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Without legislation to create Great British Railways, what’s next for rail reform?

Without legislation to create Great British Railways, what’s next for rail reform?

Rail Partners - Without legislation to create Great British Railways, what’s next for rail reform?
09 November 2023
Andy Bagnall, chief executive

First published in Rail Business Daily.

Sometimes what isn’t in the King’s Speech is as important as what is and that is certainly the case for the rail industry this week as the government has recommitted to establishing Great British Railways, or GBR – and published a draft bill  but will not be giving that bill a legislative slot this side of the next general election.

Expectations around rail reform legislation were set high in February this year at Rail Partners’ George Bradshaw Address, when the Secretary of State for Transport, Mark Harper MP, committed to establishing GBR as a single point of accountability for customers using the railway, at arms-length from Whitehall, putting an end to micromanagement in the day-to-day running of the railway.

While the industry can now get its teeth into a draft bill, it’s disappointing that, two and a half years on from the Plan for Rail being published, a vital element of rail reform will not actually materialise, at least for now. Rather, it looks like we are in a further hiatus until at least the first session of the next parliament, and possibly longer, depending on the priorities of whoever wins the election.

Creating GBR would have provided the underpinning for the reform process, so it’s a blow to industry to see it kicked further down the tracks. However, industry cannot stand still waiting for the government. In the absence of strong political momentum, it must use the levers it does possess without legislation, to push ahead with positive change for customers wherever possible.

A challenging time for rail

The news that legislation isn’t arriving soon comes at a turbulent time for the industry. With an ongoing backdrop of industrial action, services and passenger numbers still below pre-pandemic levels, the cancellation of HS2 north of Birmingham, a reversal on the shift from ticket offices to digital channels, and now the omission of GBR from the King’s Speech, the challenges keep stacking up.

The public, rightly, doesn’t care how our railways are structured, they just want to have trains that run on time, and fares that offer them the best price for their journey. But to make this happen, decision-makers must specify what they want the railways to achieve, and give train companies and the rest of the industry the tools to do it.

The risk, for this administration or for whoever is in government after the next election, is that a continued emphasis on cost reduction, without giving operators the necessary flexibility to grow revenues, entrenches a cycle of decline. A shrinking railway cannot help government achieve net zero or draw investment into towns and cities across Britain. That’s why reform is urgent.

So, without GBR, what can we do to improve our railways?

Despite the challenges, and the continuing need for long-term reform, there are ways we can still move forward that can help the railway deliver better outcomes for customers, and the taxpayer.

With another aspect of the Plan for Rail, the proposed Passenger Service Contracts, also out of sight for at least a few years, National Rail Contracts introduced during the pandemic need to be evolved to better harness operators’ commercial nous and customer focus. On longer-distance routes, operators need significant commercial freedom and strong incentives to make rail journeys competitive with more polluting forms of travel, while commuter-style contracts need to deliver an efficient and reliable service with an incentive to increase journeys.

A crucial element of this is to reunite cost and revenue considerations which are currently split between two government departments – transport and treasury. No business can operate successfully without being able to look across both sides of the ledger.

In addition, freight operators need an ambitious freight growth target – this will be all the more important without Phase 2 of the HS2 project, which would have brought much needed capacity on the WCML and removed half a million lorries from our roads. 

Lastly, as the railway continues to modernise, fares reform is crucial as it can give the customer confidence that they’re getting the best price for their journey, and allows operators to better use rail capacity through intelligent pricing.

What the next election means for rail

With MPs' focus increasingly turning to re-election, influencing what comes after that is crucial for our sector. The message from Rail Partners’ members to all political parties is to look at the evidence and focus on what works rather than being guided by pre-conceived ideas of what might – whether that is a wild west free-for-all of a network run entirely as open access dictated by market forces, or as a centralised monolithic structure in the public sector.

Despite its flaws, franchising had many successes – doubling passenger numbers, increasing services by a third, and investing £14bn in rolling stock. The strengths of the old system need to be recaptured in whatever is put in its place to address its weaknesses. The best way of doing this is reform to create a rebalanced and reinvigorated public-private partnership. This would also allow greater flexibility to balance the needs of the railway as a network, with the aspirations of devolved authorities for greater influence over their local railways as part of integrated transport systems, particularly in the large conurbations.

Rail reform is vital to spur green growth – so we must get reform right

Rail can be a great enabler for wider objectives, helping Britain to reach net zero, catalysing inward investment in the regions, and connecting communities to new opportunities.

The publication of a draft bill is not sufficient to offset the disappointment that we won’t see structural reform in this parliament. So, the test for government in the meantime is the extent to which they afford the industry as many of the tools as they can in the absence of legislation to deliver improvements. Industry in turn can’t wait for structural change but must use the tools it does possess to focus on passengers and freight customers.

We’re still in a moment of crisis for the railway, the threat of managed decline is real, and whoever is in office after the election will now inherit these challenges.

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