On New Year’s Eve one of the more successful operations of the new rail industry passes into history. Directly Operated Railways (DOR), created by Lord Adonis as the operator of last resort, will be reabsorbed by the DfT, leaving its offices at Chancery Lane on the site of Old Serjeants’ Inn.
The move doesn’t perturb current chief executive Michael Holden, who is stepping down – although the phrase hardly befits a man who shins up Mount Kilimanjaro, bests Everest Base Camp and regularly hikes hills.
Holden, fit and slim and 30 pounds lighter than he was 10 years ago, is looking forward to skiing in the New Year with his daughters. A reassuring figure, it is easy to imagine him calming down meetings of goggle-eyed civil servants.
DOR first came to national attention after National Express pulled the emergency cord on East Coast. The operator had put in an optimistic bid which it could not deliver during the recession. A private sector operator dodging risk when times turned tough did not play well with consumers anymore than it did with government.
Small and temporary
Few among rail staff and passengers mourned the departure of National Express Group. However, six years later staff and public both felt DOR should continue to run the intercity operation. Staff morale was high and services punctual. Why not keep the premier Anglo-Scots rail link in the public sector? The chief executive disavows the compliment.
‘DOR has worked despite being in the public sector not because of it,’ says Holden. He alludes to a good relationship with Clare Moriarty, Director General of Rail at the DfT at the time, and the inspired choice of Karen Boswell to lead DOR’s East Coast operation. However, the main reason for its success was its simplicity. The team was small, temporary and knew about franchises.
Nevertheless, the successful custodianship of the jewel of the east marks a singular achievement for Holden – who has form in this area – just as it does for Boswell and indeed train crew and depot staff from Craigentinny to Bounds Green.
Fire and rescue
Back in May 2003, Holden was drafted in by the Strategic Rail Authority to take over the failed South Eastern franchise run by Connex. As managing director, Michael Holden appointed a senior team full of experienced rail managers and set about boosting reliability, service quality and staff morale. It was a role he performed for three years until the franchise, as it is now, passed back into the private sector, this time under the aegis of Govia.
Surely walking through the post- apocalyptic fallout of failed NEG and Connex franchises would confirm this BR careerist as a vertically integrated statist? Not so. Holden carries no torch for nationalised railways.
He served time at Railtrack, joining in 1994, and helped set up the bewildering contractual mosaic posited by the 1993 Railways Act. As zone director of South West, he would have seen at first hand the arrival of Stagecoach and the subsequent departure of far too many drivers – often the seniors in the link – under an ill-thought-through voluntary redundancy scheme.
After the Stephen Byers (transport secretary) coup de foudre opened the sea cocks on Railtrack, Holden stayed put working as Regional Director Southern through Network Rail’s hastily induced birth. It was from a nascent Network Rail that he was seconded by Richard Bowker’s SRA, blue lights flashing, to cone off and resuscitate South Eastern.
For Holden it was a welcome return to passenger operations – he had been operations manager for the South West Division at Network South East under BR. The advantage of running a rail operation is that, ‘You can put your arms round it,’ says Holden. ‘Get to know everyone.’
Quantum of Rugby
Michael Holden joined the railway as a traffic student aged 18 in 1974. BR ran a scheme of sponsored students. ‘What appealed to me was that you were paid throughout. Six months at university and six months practical.’
Competition for places was keen. ‘You do play rugby don’t you?’ Dick Hardy, a training and development officer on the Southern, asked him at his interview at Waterloo. ‘Yes,’ came the measured reply as Holden tamped down distressing memories of the cold and mud of rugby afternoons at the Leys School, Cambridge. ‘I had played but loathed it,’ says Michael.
However, Hardy ticked the form and the two, years later, remain friends – both are members of the Southern Railway Association. Holden read business studies at Portsmouth University half the year and spent the other half shunting in Eastleigh Yard, unloading cars on the Dover-Calais ferry and learning every aspect of railway operations.
After graduation he rose to become area manager at Colchester and later Watford. Along the way he met and married his wife, Irene. The family lives in Woking and the couple have three daughters, Steph, Tash, and Jazz. Through his family, he became involved in Pinewood Gymnastics Club, which was in the throes of a financial crisis. Faced with the club’s closure, Holden became treasurer. ‘I stuck my head above the parapet,’ he says. Over the next four years, the club was made into a Company Limited by Guarantee and a programme put into place to stabilise its finances.
There’s an echo here of his railway career – coloured by analogies of the gymnastic contortions favoured by railway fixers.
Like many BR careerists, Holden sees an industry where its structures fail it. ‘On balance, privatisation was a good thing,’ he says. ‘But if I had that time again, I’d do it differently. BR couldn’t have gone on as it was.’ Despite its shortcomings, he believes the industry is coming to terms with itself. ‘In the last 10 years, the industry has started to mature,’ he argues and then puts in the rider, ‘It now needs further structural realignment.’
For Holden, the continuing controversy with franchising and the emerging crisis at Network Rail should be viewed as the chance to recalibrate the industry. He terms it, ‘a once-in-a-generation opportunity to reset the British organisational model to give it a better chance to work more effectively.’
Holden has spoken publicly about this and the challenges the rail industry faces. The government is too closely involved in railway minutiae and has lost sight of the need for long-term vision and strategy.
‘I’m not really in favour of government delivering public services – it does not have a good track record.’ Unhappily the huge sums of money involved make it difficult for central government to relinquish control.
Red in tooth and claw
Speaking earlier this year in the United States he said, ’It is plain to see that competition drives improvement and innovation, so long as it isn’t stifled by the existing rules of the system it is plugged into.
Equally, free market capitalism, red in tooth and claw, does not sit so well in an industry which has significant natural monopolies, severe capacity restrictions, consumes significant public funds and requires extensive collaboration across its interfaces to make it work properly.’ A pragmatic approach that capitalises on the industry’s inherent strengths is what’s needed. The big problem is defining who does what.
‘Network Rail needs to have something done to it,’ he says. ’It’s not helping the customer.’ In fact Network Rail is too big and responsible for too much – operations, development, maintenance project management and a vast property portfolio.
Holden says network planning and access allocation should be handed to a separate government agency, into which Network Rail’s current longer- term planning activities should be transferred.
The new agency would also specify, manage and let inter-urban franchises. Access planning, timetabling and matters requiring cross-industry consistency, for example fares and ticketing systems, would also be overseen by this agency. Holden makes it clear such an agency would need to be run by well paid, competent people with the requisite railway, commercial and planning skills.
Network Rail he sees as becoming a delivery organisation concentrating on major project execution, day- to-day renewals and maintenance, and management and operation of the network. Local arrangements would be agreed with the agency. An evolving system would supplant the risk-averse centrist track authority.
Trains and Mains
Holden emphasises the success of locally specified railways. ‘The concessioning model seems to work well when there is a local public transport authority which sees rail travel as a key driver of the economic and social fabric of its community.’
Concessions are where the local authority specifies the service required and takes the revenue risk on it. This leaves the train service operator free to concentrate solely on running the service.
‘All tram and light rail systems are operated on this kind of model, as is Merseyrail.’ The idea is gaining ground and indeed works well on London Overground, Croydon Tramlink and the Tyne and Wear Metro. The principle is to take away the decision making from a remote authority and make it local. More urban commuter franchises could be absorbed by the model, he argues.
However, long-distance services should be run as open access agreements. It is unfair to expect incumbent franchisees to bear the loss of revenue open access brings.
Better to open the whole route up to commercial competition. ‘The dog fight for paths on the East Coast Main Line has been a recurring soap opera over the last 15 years, and has consumed enormous energy,’ says Holden.
Although the original 1993 act provided for on-track competition, the huge success of railways constrains capacity needed for extra paths. An independent rail-run rail agency, a redefinition of Network Rail, greater local control and the introduction of open access, long- distance, operators in competition with each other will create a very different railway from the current model. Such change would require an awful lot of determination and leadership.Strategic Vision
‘Our biggest problem is lack of leadership. There’s no driving mind, no strategy, no vision,’ says Holden.
What about the RDG? ‘The RDG was an attempt to fill the void but really only for TOCs and Network Rail and was unable to occupy that position properly.’ He is equally dismissive of the ORR and DfT. Look further at railways and the disjointed nature of the thinking behind the future is even more evident.
‘Take HS2,’ he says, ‘There’s no central vision. How will it be regulated? Franchised? Fares and ticketing?’ Holden shrugs. Why does it end at Curzon Street in Birmingham and not the recently redeveloped New Street? Why no connection to Heathrow? Crossrail is the same – no connection to the West Coast Main Line. Where’s the joined-up thinking? Holden’s ideas have a broad currency among railway staff, fed up with the inadequate mechanisms that govern an industry keen to expand.
‘We are experiencing the problems of success, a good thing. The government has shown enormous faith in railways,’ he says. The industry is fit, full of pioneers and keen to expand. Adult-onset fitness forms a theme in Holden’s own career.
Holden’s dramatic weight loss and physical fitness regime came about when he left South Eastern Trains 10 years ago – aged 50. He had been a supporter of the Railway Children charity from early on and is also a committee member of the Railway Ball – a separate entity to Railway Children and among its biggest fundraisers. Then 10 years ago his role changed.
‘We were looking for new challenges. The roster of annual events became stale, and we wanted something to attract leaders of industry.’ The idea of organising a Railway Children ascent of Mount Kilimanjaro came up. ‘I latched onto this and felt duty bound to go. It was the spur I needed. I had put on weight in my forties.’ In fact old photos are now misleading – be warned.
‘I turned 50, left South Eastern Trains in April 2006 and decided to take up the gym twice a week to get in trim.’ He also went swimming and took up long hikes – an essential element of preparation for life in the mountains.
After Kili he maintained the fitness level, stepping it up to mount an attempt on Everest Base Camp – as part of a Railway Children expedition – in March this year.
‘Ten months before the expedition, I made changes to what I ate, cut out cereal and sugar. I‘d eat a lot of eggs, chicken and nuts.’ Holden manages to fit in exercise around a busy routine by walking – to the railway station from his house, 1.7 miles, and from Waterloo to Chancery Lane – a 20-minute dash. All this saw him lose 14 kilos in 10 months.
Consultancy work took him to Sweden and Ireland as well as a broad sweep of infrastructure providers, train operators, railway companies and government, but he finds time to keep fit and devotes considerable time to Railway Children.
‘Charitable fundraising is quite a tough world, but we’ve been able to secure key funding increases each year through the recession and the medium of the Railway Ball attracting senior people in the rail industry.’ The railway industry has a great sense of togetherness that has worked well for Railway Children. Already Holden is training for an expedition to Mount Kenya next year.
Holden’s ideas of a new pro-rail government agency, a reformed Network Rail and better thought through train operations might have seemed fanciful a year ago. Now such alchemy is being openly discussed in Whitehall. Much of the current government’s hopes for future prosperity depend on the base-metal of a strong economy. Railways are seen as the catalyst, the philosopher’s stone. What’s needed are mountain people, not the myopia of the valley floor, to provide unified vision and purpose.
One benefit of a majority administration and the long and much admired tenure of Patrick McLoughlin as Secretary of State is a deepening governmental knowledge of the industry. Next year marks the 20th anniversary of the floatation of Railtrack and the launching of the first private franchises. Structural change is long overdue if only to better accommodate rail’s inherent success and capacity imperatives. Most railway people understand this. Downing Street, we know, takes a close interest in rail – witness its intervention in the un-pausing of Midland Main Line electrification – and will be considering this too.
The next step must involve serious leaders from within the industry leading it from the top. This Christmas, once the cabinet parties are over and it’s safe to put the mistletoe back up, Holden’s Theorem may well form the basis of a powerful New Year’s Resolution for railways at No. 10.
Main photo: shutterstock.com.