Scrutator: Another wheel rolls off

Chris Blackhurst@c_blackhurst
Saturday 12 September 1992 23:02

WORD that John MacGregor, Secretary of State for Transport, is searching for a successor to Sir Bob Reid as chairman of British Rail, barely two years after his appointment, should come as no surprise.

The former Shell boss must wonder what he has taken on as he contemplates the present mess that is the nation's railways.

Privatisation of an industry desperately in need of investment on a scale that no private company could contemplate is not an intelligent proposition at this juncture.

The writing was on the wall a few years ago, when Trafalgar House was offered the Channel rail link. Within Whitehall it seemed an ideal solution: let Trafalgar pay for it, build it and make money from it.

Unfortunately, Sir Nigel Broackes, the Trafalgar chairman, took one look at the project and demanded a pounds 1bn subsidy. Michael Portillo, then junior transport minister, balked and that was that.

The Government should have absorbed an important lesson from the episode: that while an 8 per cent return on investment is good for the Treasury, it is about 10 per cent less than the private sector norm.

It didn't learn, and Sir Bob now finds himself presiding over a business that has no takers. The crown- jewel passenger services will go to the likes of Richard Branson for the all-singing, all-dancing treatment. As for the rest, there is little danger of a queue of potential buyers forming.

An accountants' report due shortly is expected to show that the supposedly profitable freight operation has been bolstered by having its costs borne by the passenger services.

Meanwhile, morale within BR is said to have reached rock-bottom, while the Government prevaricates over the form privatisation should take, and funds become even tighter.

The cutting of the direct service from London to Blackpool, Britain's biggest holiday resort, was just the latest sign of the crisis facing BR.

Much-needed investment is not forthcoming and the complaints, and aggravation, mount.

Sir Bob, who was used to making bigger and bigger profits at Shell, is left to run a network where only InterCity and freight make money and the remaining divisions register losses of telephone number proportions.

He cannot win. If he moans about lack of investment he is a marked man within Whitehall. If he does nothing, he is pilloried for providing a poor rail service.

If the reports of his imminent departure are true, either he is going voluntarily or he is being made a scapegoat for Government inactivity and indecision.

He can console himself with never having wanted the job in the first place - Cecil Parkinson, who was then Secretary of State for Transport, had to use all his legendary charm to persuade Sir Bob to leave Shell.

And, at 58, he still has a good chance of capping his career by doing a job elsewhere that offers him a real prospect of achievement.

That is something, alas, that cannot be said for his eventual successor at BR.

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