to avoid making any gaffes by reading herself thoroughly into the subject, it will have been time well spent. Leaving decisions to civil servants, as witnessed by the IEP saga, is never a good idea, but it is only by understanding the issues that she will be able to make decisions that are not just simply rubberstamping their recommendations. There are plenty of elephant traps for an unwary Transport Secretary to fall into and her predecessor has done her no favours by leaving her with so many key decisions to make in the New Year.
 

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