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Engineering the future

Rail John Armitt

As the government's latest rail review draws near, Network Rail's John Armitt is more comfortable with the task ahead than he was six months ago, discovers Antony Oliver.

Transport secretary Alistair Darling is starting to understand the challenges of running the UK rail network, according to Network Rail chief executive John Armitt.

Despite Darling's recent outburst at the dispatch box that the current set-up was 'no way to run a railway', and the launch of yet another review of the industry's structure, Armitt is sympathetic to Darling's task.

'I quite understand his desire to see more progress more quickly, ' explains Armitt. 'I suspect that if any of us were doing his job we would want to see more progress more quickly and it is absolutely right that he keeps the pressure on us to deliver this.'

In response, Armitt is crystal clear about what he and Network Rail have to do and how he intends to deliver it. Yet while welcoming the review, he totally rejects any suggestion that his organisation is even remotely confused about its role.

'We are going to spend £27bn£28bn over the next five years - that's £6bn a year. To say that we don't know what we are doing or where we are going is an absolute nonsense, ' he asserts. 'I'm more comfortable today [than he was six months ago] because we have a greater understanding of the outputs we are expected to achieve and we know how much money we have got to work with.

His business plan is due out on 31 March and will show the detail of work Network Rail has planned over the next five years, plus the scope of other longer term ideas for the next 10 years. Alongside this he will also set out its spending budget for the next five years.

His primary focus, he explains, remains the use of good engineering to ensure that the 16,000km rail network works properly. This means upgrading as well as maintaining, and usually means highly complex and challenging work.

While relaxed about his role, Armitt is very aware that the outcome of Darling's rail review in July will have significant implications for all in the industry. Being the politician he is, Armitt remains very cagey about what he hopes to see.

'We are not making any statements about what we think the best outcome of the rail review will be, ' he declares in a conclusive manner. 'What the government has to make clear is that no change is not an option and nor is re-nationalisation.

What we settle on between these two is a decision for the government. But I'm not saying what I want.'

That said, he confesses he is relaxed about the possibility of Darling's Department for Transport taking more direct control of the railways after the review.

'The government has to be the final decision-maker about what the strategic network should be, ' he explains. 'If you want an integrated transport policy then you can't have the railways just doing their own thing. The government has to be involved and to set the agenda on how the railway interfaces with the other transport systems.'

Putting his own house in order remains a priority. Armitt is very clear that his decision in October to bring maintenance back into Network Rail was not only right but is already bearing fruit. Of the three contracts taken back so far, he insists that all are operating more cost efficiently, keeping him on track to meet his target of £300M savings over five years.

In addition, he says, both Reading and Wessex are already showing huge performance improvements with delays cut by double the network average.

Yet another 15 contracts still have to be transferred back to Network Rail, and if he is to stick to his mid-summer programme Armitt has some fierce negotiations to conclude.

'Contractors will inevitably seek to get what they consider is the right level of compensation payment from us as a consequence of transfer, ' he explains. 'The right level will vary from company to company. Inevitably in these sort of negotiations you don't arrive at a joint opinion that quickly - we will keep discussing it until we reach a conclusion.'

But he is adamant that reaching the right deal is more important than sticking to his programme. 'Clearly, if we thought we were being pushed to a level where we were not going to reach agreement then we will just let it run until the contract naturally expires. I don't expect that to happen but if it does, it does. We will not be held to ransom over this.'

That said, keeping contractors on-side must be important, particularly as he works to let a dozen or so new renewal contracts - often to the same contractors whose businesses were shattered by decision to cancel maintenance outsourcing. But Armitt says he fears no backlash.

'I think the contractors understand our position, ' he says.

'The volume of work is significant and very attractive to contractors. It is reasonable to assume that if it is attractive they will want to do a good job in order to stay in the market.'

He sees this latest set of five year renewal contracts - the first of which was let to Grant Rail last week - as a major route to greater efficiency. He expects contractors to work very closely with Network Rail engineers to find the best, most cost-effective solutions for the railway.

'The whole idea going forward is to work with contractors to get these efficiencies coming through, ' he says. 'We have given them very clear assurances that we do not intend to take this work back in hand.'

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