Time for a change on our broken railways
THE need for a radical overhaul of how Britain’s dysfunctional railway network is run could not be more urgent.
I have colleagues who have been reduced to tears by the dispute on the Southern Rail franchise, which has turned the commute from Brighton into a nightmare.
Forceful government intervention by seizing back control of the enterprise and firing the union malcontents who have delivered misery and a heavy cost to the economy would enjoy enormous citizen support and win plaudits for Transport Secretary Chris Grayling.
Proposed reforms designed to get Network Rail and the franchises working together through the formation of a series of joint management teams sounds sensible enough.
Concern must be that all this will do is inject a new layer of bureaucracy and spread the blame for delayed engineering works, safety issues, poor time-keeping and all the other complaints. Network Rail, which took over responsibility for tracks, signalling and infrastructure from Railtrack after Labour seized control, has been an unmitigated disaster.
In spite of governance reforms intended to make it more efficient and responsive, it has proved incompetent at delivering vital projects on time. The private sector contractors contrast the uselessness of Network Rail with the efficiency of the London Underground which is able to deliver projects such as the Olympic rail extension on time and on budget. Simply asking the train franchises to work more closely with Network Rail is not enough.
A return to the public markets, with the financial and engineering disciplines that imposes, would be a terrific start and should not be held hostage by the RMT union.
One person watching the struggles of Network Rail closely will be Gavin Patterson of BT. He has forcefully argued that splitting off the telecoms network company Openreach and running it as an independent enterprise would be both a financial and operational mistake. In his view it might result in a slowing of the roll out of ultra-fast broadband and less coverage than the nation has at present.
Clearly telecoms are not the railways, with all the historic problems of ageing tracks and Victorian tunnels, but the similarities are obvious.
Hard luck
ANDREW Bailey is doing a splendid job at the Financial Conduct Authority and, as required, is looking out for consumers.
Even though we are all in favour of protecting people from sharks, it is not absolutely clear that the spread-betting companies fall into this category. In the first instance, you have to be pretty savvy to engage in spread betting. It is not like walking into Ladbrokes and putting a £100 on Chelsea to win the Premier League or shoving endless money into gaming machines.
Much of the population won’t have a clue what contracts for differences are, let alone how to access them, how to set up an account or how to use them.
Those who consider themselves financially sophisticated enough to stay up all night spread betting on Brexit, the US presidential election, the Italian referendum or Marks & Spencer’s results, or whatever takes their fancy, should be on their own.
And if the stupidity of their actions, involving themselves in markets well beyond their capacity, leads to 80pc losing their shirts they deserve all that they get.
The impact on the share prices of IG, CMC and Plus500 was severe after the FCA’s statement, resulting in heavy losses. It is hard to have sympathy for companies that play on the vulnerability of the greedy.
Market reaction was not dissimilar to when the previous incumbent at the FCA, Martin Wheatley, went off-piste with a fumbled pledge to look at historical liabilities of insurers. Billions of pounds were wiped off share values. Investors expect insurance and savings stocks to be safe and secure even if sometimes the products sold, such as endowments and annuities, have been poor value.
Spread betting is gambling for the financially sophisticated and a gift to people who think they have inside knowledge. They don’t require FCA nannying.
Power play
DOROTHY Thompson at Drax always has been a bold thinker. Faced with the extinction of the group’s power plants that were spreading poisonous fumes across Yorkshire, she moved seamlessly towards biomass despite the slings and arrows of those who argued that shipping wood chips across the Atlantic was hardly a green-friendly policy.
Thompson is now seeking to broaden the group’s activities with investment in two separate areas. Drax is to expand its role as a power company of choice for small and medium-sized enterprises with the acquisition of Opus Energy.
And at a time where there is uncertainty about UK power supplies, especially during cold snaps, Thompson is investing in four open cycle gas turbines. These plants can be rapidly fired up during times of peak demand (when renewables cannot be relied upon) and margins soar.
Shares in Drax, up 12.1pc in latest trading, rightly are stoked up.