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21st Century Ford

Dr John Prideaux

 

In the heyday of the pre-nationalisation railways young managers were expected to go wherever their career progression took them. Of his early years on the London & Morth Eastern Railway, Gerard Fiennes records that he and his family lived in 11 houses in 10 years, but then he was a high flier on the up.

British Rail continued this policy, with a move to a new post every two years or so. And, as for the post, it was assumed that – engineering excepted – a railway manager could turn his hand to any job.

Thus, in the case of John Prideaux, at the end of the 1970s the BR Board's personnel department obviously decided that the young man beavering away as its Strategic Planning Officer at the 222 Marylebone Road headquarters – better known as the Kremlin – needed to get out and about a bit. So what better than to appoint him Divisional Manager Birmingham to experience operational management at the sharp end.

Then, after a couple of years, it was back to the Board as Director of the Policy Unit, just as Bob Reid was unleashing his business led railway. And the business led railway opened up a new world for the top tier of ambitious railwaymen.

In particular, it created sectors – InterCity, Regional, Freight and so on. Initially, a sector bought in its operations from the Regions, but the remit was to become what we would now call vertically integrated businesses.

There were commercial remits too. InterCity was required to run without subsidy and make a profit. And there were projects to manage, like electrifying East Coast Main Line

Director InterCity was a plum job and in February 1986 John Prideaux got it – with a string attached. The ‘string' was that InterCity was losing 25% of turnover but achieving profitability was mandatory.

Profitability was achieved, and in doing so Prideaux grew to love the job. So that when at the end of 1991 the BR Board told him that his next task was to sort out the route of the Channel Tunnel Rail Link, he didn't want to go.

‘I never wanted to leave InterCity. I'd have been very happy to continue and it would have been nice solution if I still had InterCity to run', he recalls.

Looking back over his period with the business, what he is most proud of it's the number of InterCity people who have now reached ‘relatively dizzying heights'. Readers may recall that the former manager of Midland Main Line is now the Commercial Director of a billion pound plus transport group which is about a dizzying as you can get.

 

New route

BR had been making slow progress on the CTRL and Prideaux's appointment resulted from Government demanding a change of management if it were to remain with the nationalised railway. In his new post he was also responsible for that early Public Private Partnership Heathrow Express.

Prideaux's approach was to ensure that the then Department of Transport, the Department of the Environment and the Treasury were all involved in the process of developing the route. It was, he says ‘a fiercely logical process' which would come to whatever conclusion it came to'.

At this time the BR Board's preferred alignment saw the CTRL running in tunnel under London from the south east to a new terminal at Kings Cross. Given that the Tunnel was more east than south from London , the logic of this alignment was ‘rather shaky'. Hence, the new study came up with the current approach from the east into St Pancras – which also fitted in with the Government's desire to regenerate the Stratford ‘corridor'.

This not go down well with BR, still busily promoting the Kings Cross bill. So John Prideaux was unpopular and since, what with privatisation, BR didn't have a job which he would have found appealing he left, or rather BR left him. The Government saw it as a job well done, reflected in a CBE.

 

New

Having left BR a new career began. With his CTRL background he was immediately involved in a number of unsuccessful bids for the project.

One consortium pulled out from the pre-qualification bidding late in the day because it did not have the necessary financial ‘critical mass'. This was a dissapointing decision but, in retrospect, ‘hugely wise'.

But when the shortlist of four bidders emerged he was back on board as a supervisory board of the Green Arrow consortium, looking after the ‘railway bits' Once again, the word ‘enjoyable' is used.

This was a heavyweight consortium, members including Siemens, Hochtief Costain and Nishimatsu. But it failed to make the final cut. In retrospect, Prideaux reckons that its estimates of costs and risks were ‘about right'.

Still very much in ‘planner mode' Prideaux next became involved in a preliminary look at access to London 's airports which lead into the LASSUS study where he led the successful consortium which bid for the consultancy.

This too was ‘rewarding' because a number of its recommendations are now either policy or happening. This includes the ‘wild and radical proposals of bus lanes on motorways' and the proposal for the Heathrow rail link to run into St Pancras.

Unfinished business from this work includes a people mover linking Euston and Kings Cross/St Pancras. This would give particular benefits for those using St Pancras for airport access or future Eurostar services.

So there was plenty to keep John Prideaux busy. ‘And then the ROSCO thing started'.

 

ROSCO sale

Prideaux had worked with leasing specialists Babcock & Brown before and the first stage was to see if their expertise and his knowledge of trains could come together. It did and the next stage was to raise the necessary finance.

Those of us who were around at the time know that the Rolling Stock Companies were not seen as the ‘money machines' they now appear in retrospect. Prideaux and Babcock saw around 25 financial institutions.

‘At that time', says Prideaux ‘touching railway privatisation was a crazy thing to do'. Certainly one high street bank pulled its ROSCO offer three days before the bidding deadline when the main board decided that privatisation was too risky.

It says something about Prideaux's stature in the industry that Japanese bank Nomura joined the party, the only major financial organisation to do so. So, other than the Management Buy Outs, the Prideaux & Associates/Babacock & Brown/Nomura grouping was the only buyer in town and won Angel.

 

Privatisation focus

Talking of the private sector, what does Prideaux think privatisation has brought to the railway. Well, he reckons that most comments arein the best Mandy Rice Davies tradition of they would say that, wouldn't they. The best of railway management was pretty good. ‘I've never shared the view that people who were part of BR were by definition useless' (Margaret Thatcher refers). Hence the rise of BR managers already mentioned.

But, if privatisation hasn't brought in dynamic thrusting management (© R. Ford: My book of privatisation clichés) it has brought focus.

Successful managers in the nationalised industry, in Prideaux' view, tended to have 360 degree vision. ‘You never quite knew what pressures might hit you next and what the balance between them might be'.

InterCity was not that bad, because of the dominating remit to make a profit. Even so, management had to be sensitive to a whole range of policy issues.

But in private industry, managers can afford to be more focused. They are given objectives to meet and the business either works or runs badly. It is, says Prideaux, a lot more black and white'.

Echoing the view of other interviewees in this series, Prideaux believes that privatisation has succeeded in bringing in more funding. ‘There are far more funds available than we ever received and at much lower cost.

Privatisation has also brought growth, though not necessarily created it. Given that he presided over the previous boom in InterCity ridership, Prideaux has an interesting observation on the differences a decade apart.

Back then, there was expansionist road programme and InterCity was having to put its fares up to meet its profit remit and it still grew the market. Now, there are deteriorating roads, growing congestion and falling fares

 

Light rail opportunities

While best known as a heavy rail man John Prideaux is now heavily involved in light rail. This began when the first Bob Reid retired from BR and suggested that Prideaux took his place on the Docklands Light Railway Board.

‘A lot of fun was had' as the DLR was in one of its expansion phases, including the switch over to the new Alacatel signalling. Later while he was still on the board came the Lewisham extension, the franchising process and the early days of the City Airport scheme.

He sums it up as a ‘very interestng and exciting time'. He left when the London Docklands Development Corporation folded and became Chairman of the Altram consortium, then bidding to take over Manchester Metrolink and now implementing the current extensions.

Metrolink, he thinks, was very well conceived' from the start. The original lines are now carrying as many people into Manchester a day as the surrounding heavy rail network. But he points out a significant difference between the two systems, ‘heavy rail receives a subsidy of £65million a year, Metrolink runs without subsidy'. Not surprisingly, Prideaux sees scope for more Railtrack lines around Manchester to be converted to light rail.

As a railwayman, Prideaux has enjoyed ‘ getting involved' in light rail. One of its attractions is that, like InterCity, potential customers have a choice and they choose to use it only if they want to.

 

Franchising concerns

While I suspect that I know the answer, I ask why he hasn't become involved in passenger rail franchising. He accepts my suggestion that it would have been too small a job, InterCity was fragmented into seven franchises. However, the real reason was that he was too busy, with his DLR directorship, the LASSUS study plus the executive Chairmanship of Angel Trains of which is now a non-executive Director.

But what about the current round of franchise replacement? Well, he is not ‘directly involved'. Nor is he that impressed with the replacement process.

While the concept of replacing the seven year franchises which expire during 2003-04 over a longer period was ‘laudatory', ‘tossing everything up in the air' has introduced new levels of uncertainty'.

Prideaux believes that ‘a lot more new trains would have been ordered without this uncertainty'. What? Even with franchises expiring in the next three to four years? What about residual value and all those other factors that worry my banking friends.?

Time for a mini tutorial. The lease rentals for the existing fleets taken over by the ROSCOs were based on indifference pricing. This aimed to make the total cost – finance, maintenance, fuel and overhauls' for existing trains the same as those for new stock.

Since then, the real prices of new trains have fallen – a four car Networker cost £4million in 1989 money, a Juniper or Electrostar today will cost around £3.2million. On top of which interest rates for finance are lower too.

So replacing even relatively recent stock such as Class 455s and Class 317s could be economic, let alone the Mk 1 fleet. But once you start changing the franchising rules and introduce uncertainty Train Operating Companies aren't going to sign up for new trains, and the associated introduction costs.

So he wonders whether replacement will achieve its objectives, adding dryly, ‘It would be nice to know what those objectives are and see where you might get'.

 

Strategic vision

As a one time Head of BR's Policy Unit Prideaux believes strongly that ‘you have to have a strategy for the rail network'. Under this long term strategy, those running the railway can do much within a shorter timescale.

This ‘very strong view on how to run an efficient and sensible railway' brings us naturally to the topical issue of the future of Railtrack's high speed inter-city routes. This is something InterCity was addressing when Prideaux was its Director.

As is well known, InterCity reviewed the West Coast Main Line was over a range of options from ‘do nothing' to a new high speed line. The current West Coast Route Modernisation project is not that different from the outcome of the earlier study.

Where the approach differs is that when the InterCity Investment committee approved InterCity 250 in 1991, higher speed was based on canting the track more. There would have been a 26m long coach and 8% of cant. Today, the tilting trains ‘have come of age' so the vehicles cant instead of the track.

So, the trains (being funded by Angel) and the infrastructure for the West Coast are ‘a good fit'. If you decided to try and do more on the West Coast, you would have to be able to alter the competitive position of rail. Cutting the journey times to Liverpool and Manchester further below 2hr is not going to bring significant gains compared with buying more trains and doubling the frequency.

 

Conservative on GW

On the Great Western, where first Group and Virgin Rail are getting excited about 160mile/h gas turbine powered trains, Prideaux is surprisingly conservative. ‘Even going to 300km/h would not do much good', he says, ‘because of all the short distance city pairs'. And it is true that what stressed the IC125 power cars was the stop go driving over repeated short sprints.

He recalls that InterCity never found a case for going much over 125mile/h on Great Western. However, useful journey time reductions could be achieved by concentrated major line speed improvements at such places as Reading , Swindon and Wootton Bassett. Nor does he see a case for electrification.

 

Radical ECML

Once again, Prideaux argues that massive investment is justified only when it swings the competitive position decisively in favour of rail. Which brings us to the ECML.

When he took over InterCity and the ECML electrification, electric traction was going to save three minutes on the existing IC125 London-Edinburgh timings. The rest of the reduction from 4hr 35 min to 3hr 59 min was down to civil engineering and more effective track maintenance.

He recalls that the night before the Queen inaugurated the ECML electrification in June 1991, there was a dinner for the project team. Prideaux pointed out that Project Director Don Heath had been working on the ECML for ten years and that since it would take at least 10 years for the next upgrade it wasn't to soon to start.

A year later, privatisation was in the Conservative election manifesto, so nothing happened. Now, nine years later, the Shadow Strategic Rail Authority reckons that any major upgrade, such as the Virgin proposal for a parallel high speed line between Peterborough and Colton Junction could not be available this side of 2010. As Prideaux says, Railways are a very long term industry.

He also reckons that the Virgin proposal does not go far enough in terms of journey time reduction. This provocative statement is based on the belief that, other than the CTRL, the ECML is the only transport corridor with the traffic flows to justify heavy investment in a ‘radically new railway'.

So how radical is he thinking? Well, how about a high speed tunnel under York , to avoid the speed restrictions through the station and its approaches. And there could be a ‘Berwickshire by-pass', although he prefers a new alignment between Tyneside and Edinburgh.

And we should emulate the French approach to ‘up and over' alignments. As an example of how steep gradients can save money, Prideaux reckons that adopting some 1:40 gradients on the CTRL, in place of the nominal ruling gradient of 1:90, saved £300million on environmental works, tunnels and cuttings.

Then there is another issue that I have not seen raised elsewhere. The official justification for the new line is capacity, but building it for ultra-high speed adds a commercial justification in that you can win traffic from the Edinburgh/Glasgow-London airlines, Then what happens at Kings Cross? It has only eight main line platforms and a short station throat before the tunnels.

As Prideaux says, ‘you have to decide your long term aims' before you start planning new infrastructure.

 

Leasing

Finally we come to train leasing where Angel has funded over half of the current traction and rolling stock on order. Its fleet includes the Virgin Pendolini, the EWS locomotives, the Siemens Class 333 electric multiple units for Northern spirit, the Alstom Coradia diesel multiple units for First North Western, not to mention the recent speculative order for Desiro electric multiple units – a good solid portfolio.

Funding more trains is not seen as a problem. While the City used to think that privatisation was unattractive, now it is ‘very sanguine' when it comes to lending money.

And as already mentioned, Prideaux believes that leasing new trains is not prohibitive, even for short franchises. ‘In the early days people got far too bothered about franchise length, whereas even with the 15 year franchises you are leasing for only 10 years or so'.

Take the Virgin Pendolini fleet. This is due to enter service in 2002 and the franchise runs to 2012 – so Angel is taking a 20 year residual value on these assets.

Or, what about the Class 333. These will be leased by Northern Spirit for three years at most out of a 30 year life. ‘But we all believe that these trains will be leased for 35 years and with rentals keeping pace with inflation' says Prideaux bullishly.

Into this more optimistic world, franchise replacement has thrown a sizeable spanner. Privatisation brought focus, and the leasing market benefited from franchises knowing what they were doing and getting on with it.

But with the launch of franchise replacement, announced at the May 1999 Rail Summit, key people in franchises turned from the immediate needs of the business to how to ensure survival by winning a longer term. Not surprisingly, replacing old rolling stock or buying extra capacity went by the board. Prideaux estimates that between 1,000 and 2,000 vehicles would have been ordered by now in the absence of such disruption.

His message to the SSRA, as a railwayman and a businessman, is that the industry needs clear long term vision made up of a series of ‘sensible strategic propositions'. Within this overall structure, the Train Operating Companies then compete on marketing and operational efficiency.

And the man who once ran East and West Coast, Great Western, Anglia, Midland and Cross Country, not to mention Gatwick Express profitably. Who disrupted ECML services for that brief moment when Edinburgh was 3hr 29min by rail from London . Who took the CTRL into St Pancras via Stratford . And who put together the only non MBO consortium to buy a ROSCO is, I sense, impatient with the current drift.

‘Decide what we want and let's get on with it' he says as the interview ends. And you can take your choice as to whether ‘it' is the high speed ECML, Mk 1 stock replacement, Manchester Metrolink taking over more main lines or the future of the IC125 fleet.

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