Rail Minister Lord Hendy: nationalisation and the future of rail

After seven months in office, what has Rail Minister Lord Hendy achieved? In an exclusive RAIL interview, Paul Clifton tries to find out.

Peter, Lord Hendy of Richmond Hill, of Imber, dressed all in black as usual, sits at the head of the table. A crumpled and well-used orange vest hangs over the back of his chair.

It’s a refreshing change from the unfeasibly clean, fresh-out-of-the-packet, ill-fitting garments brought by the press team for previous transport ministers to wear briefly in front of the cameras.

“I had been at Network Rail for nine years - six of which were spent waiting for rail reform,” Lord Hendy says.

“Despite all the noise made by successive Secretaries of State, reform was no nearer happening at the last General Election than it had been the day after Keith Williams published his report.”

Hendy is explaining why he took his first ever party political appointment.

At 71 (he really does not look it), he still has fire in his belly for such a challenge. He has held a succession of big jobs, with multi-billion-pound budgets and responsibility for tens of thousands of staff. So why on Earth take on the role of Minister of State, when he knows they come and go with the frequency of football managers - and nearly always depart with a perception of failure?

“I am absolutely committed to reforming the railway. Nobody knows what else to do with it - there is no other plan. I was offered the opportunity, nobody else was doing it, so I took it.”

Hendy has always been ambitious. He clearly enjoyed being “Sir Peter”, and since his elevation to the House of Lords (following his barrister elder brother John), he clearly likes being “Lord Hendy” as well.

But to people he has known for decades, he is still down-to-earth Peter, and he is not in the least offended when addressed that way.

Until last summer, he was a Crossbencher. In other words, not tied to a political party. But not anymore.

That explains why this interview has taken so long to happen. I requested it the day he was appointed. Peter texted back within minutes. Of course, he said, but he would need permission from No 10.

That permission took seven months, passing through two Secretaries of State, and countless advisors multiple times. We spoke often in between, both socially and professionally, but on nothing of consequence.

“I could have put my feet up,” he says, reflecting that most people have retired by his point in life.

“But the opportunity was there. The government, as it is now, had committed itself to rail reform before the election. Of course, the Labour Party had said a lot of things about a lot of subjects, but one of the most substantial documents it published was its Plan for Rail. And there wasn’t a cigarette paper between that and the Williams Report.”

Seven months into power, has anything changed?

Certainly nothing that passengers could notice on their daily journeys, apart perhaps from a shiny departures board reinstated at Euston station.

Hendy has already seen his first Transport Secretary (Louise Haigh) come and go, and now unexpectedly finds himself answering to Heidi Alexander, whom he first knew through Transport for London.

It is certainly not clear how committed the government is to real reform. HM Treasury is already battered by the winds of change, and the Prime Minister has bigger problems to worry about than the administrative structure of an industry that is functioning indifferently. So, what barriers to change does Hendy have to overcome?

“I don’t see any lack of willingness in the government. The Public Ownership Bill [the Passenger Railway Services (Public Ownership) Act 2024] was the first manifesto commitment to become an Act of Parliament.

Yes, it was a simple Bill. The substantive reform Bill is going to be a pretty big piece of work. There will be a consultation first, because that is the right thing to do, since there are some big changes to access rights and charges.”

Ah, yes. And wasn’t that consultation due before Christmas?

“I’ve already become scarred by predicting political dates. It will be in a matter of weeks now. It’s not far off. It will be an indication of the way the major Bill will go.

“It’s a big change. Keith Williams’ report was a diagnosis with a remedy. But it did not get into the detail needed to get into the legislation creating a brand new public body. It is enormous.

“What really needs resolution is that the revenue is not where it was, the public subsidy is much higher, and performance is not where it was.”

So, how far down that route will Hendy get?

Not all new transport ministers set out with honest and bold intentions. But most do.

In recent years, however, it could easily be argued that none have succeeded. Given that none arrived with Hendy’s level of expert knowledge, could he be the one to buck that trend?

“Since I’ve got here, we’ve only started down a route where so much work needs to be done.

“Running a consultation will take two, three, four months. I’m expecting to see the Bill in the summer, which is a political period that lasts from when it starts getting warm until when it gets very cold. I’m expecting it to be in Parliament in the autumn.

“There comes a point in the Bill that you can create a new body. After the Bill gets Royal Assent, you put in the work to get it all set up. That doesn’t mean the railway can’t change in the meantime - we have several urgent things to do.”

Ah, yes. Shadow Great British Railways. It’s Chair, Laura Shoaf, was grilled by the House of Commons Transport Select Committee at the end of January, with Lord Hendy alongside for moral support.

During this 2½-hour grilling, we learned that SGBR casts only the faintest shadow. Shoaf works one or maybe two days a week. She is tasked with holding meetings between three existing organisations. She has no powers, no resources, and not even a secretariat to call her own. To an outsider, she appears to be a one-person, part-time organisation.

“It’s a means of driving an agenda,” Hendy says.

“You couldn’t give SGBR executive powers, because it’s not really ‘A Thing’. It’s not established. It’s a means of bringing the elements of the railway that would come together in GBR beforehand.

“Defining fares reform is not a simple matter. But Laura has been asked to take that on. There are some things that can gather speed as the train operating companies come into public ownership. There’s a lot of preparation needed for GBR, simply because the railway has been balkanised for three decades.

“We have started to do performance meetings already, at which the train operating company managing director and the relevant Network Rail route director come in. They sit in this office.

“That’s been a revelation, actually. They have been really collaborative, among people who have not previously got together - either with any intent to improve performance, or have much of an agenda to do it.

“The original intent was to get somebody in with a fresh outlook, and Laura has been welcomed.

“Creating this large body is not, of itself, going to do what is needed. If you have to wait for the creation of this body, then wait for it to sort itself out, then we would be waiting a bloody long time before anything happens.”

Hendy and his still-new Secretary of State Heidi Alexander will not expect an easy ride. The Conservatives and Liberal Democrats can be expected to fight this all the way. Already, they have been questioning whether reorganising the administration will produce much change for passengers.

The Tories are ideologically opposed to large state-run industries, and the Lib Dems can sniff an opportunity to score points in their freshly won commuting constituencies outside London.

The Conservatives also retain a substantial majority in the House of Lords, where the Bill will get a thorough interrogation.

“There was a clear political difference about public ownership,” Hendy concedes.

“I can make a very strong case on practical grounds, simply because if you are going to put track and train back together and ask people to make the best decisions for passengers and freight on a daily basis, sweeping away the minutiae of the current regime will make it just profoundly easier to do.

“I have some experience of that. When we took the PPP [Public-Private Partnership] companies back into Transport for London, the morning failure-and-delay meetings turned overnight from being attended by lawyers intent on allocating contractual responsibility, back into a meeting of railway people who wanted to stop bad things happening. Performance went up as a consequence.

“I think public ownership automatically delivers that, because you don’t have any unwanted contractual behaviours. As [Network Rail Chief Executive, Sir] Andrew Haines always tells me, people behave logically according to the terms of their contract. They behave in a way that makes the contract work best for them.

“I get really fed up when I see, on occasions, that it pays companies to drive trains into an infrastructure failure, because they make much more money by doing that than the alternative, which is to curtail the service until the failure is fixed.

“This is a long-winded way of admitting the political differences. I would say to the opposition: what is your alternative? We’ve been at this for six years now, and nobody in the opposition has a Plan B for the railway. Nobody I’ve met says it is OK as it is - because it bloody well isn’t.”

Does this mean the leopard has changed its spots?

When Hendy was Transport Commissioner for London, he was a strong advocate for the concession model of passenger operations.

It’s hard to argue against the success of London Overground or the Elizabeth line. With private companies running the services on behalf of Transport for London, passenger numbers have soared and satisfaction scores are well ahead of either private operations such as South Western Railway or directly-controlled Southeastern - and miles ahead of Northern.

Now we are heading into an era in which nearly all rail will be entirely nationalised. Why has Hendy changed his mind?

“Rail Partners [which represents the private train operating groups], before the election, were consistently advocating the remains of the free-market approach. They didn’t advocate concessions until after the election. By that time, Labour had made up its mind.

“In the spring of last year, when Labour was formulating its plans, Rail Partners were still saying they didn’t want concessions - they wanted a market model. That model was already broken. They might have changed the policy of this government.

“Labour’s Plan for Rail was not my document, although I will own it now politically. It was formulated before my appointment. But frankly, Rail Partners missed that opportunity.

“For myself, because of the baggage of 30 years of balkanisation, I think the elegant solution is to take operations back into the public sector. It will mean you can have a whole-industry approach to running the railway, unencumbered by contractual differences.”

So, will that mean more, or fewer, open access services in future?

“You’ll have seen Heidi’s letter (RAIL 1027). I’ve seen interpretations that this is the government bearing down on Open Access. I think it’s a restatement of the right principles for Open Access - it has to enhance the offer of the railway, and not just rip out the best revenue. It has to offer something genuinely extra. Which is what Hull Trains, Lumo and Grand Central do.”

Potential future operators note: there is no mention of the most recent open access applications.

The clock is ticking away the minutes in our allotted meeting time. CrossCountry and Network Rail are up next to discuss performance, and are waiting in the lobby. But there’s still a moment for a couple of pressing issues of the day.

Hendy has come out as something of an evangelist for discontinuous electrification.

For Waterloo-Exeter, this could make real sense on a route where the high capital cost of wiring or third rail all the way to Devon would be prohibitive. But what about his vocal support for it on East West Rail, which is effectively a brand new line?

“Because technology has moved on. There are too many people on and around the railway who automatically see electrification as a good thing, without having regard to its very large capital cost.

“If you can get the same effect with less electrification, you would do less, frankly. If you can get electric trains and zero emission at the point of operation, it can do it.”

That won’t help long-distance services that could use the line between Oxford, Milton Keynes and Bedford, and (eventually) Cambridge. It won’t help freight, either. What does your mandate to grow rail freight look like, if there is also discontinuous electrification?

“More traction on the network is bi-mode. Or, in the case of GB Railfreight’s new locomotives, tri-mode.

“The old argument is clearly gone. You can now use rolling stock that can run on that line that can power itself where there are wires, and run on battery where there are not.

“In any event, nobody has designed East West Rail to be a major route for freight. It will be quite an intensive medium-length passenger service to significantly grow the economy, build houses, and create jobs between Oxford and Cambridge.”

HS2 Euston: how is it going to be funded, and on what timescale? How much private sector money is really going to appear?

“All the plans for Euston have always had Lendlease Partnership to do development over and around the station. The government is looking at ways of funding the station - including private finance, which I believe is possible.

“When I took over chairing the Euston Partnership four years ago, one of the nonsenses was building an HS2 station next to the existing concourse, which is inadequate by any standards. Including all the Network Rail station allows significant further development, in particular up the western side of Eversholt Street.

“You know, there’s a viewing corridor from Parliament Hill to St Paul’s, which prevents you building high. That line bisects the station, so you can’t build high in the middle of the station.

“But you can build on its eastern side, so there’s a significant amount of further development - probably mostly offices. I think it might well be quite an attractive thing for private finance. We are working on a spatial plan that I think this time will be successful.”

Hendy has lost none of his energy or enthusiasm, which is remarkable, given the frustrations that have led to relatively little change during his tenure at Network Rail. He had been unable to deliver much of what had been promised when he took on the role.

So, what does he think the railway will look like by the time he leaves office, or by the time of the next General Election - whichever comes sooner?

“What I want most is to see people with their arms around pieces of the network, saying: ‘This is mine, and I am going to run it the best way I can.’

“At TfL, I was in charge of the thing. If anything went wrong, it was my fault. If anything went wrong on the Tube, it was the fault of Mike Brown.

“I didn’t tell him I wanted the capital delivery people in the room. I didn’t tell him I wanted the maintenance people in the room. I just told him it was his railway and his job to sort it out.

“By and large, we did quite a good job. We took responsibility. You Paul, in particular, will remember the failed alliance between South West Trains and Network Rail. That did not succeed because of the commercial pressures between the two bodies. They could not align.

“Wouldn’t you and I feel better if we knew the person in charge of the South Western had under their control the operating staff, the infrastructure, the control room, the commercial people, and Waterloo station? It’s someone’s railway to run. It’s their job to fix it.

“It won’t happen on the first day. But I just want to know there are 14 or 15 people who wake up every morning and say ‘that’s my problem and I have to fix it’. That will be more important than whatever colour the trains are painted, or what name is above the stations.”

The next General Election is, broadly, three years away.

Let’s say, generously, that the legislation gets under way this autumn. It will take a year. Maybe two, if the opposition really get their teeth into it.

That’s an Act of Parliament in late 2026 at the earliest. More likely 2027. Once enacted, sorting out the administration of it will take another year, if we are being optimistic. By then, we are heading into that General Election.

“Yeah,” Hendy sighs.

“We haven’t quoted a timetable for taking all the private companies into public ownership. But you know the last two in date order of expiry are Avanti and CrossCountry. Whatever you might think of both of those, I believe it can be done in that time.

“In fact, it has to be done in that time. Because there is no way this government can get to the next election with the railway costing as much, with the subsidy and performance as it is now.

“If that happens, we will have failed.”

Who is Lord Hendy?

Peter, Baron Hendy of Richmond Hill, of Imber in the County of Wiltshire, was made Minister of State at the Department for Transport in July 2024. He is 71.

Until his appointment, he was Chairman of Network Rail from 2015-24.

He had served as Commissioner of Transport for London from 2006-15, under first Ken Livingstone for Labour, and then Boris Johnson as Conservative Mayor.

As Sir Peter Hendy, he was knighted in 2013 following the successful operation of transport during the 2012 Olympic Games.

He was awarded his life peerage in 2022 and, until being appointed a Labour Minister, he sat as a Crossbencher, meaning he was not affiliated to a political party.

He joined his elder brother John, Baron Hendy, in the Lords.

Lord Hendy has chaired the London Legacy Development Corporation, and been a Trustee of the Science Museum Group, which includes the National Railway Museum in York, and of the London Transport Museum and the Heritage Railway Association.

He owns two Routemaster buses and founded Imberbus, the annual one-day event when scheduled bus services run to the abandoned village of Imber in the middle of the army’s Salisbury Plain Training Area.

The village is normally closed to the public. The event regularly attracts 30 old buses and tens of thousands of visitors to the Wiltshire village, raising in excess of £30,000 a year for local charities.

Paul Clifton has been the BBC’s transport correspondent for southern England for 31 years, leaving in February 2025. He is also a volunteer bus conductor at Imberbus.