How is Shadow Great British Railways shaping up?

In September, the government announced Great British Railways would be established in ‘shadow’ form. Paul Clifton finds out what the industry thinks of it so far…

Quietly, behind firmly closed doors, the future structure of the railway is being formed. It has to be achieved fast: the existing organisation, Great British Railways Transition Team, will cease to exist on April 1 2025.

In its place comes Shadow Great British Railways (SGBR). Very little about it has been said in public, just a short statement to the House of Commons on September 3, which contained precious little detail.

Exactly one month later, Laura Shoaf was appointed Chair of Shadow Great British Railways. The leader of the West Midlands Combined Authority and former head of Transport for West Midlands hasn’t spoken about it since. But technically, it is up and running.

“The structure of GBR is still being discussed. I don’t think it is near settled yet,” confides an informed source.

“It is very complex, especially if the private sector is going to be involved in any meaningful way. We’ve all seen the Budget: they badly need private money in the rail industry.

“Who will everyone work for? Will they all work for GBR? Very unattractive because they could all go on strike at once. Or will they be split into regions, routes, faux train companies?”

Another source with an ear to the Department for Transport door warns: “I think this will take three to four years. Consultation this winter, a draft Bill next summer. But SGBR will not exist as a legal entity. It will be the existing Network Rail, Operator of Last Resort and the Department round the same table, with each holding the same powers as before. You can’t suddenly change the obligations and legal responsibilities, nor the legal duties of the regulator to uphold them.

“Whether you can achieve culture change in that way, I am not sure. It will look awfully like Network Rail running the whole railway.”

Back to the first informed source: “There are two schools of thought in the Department. One is that GBR needs little economic regulation or oversight - it will make all the decisions, a bit like Transport for London.

“But there is private money that will need protecting: open access and freight. In which case, you need an enforcing regulator that is independent of the government, which brings us back to where we are today.

“My feeling is that the future will not look as different as people previously thought.”

For the 200 or so people working for the existing organisation, this is a sensitive time. Not all will move to the new organisation. Fifty of them are working on fares and ticketing reform, and that work is already funded separately by the DfT.

Under the Conservative administration, this was a centralised model - all the staff in one place, keeping the reform team out of the way of the day-to-day railway.

That idea has now been binned. Under the Labour administration, the idea is that the railway has to ‘own’ the reform.

“If you move to a dispersed model, you don’t need as many people,” a source close to the work tells RailReview.

“It cannot be the same thing - you don’t want a big centralised group. You need a small group helping the sector work its way through the challenge.”

It will be led by Network Rail Chief Executive Andrew Haines, Alex Hynes, director general for rail services at the DfT, and Robin Gisby, who heads the government’s Operator of Last Resort (OLR Holdings, which will become DfT Operators in 2025. From April, NR and OLR will both be under the new organisation.

It is widely assumed that South Western Railway will become the first of the remaining privately managed train operators to return to the public sector when its contract expires next May.

“Changing the ownership is really the easy bit,” says a well-known industry figure.

“The real grind is getting the savings from pooling back-office functions. Having 14 HR systems is stupid. Having 14 websites is stupid. Having 14 safety cases is very stupid. That’s not counting open access operators. All that duplication can be reduced. But it is slow stuff. And you’ve got the unions mixed into it all.

“I think what the government is trying to do will take years to find its shape.”

In a burst of motherhood and apple pie, now-departed Transport Secretary Louise Haigh’s statement announced: “I expect Shadow Great British Railways to be passenger-focused.”

It then promised: “This will include paving the way for a powerful new passenger watchdog, the Passenger Standards Authority.”

This, it said, means “GBR will not be marking its own homework”.

What will happen to the railway functions of Transport Focus, where 45 staff act as the government-funded, but independent voice for passengers?

“Louise Haigh positioned herself as passenger-in-chief,” says a rail leader.

“She was taking on the mantle of advocate for the user. As the same time, she was chief specifier of a monopolistic organisation which is state-run. All lines lead to the Secretary of State.

“How much does the government want to be criticised by an arm’s-length passenger authority that it also funds? Not very much. The last thing the government will want is another body telling it what to do from the sidelines.”

Another executive puts it like this: “How will a passenger authority dovetail with the passenger-in-chief? I think that’s so unknown that it will be posed as a question in the consultation document rather than a solution being offered.”

An insider comments: “It doesn’t work as an accountable system of checks and balances. What Lord Hendy and his friends want is a monolithic organisation, answerable to the Secretary of State. The Passenger Standards Authority feels like window dressing. How can it hold to account when the Secretary of State will be specifier, funder, watchdog and so-called passenger-in-chief?”

“Transport Focus is a statutory organisation,” the rail leader points out.

“I think it will take on additional powers to become the Passenger Standards Authority because that is the simplest solution. It will take on Transport Focus’s advocacy role - not as a campaigner, but more a measurer of performance against targets.

“It will take the Rail Ombudsman scheme from the Office of Rail and Road, protect the consumer, and publish performance stats - revenue, numbers, satisfaction levels - leaving ORR with safety and economic regulation.”

The initial announcement to Parliament promised that “GBR will reform the ticketing system to make it simpler for passengers” and “replace the current myriad of ticket types”.

Pretty much every rail minister since the 1990s has made similar promises, all of which turned out to be hollow.

It will also “unlock barriers to delivery”. But what does that actually mean?

“Fares reform is quietly happening anyway,” explains a source with a vested interest.

“The public likes the single-leg fares trial on LNER - it is easy to understand. If you couple that with expanding pay-as-you-go, we are on the cusp of fares reform by stealth.

“Every few months, another batch of stations are enabled to do pay-as-you-go. Add a couple more main lines following the LNER model and it becomes too late for the Treasury to object. Reasonably large areas of the railway are coming under a new fares structure.”

“Who will punters pay their money to?” asks Anthony Smith, formerly the long-serving chief executive of Transport Focus and now chairman of the trade association Independent Rail Retailers.

“From whom do you buy a ticket? That is not clear.”

Smith says that GBR will retail its own tickets in some form to challenge the dominant Trainline, because that is in keeping with the concept of public ownership. Others closer to government suggest that it is far from decided whether the state-owned entity will sell fares in competition with others.

He adds: “GBR would probably ‘white label’ an existing system because that is an efficient way to do it. But it would be really important that it works transparently on a level playing field with third-party retailers.

“A state-subsidised retailer will always be able to beat a private retailer living on 4.5% commission. That commission has to cover all costs - IT, data, marketing, staff - and still leave a profit.”

Instead, he argues, there is an opportunity to do something with outdated information systems from NRES, currently run by the Rail Delivery Group.

“When you ask a question of NRES, it can only give you an answer to one fare at a time and date. It can’t do marketing. But it has to change to follow the way airlines and hotels sell themselves.

“There is a dynamic role for private retailers. When you book a flight online, you are offered beneficial prices for hotels and car hire tied to the flight. When you book a hotel, you are offered another deal nearby for another time, when take up is low. But the retailer cannot offer you a train fare for £10 to get there. All these other sectors link together, but they can’t do rail. The mechanism doesn’t exist.”

The private sector has a vested interest in this working and being good - it minimises costs and sells more tickets to make more money. Under the present system, if a train operator alone sells more tickets, it doesn’t make more profit.

“The private sector can fill up those empty seats and get revenue really kicking,” says Smith. “So, how about GBR focuses on the trains and lets the private sector do the sales?”

The railway appears to be giving the new leaders a chance to breathe. Either that, or they are nervous about voicing an opinion.

RailReview approached a range of industry leaders who are usually keen to express their views in open discussion, and several offered versions of “it’s too soon to talk” or “I don’t want to put my head above the parapet”. Others, whose views you read here, spoke only off the record.

That’s partly because so little detail is available and partly to avoid causing offence, as people know they will soon be jockeying for position in a new environment.

“They’re aiming to get the legislation going before summer 2025,” one source observes.

“That is massively optimistic. It will need a huge amount of scrutiny, and the Opposition will have great fun with it because it will be hard to see the purpose: what will actually be different on the ground that passengers will notice?

“Will there be more money? No. Will it be cheaper? No. Will more trains run on time? Not for several years.”

Haigh admitted that “change will take time” and that SGBR, like GBRTT (Great British Railways Transition Team) before it, is just one more administrative title to come and go.

“In theory, Shadow GBR will involve some transfer of civil servants,” says the source.

“But it won’t happen because civil servants hate being transferred out of the Civil Service. They see that as a career killer.

“The Treasury and the Department have had their paws on the railway’s tail for years now. They’re not going to give it up lightly. You’ve never seen a headline: ‘Civil servant gives up power.’ It just doesn’t happen.

“Mark my words: in two years’ time, there will be more civil servants working on rail than there are today. The government will be man-marking everything everyone at SGBR does.”

The government states that SGBR will have an obligation to work “with rail stakeholders and partners across Great Britain, including national and regional governments, mayors, the trade unions, train operators, passenger and freight representative groups, the supply chain, the regulator and railway staff to deliver improvements”.

Much easier said than done.

The most optimistic government timetable would require a new Act of Parliament to receive Royal Assent at the tail end of 2025. And achieving that would require the smoothest of progress with the least opposition. Several industry leaders suggest it would take a bare minimum of a further year to create the new structure, taking the timeline for establishing a fully functioning GBR well into 2027.

The source concludes: “Politically, this has to be seen as a success by the next General Election. So, the Department and the ministers’ special advisers will be all over it. We all know it is not actually going to be that different.”

An insider agrees: “If everything goes to plan, it will take three to four years. It won’t go to plan - these things never do. Let’s assume the next General Election is on the first Thursday in May 2028, combined with the local elections. That’s three and a half years away.

“By then, will the colours of the trains have changed? Will they all be under a new national brand? How real will GBR be to passengers, and will it be visibly better?

“The answer to all those is: probably not. We know trains won’t be cheaper. We learned in the Budget that fares will rise by RPI + 1% next year. If they keep that up, it’s a 12% increase by polling day.

“This is a flagship project for the government, but with no added money. And the government needs to show that things have changed for the better, that it has delivered what people voted for, while at the same time taking a long view, distancing itself from the stream of undeliverable promises of the previous administration.

“In the time available, that is a hugely tall order.”