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The buck stops here

COVER STORY:John Armitt and John Spellar will have more influence than most over the lives of Britain's civil engineers over the next 12 months. Armitt, himself an engineer, became Railtrack chief executive just before Christmas. Spellar has been transpor

Mr Motivator

John Armitt's experience at rescuing Costain and developing the Channel Tunnel Rail Link should stand him in good stead as Railtrack's new chief executive.

Andrew Bolton spoke to him last week.

When John Armitt left his job as Costain chief executive last year he said he wanted one last challenge before he retired.

After pulling the contractor back from the brink of collapse and making it profitable again, he felt it was time to move on.

No-one could have predicted that he would have ended up running Railtrack by Christmas.

Not surprisingly the pressure has been on since Armitt started his new job. 'I've been going straight into meetings where I have been pedalling furiously under the table to work out what is going on, ' he says. Those who have met him would not expect this to bother Armitt, a man known to be unflappable in the tensest situations.

Although Railtrack is in administration the company is still responsible for keeping the rail network running safely and as reliably as possible. It is still funded with a combination of government subsidy funnelled through the Strategic Rail Authority and train operating company track access charges.

The track operator also has to pay financial penalties if trains are delayed because of poorly maintained track or if engineering work overruns.

Armitt was hand picked to replace outgoing chief executive Steve Marshall by Alan Bloom, one of the two Ernst & Young partners brought in to oversee the running of Railtrack after Transport Secretary Stephen Byers put it into administration in October (NCE 11 October 2001). It is now Ernst & Young's job to prepare Railtrack's transfer to a not for profit company or to one of the banks preparing to mount a takeover bid for the troubled rail operator.

Bloom contacted Armitt personally to offer him the job soon after Marshall resigned in anger at the government's treatment of the track operator.

Sources say Armitt impressed the administrators because of his civil engineering background, his commercial track record at Costain and because of the rail expertise developed during his time as chief executive of Channel Tunnel Rail Link developer Union Railways, immediately before joining Costain in 1997.

At Union Railways, Armitt also built relationships with people now working for Railtrack or the train operators.

This gave him the personal contacts lacking in his predecessors Gerald Corbett and Marshall who came from the retail sector.

Before joining Union Railways, Armitt had risen through the ranks at John Laing working alongside Stuart Doughty, now his replacement at Costain, and Oliver Whitehead, now Alfred McAlpine chief executive.

While at Laing he led the successful bid for the toll financed Second Severn Crossing.

With Railtrack in administration and shares suspended, Armitt has no direct responsibility to deliver shareholders value in the way his predecessors did. But he is under pressure to help Ernst & Young maximise the track operator's value, so that it can be sold for the highest possible price.

This means improving the performance of the network, so that Railtrack pays less financial penalties for causing train delays. It also means keeping key staff motivated and in their jobs.

If reports of impending mass resignations and plummeting morale among engineering staff are to be believed, Armitt faces a stiff challenge. Typically he seems to be taking this in his stride. 'You have to use statistics to tell you the true situation, ' he says. 'Our staff turnover is 10%; that is not high.

Our sickness level is 3%; that is not high. So at least people are wanting to go to work, ' he says.

His press office points out that sickness rates run at between 6% and 7% of workforces in other companies and that resignation rates have been stable for some months.

Armitt adds that people working for Railtrack have a relatively secure future, whoever ends up owning it. He believes those considering leaving would probably end up in less secure jobs at contractors.

He sees parallels with the challenge he faced as incoming Costain chief executive in 1996. At the time the company was staring financial collapse in the face. It had cumulative losses running to hundreds of millions of pounds and had suffered a huge drop in orders as clients feared the contractor would be unable to finish their jobs.

As chief executive he made a point of travelling the country to talk to regional staff and keep in touch with the work at the coal face, outside headquarters. This involved early starts and late nights, but was vital to maintain morale and lift the company out of the mire. He says the same goes for Railtrack, albeit on a larger scale.

He now has a workforce of between 11,000 and 12,000 nationwide instead of the 9,300 he had when he took over at Costain. But he says the underlying issues are the same.

'There is a bigger audience to get to - there are a lot of offices around the country and its not as easy to get close to the people, ' he admits. But he is rising to the challenge and already planning days out to visit his regional workforce later this month.

Getting the network operating efficiently is also a key task for Armitt. Railtrack attributable train delays fell in December, he claims, but more needs to be done. 'Slightly more than half of the delays are caused by us, the rest are caused by the train operators, ' he says. 'I would be expecting to see an improvement over the next three months.'

Armitt believes the way to improvement lies in developing Railtrack as an equal partner in a supply chain that includes contractors, equipment suppliers and train operators.

'None of us can actually succeed if the others fail, ' he says. As a result he wants to develop closer relationships with suppliers and the train operators so that all of the parties recognise the mutual benefits of working together.

As a former contractor he believes he can see the point of view of the maintenance and renewals companies better than most. He also understands better what amounts to a fair price for construction. These factors could help him develop better client/contractor relations and with it more efficient ways of maintaining and running the network.

Railtrack is already phasing out the adversarial RT1A contracts and replacing them with the more conciliatory IMC2000 form. But Armitt wants to improve relationships with contractors further and is looking to fine tune contracts in an attempt to develop a shared interest in improving the rail network.

Armitt's job at Railtrack is unusual in that he has no idea how long it will last. He is realistic enough to know that it could all end suddenly after Railtrack is sold on, if its new owners decide they want someone else in charge. 'I am running the company now on the basis that I will continue, ' he says.

In his favour, Armitt is well respected and was hand picked for a job that few would want to take on. His rescue of Costain, his work on securing planning permission for the CTRL and his success in negotiating the privately financed Second Severn Crossing deal will doubtless stand him in good stead.

Decision man

John Spellar is facing a year of reckoning in the challenge to deliver the government's faltering 10 year transport plan. Damian Arnold met him.

Transport minister John Spellar is under increasing pressure to put the record straight over mounting conjecture that the government's 10 year transport plan targets will be redrawn.

Amid fears that the £60bn roads budget will be raided to prop up the ailing rail sector, there is concern that a six month review about to start of the Government's £180bn 10 year transport plan will leave it bearing no relation to the highly praised July 2000 launch document.

Spellar concedes that cash could be moved between sectors but insists that spending after 10 years will be the same as originally forecast.

'Some parts of the plan will go faster and some will go slower, ' he says. 'We need to retain flexibility to move money between budgets but we are sticking by our original pledge of monies for each mode of transport.'

A recent MORI survey of 19 top transport professionals confirms that optimism within the industry is dropping after the euphoria that greeted publication of the 10 year plan.

Spellar, however, still repeats the line of previous transport ministers. 'We are faced with a huge challenge to reverse decades of underinvestment in transport infrastructure, ' he says. 'But we are starting to make significant moves forward.'

He cites some impressive statistics to back up his claim. An extra £200M of government cash has just been granted for local transport, and recent Department of Transport Local Government and the Regions (DTLR) figures show that bus ridership is up 1% over the last year, and 4% in London.

Light rail passengers are up 27%, and the number using London's Underground is up 5%. Meanwhile there are 3% more passengers travelling on the national rail network despite the disastrous effects of the Hatfield rail crash in October 2000 and Railtrack's subsequent plunge into receivership last October.

However unlike his predecessor Lord MacDonald, Spellar is refreshingly candid about shortcomings in some areas of transport policy.

Over the delayed multi modal studies from which over 30 major trunk road projects are expected to emerge, Spellar is disarmingly honest about mistakes made and open in his determination to put them right.

'If the transport modelling in the studies is inadequate I'd much rather face up to that and do it again to get more robust figures rather than just carry on. Having a road building programme with inaccurate modelling figures is the last thing we want.'

Spellar has been an MP since 1992, after briefly serving the Birmingham Northfield constituency between 1982 and 1983. He has built a reputation as a decisive politician during his time as Armed Forces Minister at the Ministry of Defence (MoD) before his move to the DTLR. Among his MoD responsibilities was procurement using public private partnerships.

'He is known in Whitehall as someone determined to make tough decisions, ' one transport lobbyist told NCE .

'He has not showed it yet because the demise of Railtrack seems to have stalled everything else but there will be plenty of chances for him to demonstrate his decisiveness over 2002.'

Difficult issues in the coming year will include choosing the site of a major new airport runway in the South East, approving more big road schemes and getting London Underground's public private partnership up and running.

A benign appearance, a household menagerie of 20 cats and hobbies which include gardening and reading hardly give the impression of an imposing political presence. But Spellar has already ruffled feathers recently by threatening to veto the Greater London Authority's proposed £5 congestion charge on motorists entering the centre of the capital if improvements to the public transport system are not in place by early 2003 when the scheme is expected to be launched.

With the Treasury known to be strongly supportive of congestion charging, sources say Spellar's comments have not gone down well in all quarters of government.

Spellar's appointment last June came at a time when it was hoped transport could finally rid itself of the bad publicity that plagued deputy prime minister John Prescott in his tenure as transport secretary between 1997 and 2001.

But no sooner was Stephen Byers in place as transport secretary, than government was drawing new flak from critics by putting Railtrack into administration. 'The government badly mishandled the way it put Railtrack into administration, ' says Imperial College professor of transport infrastructure Stephen Glaister. 'It didn't think through the process of transition from the old arrangement to the new and the confidence of the industry is badly shaken.'

Spellar, meanwhile, flashes his teeth and waxes lyrical about the new men in charge of the railways. 'We have three very good new people: Ian McAllister as chairman of the company limited by guarantee;

Richard Bowker at the Strategic Rail Authority and John Armitt as chief executive of Railtrack.'

He is particularly glowing about Armitt. 'He has the confidence of the industry and engineers to get the company focused on its bread and butter work. And he brings the management skills to oversee major projects having worked on the Channel Tunnel Rail Link.'

The new regime will harness engineers to do what they are good at, he says. 'The old Railtrack was a short term dash for cash and not enough due diligence was undertaken. It was too focused on risk aversion whereas engineers are used to risk management. That's the culture we have to get back into the rail industry, ' says Spellar, who sits in on Cabinet meetings albeit without voting rights.

Looking to the future Spellar is expected to introduce inter- urban tolls for heavy goods vehicles, on the back of concern about the large number of foreign hauliers filling up with cheap fuel in mainland Europe to avoid paying higher VAT in Britain.

Spellar has launched a working party which will look at inter urban tolls using global positioning systems, and could also see heavily taxed UK lorries get rebates to even out the playing field, he says.

Spellar is also hopeful that local government minister Nick Raynsford's White Paper will lead to 'high performing councils' given powers to borrow more money for transport projects on the back of future revenues. 'Raynsford is creating more flexibility and freedom for high performing councils, ' he says.

So six months after leaving the MoD for transport, what does Spellar think of it so far? 'I've finally got used to people not saluting me any more, ' he laughs. 'This job is crucial for the success of UK business but I'm reassured by the fact that there are so many capable people in the transport industry.'

Issues for 2002 Winter/spring lContracts with private consortia for £13bn investment in London Underground are expected to be signed bringing to an end a dispute with the Greater London Authority which claims that the public private partnership will make the Tube unsafe.

lLondon Mayor Ken Livingstone is expected to give the go ahead to congestion charging in London by early 2003. Spellar will need to approve the scheme.

Summer lSix month review of the 10 year transport plan will conclude and the government will map out how much it will spend on transport over the next three years in the Comprehensive Spending Review.

lPlans for a not for profit company limited by guarantee replacing Railtrack must be finalised.

Autumn lA decision is needed on where to build much needed airport runway capacity in the South East.

This will form a major plank of the aviation White Paper.

Throughout 2002 lMajor road schemes must be put out to tender from the Highways Agency's Targeted Programme of Improvements.

Among those are congestion busting projects on the A1(M) Wetherby to Walshford and Ferrybridge to Hookmore; widening on the M25 J12-15, the A303 Stonehenge Tunnel project and a £40M traffic management scheme on the M42.

lAction from the multi-modal studies looking at major bypasses and widening projects is also expected. Look out for government decisions arising from studies for South East Manchester, West Midlands Area, North South Movements in the East Midlands, Tyneside Area, London to Southwest and South Wales, A1 (north), South and West Yorkshire, South Coast and Thames Valley.

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