Government should grasp the opportunities around rail reform
Credit: Shutterstock / Elena Stroud
Darren Caplan, Chief Executive
| Railway Industry Association
The Railways Bill was finally lodged in Parliament last month, after several false dawns and more than seven years since the Williams Rail Review was first launched to provide recommendations on how to reform the UK’s railways.
The proposed legislation, tabled on 5th November, will create Great British Railways (GBR), a new public body that will oversee and coordinate the UK’s rail system. It has been generally welcomed by industry players as progress towards a more strategic approach to co-ordinating rail through better integration of track and train, underpinned by a long-term plan for investment.
The Railway Industry Association (RIA), which champions a dynamic UK rail supply sector, welcomed the progress, and its members – businesses of all shapes and sizes, representing the many rail disciplines – will play a significant role in delivering its various projects across the country. These include Network Rail’s five-year programme of rail maintenance and renewals (more than £30bn between 2024 and 2029) and supplying most of the UK’s rolling stock fleet.
It has been reported that GBR’s workforce will eventually amount to some 100,000 people once it has been stood up, compared to that of Network Rail – the current public, not-for-profit company that owns, operates, and maintains most of the UK’s railway infrastructure and which GBR will replace – which employs 40,000.
‘Transforming while performing’ will be the main challenge for GBR as it establishes itself. Whilst Transport Secretary Heidi Alexander and Rail Minister Lord Peter Hendy are set to provide strategic direction to rail, it is rail professionals who will need to be empowered to run the railway free of political and official interference day-to-day. This is a much-needed departure from the existing system, though it is not clear that the Railways Bill, as currently drafted, will do this.
Rail suppliers want to see GBR as a high-performing organisation which delivers for passengers, rail freight and taxpayers. RIA believes it should be constituted as something akin to a development corporation, which runs train services and rail infrastructure but also leverages assets like the railway’s substantial property and land portfolio to build housing, create jobs and boost regional and national economies. RIA’s Station Investment Zone report makes the case for such opportunities, particularly through the use of private investment, and the initiative even received approving remarks by none other than Prime Minister Keir Starmer during Prime Minister’s Questions last month.
But GBR will only succeed if it can integrate rail funding streams and decision-making across track and train. Given the scale of the mobilisation which lies ahead, a clear implementation plan for the merging and consolidation of key functions and departments across multiple business units needs to be brought forward. Ultimately, a smooth transition will depend on close working with the railway industry, resisting the temptation to become inward-looking during a time of change.
Elsewhere savings and better performance could be realised by shifting annual spending decisions on train operations and some enhancements, and moving them to a fully integrated 5-year planning cycle.
The railway has benefited from 5-year funding settlements for infrastructure for over three decades now, but the legislation currently proposes that the Secretary of State for Transport will be able to reopen these at any time without consultation. Any move away from 5-year funding stability has the potential to create future costs for taxpayers and a deteriorating customer experience for passengers.
The unintended consequence of this could be short-term decisions being taken that remove essential railway funding without transparency over the consequences. So RIA will be calling for targeted legislative amendments ahead of the Second Reading of the Bill this month, to address the risk.
A majority of GBR’s future expenditure will be through the rail supply sector. Therefore, it is vital that GBR provides a clear outlook on future work and procurement, to help reduce both supplier and public sector costs. GBR should consider examples such as the Core Valley Lines in Wales, which combine strong public sector leadership and vision with a substantial transfer of risk to the supply chain to provide services to manage the railway efficiently. It works because the support is a long-term partnership and is integrated across track and train operations.
Alongside these structural changes, RIA acknowledges the Government’s continued commitment to several major rail projects, including HS2, the Transpennine Route Upgrade, East West Rail, Midlands Rail Hub and ongoing enhancements projects. The recent Budget by Chancellor Rachel Reeves also announced an extension of the Docklands Light Railway, along with her retail offer to freeze rail fares for the first time in 30 years. However, we urge the Government to redouble its efforts to get the seemingly stalling Northern Powerhouse Rail scheme back on track, especially given its previous record of having cross-party political support. It is worth noting that whilst on the surface there is much rail work to be done, many rail suppliers are having a difficult time finding work or making a fair return, and confidence in the future rail market is very low.
With all this going on, it is critical that GBR is set up in a way which maintains and sustains all of its ambitions, and this means accelerating other innovative investment models to fund rail where investment from the public purse is not made available. Private and ‘third-party’ investment would give a significant boost to central Government funding, whether from private investors and developers, local governments, or community and regional partnerships. They would draw on good practice from countries overseas, but to succeed, GBR would need to develop an ‘open to business’ culture.
To conclude, the establishment of GBR will probably be the biggest public sector reform undertaken by the Government in this Parliament. It is a huge opportunity to create a better rail network for passengers and freight users, as well as to leverage the railway’s estate to create jobs and build new homes, whilst providing the taxpayer value for money. The UK’s rail businesses and innovative investment will be integral to the success of such a proposed transformation in the months and years ahead – they and we at RIA look forward to working with GBR to try to ensure this potential is fulfilled.
