Chris Bolt: 'The rail reorganisation now arriving at platform one cannot be allowed to fail'

The man charged with restoring harmony to the rail network tells Clayton Hirst his first task is to tackle the blame culture

Few people would envy Chris Bolt's journey into the office. For starters he lives in Rugby and works in London, so his commute by rail takes well over an hour. And his journey takes him on Britain's poorest-performing long-distance rail service - the Virgin West Coast - where one in four trains is late, leaving commuters' blood boiling.

But we shouldn't feel too sorry for Bolt as he is the man charged with overseeing the country's fabulously complicated part-privatised rail network. As the fat controller, or to be more polite, chairman of the Office of Rail Regulation (ORR), he has a huge task ahead of him. Days after Bolt arrived at the ORR in July, Alistair Darling, the Transport Secretary, announced the latest government reorganisation of the railways. Billed as a "once in a generation" opportunity to fix the mess created by privatisation and the subsequent partial re-nationalisation, the ORR was given unprecedented powers.

It now decides how many billions of public money is needed to fix the creaking network; and it breathes down the neck of track operator Network Rail to ensure it's spending the money wisely. It is also charged with restoring harmony between the warring factions of the industry. Oh, and soon it will be in charge of safety.

"We can't afford to keep changing the structure [of the rail industry], so we have to get this one right," says Bolt. "Everyone must approach this in the spirit of 'failure is not an option'. Every single party must develop a shared interest in making the industry succeed." His rallying call has a familiar ring. Two years ago when Network Rail was born out of the ashes of Railtrack, the industry made a similar pledge. Six months in and the old rivalries reappeared, notably between the ORR and the soon-to-be-abolished Strategic Rail Authority.

Then, the ORR was run not by a board but by one man: Tom Winsor. Critics said that Winsor was an autocrat who spent too much time on the legal minutiae of the rail industry. Supporters, on the other hand, said he tightened up the woolly railway laws.

The industry has yet to suss out Bolt, but on first impression he appears to be taking a more conciliatory and less legal approach to regulation. He refuses to criticise the Winsor regime, although he says that having a board rather than a single regulator ensures that decisions are "rigorously challenged".

But last month Bolt's new board suffered a setback when ORR chief executive, Suzanne McCarthy, resigned after just five months. "You have seen the statement. That is all we are saying," Bolt says tersely. The statement in question sheds little light on why McCarthy quit, saying: "It was not the job she thought she came to the ORR to do". With a permanent replacement not expected to be appointed until well into the New Year, Bolt has decided to press ahead with his reforms anyway. This week he will attempt to tackle a problem that has bedevilled the railways since privatisation: the blame culture. The operational separation of track and wheel created a feeding frenzy for lawyers. If a train operator is delayed by a problem on the track then it claims compensation - and vice versa. This, says Bolt, is counter- productive. "The various industry parties try and resolve problems in their own little boxes without talking to each other."

Bolt isn't proposing to do away with compensation payments. Instead, he is considering passing the responsibility of late-running trains to one organisation: Network Rail. This will be the central proposal in an ORR consultation document due to be published on Tuesday. "If Network Rail has lead responsibility, then - if there is a problem on the network - it is not a case of haggling over how to deal with it. Network Rail will have responsibility for telling the train operators to do particular things to recover from that problem," says Bolt. "People on the ground would work together to solve those problems, and come up with performance improvement plans."

Bolt's idea would potentially have a have a positive knock-on effect on the governance of Network Rail. The company doesn't have shareholders, but instead is held to account by 100 "members", made up of rail industry executives and members of the public. But with the current compensation structure in place, some members - notably the train- operating companies - benefit if Network Rail fails. This, say some critics, means that many members have little interest in seeing Network Rail improve its performance.

Bolt says: "Network Rail, as a company limited by guarantee, is different to an investor-owned utility. I know, having worked for Transco for three years, what it is like to have a parent company as immediate shareholder, and the pressures from institutional shareholders. That doesn't exist with Network Rail."

When asked if Network Rail's membership structure works, Bolt says: "It is not for us to take a view on Network Rail's governance." But much to the irritation of thecompany, this is exactly what Bolt did in a report published last month. "As a company limited by guarantee, Network Rail's members do not have a personal financial incentive to require the company to increase its profitability though greater efficiency and successful operation of its business," said the ORR report.

Ding-dongs between Network Rail and its regulator shouldn't come as a surprise. The regulator's job is to ask difficult questions and ensure that public money is spent wisely. Certainly, the ORR under Winsor did just that when settling how much money Network Rail could spend in its first five years. It eventually settled on £24.2bn, on condition that Network Rail made cost-savings of 31 per cent. Even for the railways, where costs have spiralled in recent years, this was considered a tough target.

However, Bolt warns of further cuts. "At the end of the current review period Network Rail's cost base will still be higher than before the Hatfield rail crash. Should that be the case? I am not going to predict a particular [future] cost case for Network Rail, but it will be well below the levels at the end of the five-year period."

This illustrates what will be the biggest test of Bolt and the new ORR. In the bad old days, wrangling and reading the letter of the law was the way the railways were run. While it didn't make for harmony, at least everyone understood how it worked; it was second nature.

Bolt must make tough decisions; ruffle feathers; tell people to do things they don't want to do. But at the same time he wants to make the rail industry harmonious. As a customer on one of the country's worst routes he will soon learn if he is succeeding.

BIOGRAPHY

Born: October 1953.

Education: Read economics at Gonville & Caius College, Cambridge

Career

1975: Economist in a number of government departments including the Treasury and the Home Office

1988: Part of the Department of the Environment team responsible for privatising the water industry

1989: Head of economic regulation at Ofwat, the water regulator

1994: Head of economic regulation at the ORR

1998: Rail regulator at the ORR

1999: Regulation and corporate affairs director at Transco, the gas pipeline operator

2001: Group director of regulation and public policy at Lattice, Transco's parent company

2002: Started four-year term as arbiter for the London Underground public-private partnership

2004: Chairman of the ORR