Exclusive: Andrew Haines on GBR and the future of rail

Network Rail Chief Executive Andrew Haines says the industry needs to change after 30 years of stagnation, in an interview conducted before the General Election was called.

Network Rail’s abolition is coming, as the headline act of the greatest change to Britain’s railways since privatisation 30 years ago.

NR will make way for Great British Railways, the independent rail body (IRB) that features in the draft Rail Reform Bill being examined by the Transport Select Committee.

That draft bill is the product of a Department for Transport headed by a Conservative transport secretary, Mark Harper.

But there’s also a place for GBR in Labour’s recently announced plans to reform rail.

With both major parties in Westminster agreed on the need for an independent guiding mind, the railway seems on course to embrace GBR.

But here’s the rub. GBR will be formed from Network Rail Infrastructure Limited, which is the current owner and operator of almost all of Britain’s main line railway network. This prompts the obvious fear that it will merely be NR 2.0.

When RAIL meets NR Chief Executive Andrew Haines in early May, he’s clear and blunt: “There is no transition. It’s an abolition.”

He adds: “I know people don’t believe me.”

GBR will be acting under new instructions from the transport secretary, and will have a new licence to run the railway. It will be responsible for passenger services run today by private operators under contract to the Department for Transport and by those run directly by the DfT through its Operator of Last Resort. Passenger services in Wales and Scotland already sit under those countries’ governments, so the bulk of the change falls in England.

It’s the area where Conservative and Labour diverge in view.

Labour would bring all English operators’ owners under GBR (hence DfT) ownership as their private operators’ contracts expire. This means nationalisation, with track and train both owned and operated by the state’s GBR.

Conservatives would keep private operators, and talk about returning to the privatisation model of holding competitions to select the best bidder. GBR would provide an overarching guiding mind to integrate their activities with the future infrastructure operator.

Such competitive contracts (franchises) held sway until 2020’s COVID pandemic saw passengers disappear overnight. DfT rescued operators by putting them on emergency contracts in which government took all revenue and paid a small fee to those operators.

Haines dismisses any notion that GBR will be merely a rehashed Network Rail.

“Network Rail is a regulated infrastructure provider and co-ordinator of the network. It is regulated according to licence and it does its best to discharge the requirements of the licence,” he says.

“The idea that you replace the licence with a different licence, and you replace the financial incentives with different financial incentives, and Network Rail carries on regardless, frankly is the sort of (dare I say it) lazy thinking that is another manifestation of why our industry is as it is.”

He continues: “Network Rail is a creature of the architecture that it fits in with. I meet thousands of fabulous people in Network Rail who are frankly sick and tired of being told they are useless just because our system doesn’t work as a system. I get very angry when people are prepared to criticise the Network Rail culture as if somehow that’s the choice of the people that work there.

“If fulfils a function that Parliament has set out and the regulator has set out under the licence. Yes, sometimes we get things wrong within that, and I’m the first to be very critical about that when we do. But, overwhelmingly, Network Rail’s culture is a consequence of that framework.

“So, you change the framework, and you change the culture.”

It’s that simple?

“It is absolutely that simple,” he replies.

The need for change comes from a review conducted by Keith Williams before the pandemic. Government published it as the Williams-Shapps Plan for Rail in 2021, with the transport secretary of the day - Grant Shapps - inserting his name into it.

It said: “To truly secure rail’s future, there must be radical change. The railways lack a guiding focus on customers, coherent leadership and strategic direction. They are too fragmented, too complicated, and too expensive to run. Innovation is difficult. Incentives are often perverse. Some working practices have not changed in decades. There must be single-minded efforts to get passengers back. In short, we need somebody in charge.”

The Plan proposed ditching franchising in favour of passenger service contracts, promising “strong incentives for operators to run safe, high-quality, punctual services, manage costs, attract more passengers and innovate”.

Introducing GBR, it said: “Great British Railways must be a new organisation, with a new culture and customer focus, definitely not just a bigger version of Network Rail.

“Just as with operators, it will be incentivised to improve customer service, maintain a safe network and attract new passengers. It will have a completely new role, with specific responsibilities to its passenger and freight customers and a clear remit to reform the can’t-do culture and inflated costs that exist across the sector.”

The breaking point had come in May 2018, when new timetables quickly collapsed, exposing flaws in the way Network Rail and train operators delivered service improvements following infrastructure upgrades.

This remains a problem, with two failed attempts since then to introduce a new East Coast Main Line timetable. The most recent was abandoned in spring 2024, as it became clear that delivering operators’ ambitions for December 2024 was impossible.

Between track and train, rail companies work collectively on new timetables. Haines is at pains to stress that timetables are not Network Rail productions.

“When we as a sector have difficult decisions to take, our ability to splinter is really quite… not just frustrating, I think it’s damaging,” he explains.

“That’s why, following May 2018, we created this industry PMO [project management office]. And that’s why we ensured that those big timetable changes go through that process.

“It isn’t Network Rail that has some sort of veto. The Network Code is very clear - we don’t have a right of veto. We couldn’t possibly say that you can’t go ahead with this, because we don’t have any legitimacy to do that.”

Referring to the recent decision to ditch December 2024’s ECML timetables, Haines says: “The reason the PMO said that’s not the right thing to do was because, by then of course, you’re left with no time to do anything.”

This isn’t the first time this has happened. Haines notes: “That was the heart of the May 2018 problem. Because of, in that case, late notification of infrastructure shortcomings, operators didn’t have time to properly plan and resource their timetable and then really scrutinise available resource to that revised timetable.

“If we’d followed normal industry process, that’s what we’d have done this time. We knew there were going to be conflicts, and those conflicts would almost certainly have resulted in appeals.

“Even if those appeals could have been heard in time, there would have been no time to properly resource the base plan. It’s one of those areas where the industry system does not work for significant change if there isn’t consensus.”

Failure to deliver improved timetables does not just deny passengers better services, it also fails to deliver any sort of return on the money that government spends on upgrades. In turn, this could see such funding cease.

Haines cites the ECML as one example, but also notes that the railway is not delivering the 24 trains per hour through Thameslink’s core that it promised in return for major government spending.

Nor is it delivering the 4tph promised over the Ordsall Chord in Manchester. This example is not entirely the railway’s fault, because Ordsall was planned in conjunction with work to improve capacity along the Castlefield Corridor, complete with two extra through platforms at Piccadilly. Government declined funding for this, which left the job half done and Ordsall Chord unable to deliver its promise.

Yet the privatised railway has delivered radical timetable change following major infrastructure improvements.

It might be 20 years ago, but Virgin West Coast brought its ‘VHF’ timetable into use after Network Rail completed its modernisation of the southern end of the West Coast Main Line.

More recently, ScotRail planned new timetables following NR’s electrification of the Glasgow/Edinburgh/Alloa triangle.

It did this under close gaze from Transport Scotland (the Scottish Government’s transport department).

And, of course, delivery of the West Coast Route Modernisation was hugely helped by the Strategic Rail Authority providing a guiding mind to give clarity and direction. This extended as far as having Midland Mainline (the franchise operating London-Sheffield) run London-Manchester services via the Hope Valley, to maintain direct trains while Manchester’s WCML routes were closed for work.

Which suggests that GBR is one answer, while the other could be DfT more closely co-ordinating the work of its subsidiary (Network Rail) and the train operators it has under contract.

DfT has had these powers over track and train since ministers abolished the SRA in 2004, but it hasn’t effectively used them.

So, to the question ‘why GBR?’, Haines responds: “Because the industry tends to fracture, that’s why. It doesn’t need GBR, that’s a perfectly valid point, except that 30 years on, virtually nothing has changed.

“The proof of the pudding is in the eating. How different today is the Network Code from the access conditions that were hastily cobbled together in a nine-month period in 1993? The answer is that they are virtually unchanged.

“How different is Schedule 8 today from its first year, which I think was in wooden dollars? I think it was in 1995, or it might even have been 1994. Virtually unchanged because a deeply contractualised model of working gives lots of people the rights of veto, and it takes a lot of momentum out of change.

“That’s why I’m such a passionate believer in GBR. Not because you can’t notionally change the system currently, but because all the evidence is that the system hasn’t changed.”

Yet, in itself, GBR doesn’t mean the fractures and tensions will disappear. They will remain, but will simply be hidden behind the overall brand. This suggests that while GBR is necessary, it’s not sufficient to drive the changes the Williams-Shapps Plan wants.

Haines says: “For GBR to do it properly, you would need to make changes to some of the regulations. You would be able to rationalise a lot of the tensions within GBR - not all of them, of course. You’d then be left with a smaller subset of issues. And you would have a guiding mind that was capable of developing alternatives and making the case for that in a way that is much harder for any individual to do that currently.

“So, you’re right. It doesn’t solve every problem by any means, and it would be absurd to suggest it does. But what it does is that it gives a capability and a legitimacy to be an engine for change in a way that we manifestly haven’t done.”

The gist of the simplification that Haines wants to see comes by moving away from contractualised rights.

As currently structured, train operators (passenger, open access and freight) apply for rights to run trains. The Office of Rail and Road adjudicates to grant those rights, and it directs operators and NR to enter contracts to give effect to those rights.

Some rights are ‘firm’, which means that NR must accommodate them on the network. Others are ‘contingent’, which means that they should be accommodated if there’s space.

The heart of the ECML’s problem appears to be that there are more firm rights than the line can cope with, hence the difficulty in pulling together a timetable that satisfies everyone.

As Haines notes, the current model allows operators to appeal to ORR, which takes time. This model is not designed to satisfy everyone. Appeals may be rejected, and there’s no guarantee that ORR would grant rights in the first place.

A move away from contractualisation will worry freight and open access operators sitting outside the GBR tent. They are concerned that they will be squeezed out by a GBR prioritising its own services.

MPs on the Transport Select Committee recently quizzed ORR Chief Executive John Larkinson about access rights, as they dug into the detail of the Rail Reform Bill.

He told them: “On overall certainty for freight, it comes back to the interface with the integrated rail body [GBR]. To my mind, it is the classic big guy and little guy type of situation in the regulatory setting.

“You have a very large organisation with, potentially, a lot of power. They are going to publish a document and call it an access document. What is going to be in that document? Is it going to have different priorities? Is it about allocation of capacity? The point is that it must be about allocation of capacity and timetables.”

Larkinson added that as the draft bill is currently written, ORR’s role in approving access decisions remains in place.

MPs also heard from Rail Partners Chief Executive Andy Bagnall, who said: “It is absolutely clear that there is a potential danger for conflict of interest between Great British Railways and Great British Railways contracted operators and other users of the railway infrastructure. There has to be stability so that people have confidence to invest.”

Rail Freight Group Director General Maggie Simpson added: “If [the bill] makes it much easier for the IRB [GBR] to change the access rights of private companies, that is a real concern.”

Haines suggests that freight’s concerns might be overstated: “I’m not sure there’s anything in the draft bill that freight could really object to, in that there’s no change at all to the Access Management Regulations - so all of their protections are still there.”

He adds, correctly, that government has proposed a rail freight growth target. It did this in December 2023, with the target being a 75% increase in freight moved by 2050.

At the time, DfT said: “It is critical that the full industry, as well as Network Rail (and the future GBR), plays its role, collaborating where appropriate and taking the necessary steps to deliver rail freight growth. By setting the target, the government is providing confidence for industry to take ambitious steps and to further invest.”

It cited its investment in Oxford station and its support for work to remove a bottleneck at Ely as evidence of its commitment to rail freight.

Haines says of freight and open access rights: “I think you can give them protection. And, frankly, you can negotiate with those parties. They will have contractual rights. There will still be an independent regulator, but what you’re not doing is applying that to every train because it applies to 10% of the trains or whatever.

“There are large parts of the network where freight is not very much, and there are large parts of the network where there is unlikely to ever be open access.”

This suggests that it will be GBR operators that have to flex to accommodate the rights of operators outside the tent. But, as Haines notes above, GBR should be able to negotiate over rights.

He explains: “If you look at the East Coast Main Line timetable, GBR might say, entirely hypothetically, there are two freight trains that couldn’t be accommodated.

“GBR might try and have a commercial negotiation with those freight operators to say ‘Do you still need those rights? Could we move you somewhere? OK, there’s an additional cost, but we could compensate you for that.’

“You could have a meaningful conversation in the way that you can’t currently have.”

While Haines is not explicit, this suggests more flexible charging might be coming for operators outside GBR.

Traditionally, when it conducts its five-yearly periodic reviews of Network Rail spending, ORR sets access charges. These look set to continue for GBR’s infrastructure arm, but the result might be a set of charges that provide a ceiling in negotiations between GBR and operators outside its remit.

Taken to a natural conclusion, GBR and freight operators might strike a deal that entails access charges being waived for a particular train, to see it run on a less congested route or at a quieter time.

Part of this answer lies in the combined profit and loss accounts that GBR is expected to run. This combines the costs of track and train.

Haines explains: “The P&L model gives you choice. It doesn’t tell you what to do, it gives you informed insight into the consequences of your decisions. At the moment, absent it, then we make infrastructure decisions without understanding the consequences for operators, and the movement of passenger and freight trains and vice-versa.

“That is bonkers. What business, what service, is better served by not understanding the true net cost of its decisions? And yet for 30 years we have not had that in our sector. Nobody has done it. The DfT has never consolidated it. OPRAF had no reason to consolidate it. ORR had no licence to consolidate it. It’s never been held anywhere.”

He suspects that part of the reason it’s never been done is not just that there was no incentive to do so, but that there was actually incentive not to.

As he says: “If you’re Network Rail wanting to do something that will cause pain to an operator, why would you transparently say that this is going to cause you more pain?

“If you were chasing a revenue line as an operator and didn’t want to be exposed to the true costs, the infrastructure costs, why would you even look at it? You’d just give yourself guilty knowledge.”

There’s a link here to performance regimes - particularly Schedule 8, which compensates operators affected by unplanned restrictions or delays.

It’s so called because, according to ORR: “Network Rail’s performance regime is contained within Schedule 8 of track access contracts (for both freight and passenger services).”

It adds that such a regime is a legal requirement of 2016’s Access & Management Regulations which set out how ORR, NR and train operators agree network access.

ORR goes on to explain that Schedule 8 exists for three reasons. The first is: “To reduce train operators’ exposure to losses that arise from delay and cancellations that they cannot control, by compensating them for losses incurred as a result of delay.” This reduces their level of risk from operating and investing in the industry.

It then explains: “The original intention of Schedule 8 was that, for franchised passenger operators, this ultimately reduced the cost to taxpayers by reducing the risk premia that firms include in their franchise bids.”

The other two reasons for Schedule 8 are to give NR on one side and operators on the other financial incentives to reduce delays.

Haines argues: “Schedule 8 was never a performance regime. It was a revenue compensation scheme. It was the necessary means of protecting franchises that were on revenue risk from a potential loss of revenue because of performance detriment, and that’s why Network Rail carries all external risk.

“Not because Network Rail is the best people to manage that external risk, but because it was the way of backing off the implications for franchisees taking revenue risk. But we’re still left with all that architecture without anybody taking revenue risk.”

He reckons GBR’s proposed P&L provides the route to improving performance: “If you have that P&L model, you still have the incentives to chase performance improvement without having the Schedule 8 architecture in place, with all the perversities of that where, much of the time, most of the money is being paid for reactionary delay, not for the primary cause of the delay.”

Haines is essentially arguing that Schedule 8 has not kept up with the times.

It arrived when the network was less crowded. But as more trains appeared, the balance of delays shifted the primary to secondary. In other words, the proportion of knock-on delays from the original incident grew.

He says: “If reactionary delay increases because of the complexity of driver diagrams or shortage of drivers, or a service pattern that means you end up with very extended platform occupation at big terminal stations, then (at the moment) under Schedule 8, the consequence of all of those things go to the instigator of the primary cause of delay, be that , h Network Rail or the operator.

“Perversely, an operator that is short of drivers, that has complex diagrams, gets financially rewarded for that through Schedule 8.”

Put another way, the operator that has ‘caused’ the secondary delays by (for example) not employing enough drivers to produce resilient crew diagrams receives a financial reward.

Haines adds: “Schedule 8 was never intended to behave like that. But that is the effect of an industry that hasn’t been able to regenerate itself, so is using a 30-year-old revenue compensation architecture to nominally incentivise performance.”

He puts forward a passionate case for change. It’s built on a conviction that Britain’s rail network has outstripped the model on which John Major’s government privatised it in the mid-1990s.

This was the time of rail’s lowest level of rail patronage for the whole of the 20th century. In 1995, the railways recorded 735 million passenger journeys. In the final year before COVID struck, rail recorded 1,753 million journeys.

But if Haines is right, rail could push beyond this if the industry can deliver services that make the most of infrastructure spending from governments that is aimed at increasing capacity and capability.

Privatisation, says Haines “was a model that assumed managed decline or stasis. It did not allow for significant growth. It didn’t allow for government investing so it didn’t deal with those fundamental issues.”

He argues: “That is why the system needs fundamental reform now, because the brilliant news is that governments are still keen to invest in the railways. The bad news is that the railways are pretty rubbish at giving the government the return on its investment, as currently structured.”

With the clock in his Waterloo office ticking towards 1700 on the Friday of a Bank Holiday weekend, Haines concludes: “I am a passionate advocate of the GBR model - not because it solves every problem, but because it gives the guiding mind and a simplification of contracts, which are the two biggest things we can do - under the integration of track and train - to allow our industry to continue to grow and flourish.

“Absent sorting those three things, I’m not sure why Treasury would continue to invest significant money in rail enhancements given our track record of under delivering on the benefits.”

He adds: “I’m driven by the circumstances having changed and what the railways are required to do. What the railways are required to provide for our economy means that we can’t continue to think that a model designed at the low point of rail patronage is the only or best way to deliver for this country.”