Tracks of my years at the heart of rail

The headquarters, where more than 2,000 people worked, seem to have been put there with one aim. It makes a statement: "we are the best" and when the building went up in 1906, that was a fact. The country that had given railways to the world was still out in front.

Frank Paterson, a forceful, plain- speaking Aberdonian, is retired now

and he busies himself a couple of days a week a short stroll away from his old boardroom inside another large railway building. This also boasts a "best in the world" tag and was conceived on a grand scale.

Here at the National Railway Museum, where Frank is on the advisory board and chairman of the Friends group, they have an ambitious plan to ensure that in the long-term they stay the best. The wheels are in motion to spend 20m on a major re-vamp of the main hall and the construction of a mezzanine floor which will enhance the wow factor

of the collection.

Coincidentally that's also the sum being spent on Frank's old headquarters. But when that work is completed next month, it won't be flying the flag for our railway system. It is re-opening as a five-star hotel.

Tops in museums, but second class for actual railways. It's not a claim you imagine would have impressed the Victorians who ran the North Eastern Railway.

Their NER was the engine which drove this region's wealth, shifting the coal, steel, chemicals and the rest. The Edwardian top brass of the NER wanted something that embodied their railway's importance and they paid 104,462, five shillings and eight pence to get it.

The building hosted its first board meeting in September 1906. Red carpets were rolled out and a Herr Iff and his orchestra was brought up from London to perform.

The drill thereafter was for full board meetings twice a month on Fridays following a convivial night at the Royal Station Hotel for the directors. One of them was Sir Edward Grey, later the Foreign Secretary famous for predicting in August 1914 that the lights were going out all over Europe and would not be lit again in his lifetime.

It was a bumpy ride after the war and re-organisation happened once in every generation throughout the 20th century. During these upheavals, the York HQ retained its northern pre-eminence. In 1923 it accommodated the newly-merged LNER and then in 1948 the North East region of the newly nationalised British Railways. In 1967, the new nameplate at the doors said Eastern Region headquarters of British Rail. Frank Paterson came through them for the first time as General Manager in 1978.

That was his title and that's how he was addressed by all staff. Even when he mixed socially off duty with his people at the staff association golf course, he was "General Manager".

People in his position – always men – were called officers and they had messes. Frank's was on the first floor of the Royal Station Hotel. About 40 others were sufficiently senior to share it with him. On the ground floor was a junior officers' mess (also men only) where about 80 dined and entertained. There was no mess for sergeants or other ranks. The other 35,000 rail workers in the region had canteens.

In the army manner, the backbone of the railways was a clear hierarchy with regulations which appear inflexible and pointless today. A York headquarters clerk in the early 1920s who cycled to work in the snow dressed for protection in riding breeches and boots was sent home to change into a suit. His pay was stopped until he was back at his desk.

The dress regulations had been relaxed by 1948 when Frank joined. He was free to wear a sports jacket to work on Saturdays. The fact that he eventually received the key to the door of the senior officers' mess indicates the hierarchy was there to be climbed by those with energy and talent.

At the place where he wielded power, the title of General Manager is now in the possession of Andrew Coney. He talks about reviving the glamour of the golden age of railways in what will be the 107-bedroom Cedar Court Grand Hotel and Spa. The hotel is good news for a city which has lost most of its manufacturing base, relies heavily on tourism and does not have a top-end hotel in this category. And this one will look the part. The main architect was Horace Field and his building's handsome presence was much admired by Sir John Betjeman. When he paid a visit to York, this was what he asked to visit first, not the Minster.

Andrew Coney, a dapper figure, even in a hard hat, was still eating dust and weaving around 120 building workers with six weeks to go to opening day. The spa, to open later, is being constructed in the vaults in the basement which held deeds and documents of property transactions from the beginning of the railways. They have all been transferred to the Public Records Office at Kew.

The building was largely intact from its Edwardian heyday, including the bells on the first floor – the preserve of the directors – which summoned couriers from downstairs. Paintings of the whiskered patriarchs who stewarded the railway in the days of steam hang in panelled rooms.

Andrew Coney has been on site since October and talked between brief lulls on his mobile phone, warm from potential suppliers ringing to ask if he has chosen his cheese yet and where his pencils are coming from.

A world-wide recession might not seem a timely moment to open a luxury hotel where the best penthouse suite will cost 600 a night with butler service. But he demurs, having spotted optimistic trends. "I know the London hotel scene, and a lot of their business has shifted to tourism rather than corporate." His hotel's opening offer is for rooms at 99 a night.

Following privatisation, the headquarters became a residual asset of the British Railways Board who sold it on for 14m in 2005 to a property company. The salesman who found the present buyer was the caretaker.

He was on duty when Yorkshire hotelier George Demetriou turned up to check out another building, the original York station hotel, now offices, which faces the old headquarters. The enthusiastic caretaker showed Demetriou a book telling the story of the more illustrious building across the road. Demetriou promptly requested a conducted tour and bought it.

Frank Paterson has no problems about it becoming a hotel. What he mourns is the passing of the old tried-and-tested railway method of doing things. That does not include being deferred to by underlings. In his day authority was there to be challenged. He recalls a meeting in the boardroom to outline changes in the year ahead to 100 trades union and staff representatives. They did not like what they heard and berated him as a lackey of government, a cardboard cut-out running a paper railway.

He was not afraid of radical solutions. "The railways were built by private enterprise at a time when the only competition was the horse and cart. There was tremendous logic in what Dr Beeching did in 1962, cutting a lot of the small lines that never made any money. Most of them should have been closed donkeys years before."

His region set up a pioneering integrated computer system called Aire Power, linking the Coal Board, the Central Electricity Generating Board and British Rail to get coal to the Yorkshire power stations which were producing 20 per cent of the nation's electricity. The two most significant things during his time in charge were the introduction

of the high speed train, the 125 (still running nearly 40 years on), and the electrification of the East Coast main line, approved in 1984, two years before he quit.

What irked him was the bad press that the nationalised industries received – inefficient, over-manned, too costly to the taxpayer. This last claim in particular raises a hollow laugh. The present system is estimated to cost taxpayers four times as much.

"Deadbeats, that was the perception of us," says Frank. "Margaret Thatcher, when she was Shadow Education Secretary, visited a transport staff college and told them: 'If you had anything about you, you wouldn't be working for this lot'."

It was her successor, John Major, who privatised the railways. Frank was not against it in principle. "I'd have liked privatisation because of access to money. I had authority for 1m, the railways board had authority to spend 5m. Above that we had to go to the Department of Transport who went to the Treasury."

He left after a bust-up with his chairman, Sir Bob Reid, over the direction the railways were taking as separate businesses – the Inter City sector, the south east commuter network, freight and parcels and the rump of regional services which never paid their way.

"We were just getting over the coal strike. We'd lost a hell of a lot of money and I told him, 'I don't like what you're mucking around at'. It was a diversion, we were taking our eye off the ball. A colleague of mine, Gerry Fiennes, who wrote a book called I Tried to Run a Railway, said every time we re-organise, we bleed. He was dead right."

Privatisation accelerated down the track of divided responsibilities. "Our system had grown up – a very disciplined one – over 150 years. It was a pyramid structure that interlocked, everyone was responsible to everyone else.

"We lost that hierarchical structure of everyone working for a common purpose. Now they were working for the bottom line. When privatisation was set up in 1996, there were 100 different companies involved in running the railway. You had a whole group of people chasing profit. It was a licence to print money and a field day for consultants."

Things got so out of hand that after the Hitchin rail disaster, no-one knew who had done the track maintenance. Railtrack, one of the chief pillars of privatisation, went in to administration in 2001.

What happened on the night of Frank's farewell dinner is a measure of his popularity. It was planned to be in his mess at the Royal Station Hotel. "We got there and we were told, 'sorry, it's double booked'. I think I was about to get angry when the Lord Mayor came by in her limousine and said, "I believe you are looking for somewhere to have dinner'? They'd secretly arranged it all at the Mansion House."

When he left the railways, a self-confessed workaholic, he went round the world with his wife. Then Edwina Currie, the Health Minister, asked him to bring his management skills to the NHS. Sensing a return of his workaholic tendency, he gave up that job to go round the world with his wife again in the opposite direction. Now a widower, he's chairman of Askham Bryan parish council and guardian of its duck pond. At his old headquarters he was in Room 42 on the first floor, looking out over Toft Green. His predecessor had imported a black leather and chrome look to the furnishings which he felt did not go with the beautiful oak panelling. So he went to the Railway Museum and borrowed some artefacts that fitted better.

Turning it into a hotel in one sense is bringing the story full circle. A hotel owned by a Mrs Sarah Scawin used to occupy part of this site. The NER bought it in 1891 and knocked it down to make way for their new headquarters.

Frank has been to have a look at what they are doing at the old place. "I used to work away from York a lot," he says. "And I always had a different feeling coming back through those beautiful doors."