Jeremy Warner's Outlook: Common sense prevails in rail prosecutions

Common sense has prevailed in the ridiculous and vindictive attempt by prosecutors to hold Gerald Corbett and other former Railtrack executives culpable for the Hatfield rail crash. Having failed to make the charge of corporate manslaughter stand up, the Crown Prosecution Service then proceeded to prosecute under lesser, health and safety legislation, where theoretically a lower standard of proof is required. Yesterday, a high court judge threw out even this watered down case, saying a jury couldn't properly convict on the evidence as presented.

Common sense has prevailed in the ridiculous and vindictive attempt by prosecutors to hold Gerald Corbett and other former Railtrack executives culpable for the Hatfield rail crash. Having failed to make the charge of corporate manslaughter stand up, the Crown Prosecution Service then proceeded to prosecute under lesser, health and safety legislation, where theoretically a lower standard of proof is required. Yesterday, a high court judge threw out even this watered down case, saying a jury couldn't properly convict on the evidence as presented.

The whole endeavour, costing tens of millions of pounds and involving no fewer than 33 QCs and 54 British transport police, has proved a complete waste of time and money, as this column warned it would be at the outset. It was, in any case, always wrong in principle to try to hold the chief executive and other senior executives individually culpable for an accident which had its roots as much in public policy as in any negligence on their part.

Four people died at Hatfield as a result of cracks in the rails. It was a tragic and arguably avoidable accident, yet if such events were routinely held to be the chief executive's fault, even when in a state of ignorance about the operational failures that caused the accident to happen, then no one decent is ever going to want to do these jobs, however good the money. There was never any evidence that Mr Corbett put profit before safety, or indeed of any direct negligence on his part at all.

Mr Corbett has managed to move on. He's now chairman of Woolworths and a privately owned chain of fitness clubs. Yet the experience of Railtrack very nearly destroyed him, and though the relatives of the Hatfield rail victims might regard this as well short of the punishment he deserved, Mr Corbett was always in an impossible position and it is unlikely anyone else could have done better.

In the immediate aftermath of Hatfield, Mr Corbett offered to resign, rightly taking responsibility for the second rail disaster to have happened under his watch. But to accept that the buck stops at the top, to accept responsibility, is quite a different thing from being held directly culpable.

To prove corporate manslaughter, the prosecution is required to show that an individual who "is considered to embody the company" knew that lives were being put at risk through criminal negligence of health and safety rules. The courts must establish a "directing mind and will". Systemic failure, or the negligence of a junior employee, are not sufficient. For this reason, corporate manslaughter prosecutions nearly always fail. Indeed, there have been only three successful prosecutions under existing law, all of them small beer. As a result, the Government is proposing to change the law to make manslaughter prosecutions easier. In the new law, prosecutions could be made for a generalised failure to maintain health and safety standards.

Personally, I think this an extraordinarily dangerous path to go down. Putting individuals on trial for a systemic failure in safety standards would only serve to cement a culture of blame and buck passing in rail companies and other industries where public safety is of prime importance. If such prosecutions were to make another Hatfield less likely, then there might be some point to them, but we will never know the answer to that. Much more probable is that they will lead to an extraordinary escalation in costs and unnecessary safety procedures, putting many smaller companies out of business altogether.

Fortunately for Mr Corbett, the law hasn't yet been changed. Even the dim wits at the CPS could see they'd never make a charge of manslaughter against the individuals responsible for Hatfield stick under the present law, so they moved instead to prosecute under health and safety legislation. Now that too has failed, which for all who hold high office will be an enormous relief. It would have been a terrible precedent to have set.

The root cause of the problem at Hatfield lay in the manner in which the railways were privatised. This structurally separated track from wheel and maintenance, greatly confusing the chain of command and muddying channels of responsibility. Mr Corbett wasn't responsible for that. Nor was he the regulator that starved the company of the resources necessary to be safe while requiring it to meet punishing targets for punctuality and standards of service at a time when, against all predictions, rail travel was hugely increasing, putting ever greater strains on the network.

Though Railtrack is widely portrayed today as a total disaster, its record was actually not that bad. At the time of Hatfield, both punctuality and the accident count were on a strongly improving trend. Today, costs at Railtrack's successor organisation, Network Rail, are running at twice what they were then while punctuality is at less than half. Safety on the railways must always be of paramount concern, but it seems to come at a frightful cost. What's going on now, with the health and safety executive running amok, seems extraordinarily bad value for money. Nothing excuses the tragedy of Hatfield, but the reaction of ministers and prosecutors has been out of all proportion to the underlying nature of the problem.

Reluctant regulator

As both a former City man and the director general of Ofgem who did away with regulation of domestic energy prices, Callum McCarthy, now chairman of the Financial Services Authority, makes an unlikely regulator. While at Ofgem, he also introduced a fully competitive wholesale electricity trading system, to the horror of Old Labour stalwarts who continue to believe free market mechanisms are an inappropriate way of delivering the nation's long-term energy needs.

Indeed, Mr McCarthy ought by rights to go by the sobriquet of "the reluctant regulator", for he seems philosophically to be much more attached to the idea that free markets are largely self regulating than that they need constant policing by government agency if they are to function in the wider public interest. A bit like his counterpart at the Bank of England, Mr McCarthy, now nearly a year into the job, wants to be seen as "boring" - a man who just gets on with the task in hand, keeps a low profile and interferes with markets as little as possible. Whether he is entirely on message with the Government in taking such a detached position remains an interesting question.

He plainly disagrees, for instance, with the price regulation the Government proposes to introduce for the new Sandler suite of simplified savings products. As he demonstrated at Ofgem, Mr McCarthy doesn't like price controls, which he thinks undermine competition and stifle product innovation. Yet as chairman of the FSA, he must now regulate the price-controlled products the Government is encouraging the savings industry to introduce.

To portray the FSA and Treasury as at daggers drawn over these and other matters would be an exaggeration. But the widely held City view that the FSA is little more than the Treasury's poodle is an equally incorrect one.

Mr McCarthy will ultimately be judged on whether the City becomes more or less successful under his regulatory watch. On this front at least, the Government and the FSA chairman share the same aim - to promote a thriving financial services industry, both in the largely wholesale City and the retail market. Yet it is not entirely clear they are singing from the same hymn sheet on how this is best achieved.

Mr McCarthy wants to roll back the frontiers of regulation wherever he safely can. The Government seems more inclined further to advance them. Mr McCarthy wants caveat emptor to rule. The Government wants oodles of compensation whenever things go wrong - excepting, of course, the instances in which it would be the Treasury that pays. Is Mr McCarthy doomed to a King Canute-like role in trying to hold back the tide of regulation, or can his instincts, that markets work best when left to their own devices, win the day? If the City is to maintain its position as the world's biggest international financial centre, it is important the McCarthy view prevails.

jeremy.warner@independent.co.uk