The Rail Reform Bill: does it help or hinder?

The UK Government’s draft Rail Reform Bill arrived in February with a whimper - not a bang.

At just 32 pages, the document was deliberately light on detail, although Transport Secretary Mark Harper said it “demonstrates our commitment to reforming the railways”.

One of his predecessors, Patrick McLoughlin, said it was “incredibly disappointing” that the Bill remained only in draft form, and Labour’s Shadow Transport Secretary Louise Haigh argued that it has “no prospect of becoming law”.

The Bill’s first and most significant clause amended the Railways Act 1993, so that it will state: “The Secretary of State may by regulations designate a body corporate as the Integrated Rail Body.”

This will take over both infrastructure management and franchising and strategic functions.

Network Rail 'best solution'

A set of explanatory notes published by the Department for Transport added: “It is the government’s intention that Network Rail Infrastructure Limited (NRIL), the Network Rail company that currently carries out the infrastructure management function, will be designated as the IRB.”

Some in the industry were sceptical of putting Network Rail in the driving seat, but the Great British Railways Transition Team (GBRTT) argued that it’s simply the easiest and most practical solution.

The Bill then went out to “pre-legislative scrutiny” - a process overseen by the Transport Select Committee. Ministers and officials believed this would allow the rail industry to contribute to its development before it entersed the process of parliamentary readings. Then the General Election was called.

If they hold onto power, the Conservatives would be likely to stick to a development of what appears in the Bill, as it delivers its plan for Great British Railways in line with the Williams-Shapps Plan for Rail.

Labour promised wholesale reform of the railways based on public operation of passenger services.

But this too could be delivered within the framework of an amended version of the Bill.

The Bill is of particular significance to the GBRTT.

Set up following the launch of the Williams-Shapps Plan in May 2021, the team has had to contend with three Transport Secretaries and three Prime Ministers.

When Anne-Marie Trevelyan and Liz Truss were in these respective positions, the GBR project was kicked into the long grass, but it came back onto the agenda after Truss was toppled.

GBRTT 'twiddling their thumbs'

GBRTT has faced some testing headlines.

On February 26, the i newspaper reported a GBR source saying GBRTT staff were "twiddling their thumbs”.

It was claimed that the body’s proximity to the DfT was hindering its objective of moving power away from Whitehall, with a source noting: “Turkeys don’t vote for Christmas.”

Then the National Audit Office (NAO) released a damning report into the UK Government’s programme of rail reform. It concluded that the “DfT committed the rail reform programme to a timetable that it had identified as high-risk, reflecting ministerial ambition, but without a clear plan for what it needed to implement”.

The report also identified continuing friction between the DfT and the Treasury over “key areas of reform from the start, such as the remit of Great British Railways”.

It also found that the governance of the Rail Transformation Board, created “to oversee delivery of projects, manage trade-offs and dependencies between these, and act as the key decision-making forum”, was “confused” with “accountabilities unclear”.

The NAO called on the DfT to conduct “a lessons learned exercise from its planning and delivery of rail reform to date”, and that when “fully resetting rail reform in the future, it should ensure it has secured full commitment across government for its ambitions”.

GBRTT is led by Network Rail Chief Executive Andrew Haines, with Anit Chandarana as lead director.

Its board is chaired by Keith Williams, who led the review, with Network Rail Chairman Lord Peter Hendy as his deputy.

With Chandarana on secondment to the DfT, Rufus Boyd has been GBRTT’s interim lead director since August last year.

Speaking to RailReview at the GBRTT’s offices in Waterloo station before the NAO report was published, he described the criticism in the i article as “something of nothing”, adding: “I just thought: Really? Insider close to the project? Are you in the DfT? I mean, where are you? Who's really briefed this?”

The organisation was also keen to emphasise the positive aspects of its proximity to the DfT.

Asked whether the Bill had given the team a clarity of purpose they were lacking before, GBRTT Policy and Strategy Director Michael Clark said: “No, not to us here at GBRTT, because we’ve had the privilege or luxury of being very close to the Department and they’re assisting in this.

“What I think it really usefully does is provide further clarity and momentum to the sector about the direction of travel that we’re on in quite a concrete way, particularly the market where they might still be interested in rail.

“To my mind, Williams five years ago built a big consensus for change. No one wants the current system to stay as it is.

Because of the political turmoil and COVID, I think it’s very useful now to bring that consensus back and to flush out any particular touchpoints where there is disagreement, so that we’re ready to go next election, new Parliament - that should be consensus locked in, so everybody knows what they’re doing on the Bill, everyone knows the direction, off we go.”

Providing accountability to the taxpayer

Micro-management from Whitehall remains a significant concern in the industry.

Rail Minister Huw Merriman defended DfT involvement in railway management in recent years, telling RailReview: “It’s right that government gets involved and makes sure that the money is being spent well and there’s that accountability for the taxpayer.”

But he said that while it’s “a natural consequence of the changing financial state of the railway and what Government’s had to do”, it’s not “the most efficient way to do it”.

Merriman continued: “So, here you’ve got someone - me as a minister, and the Secretary of State - actually arguing that we should be less involved in the decisions. The railway should make the decisions on an integrated basis that means the best decision for track and train, not one or the other, and that’s what we’re determined to do.

“So, I hope it’s a positive of Whitehall and Government saying that we’re not the best party to make some of these operational decisions, and our role should be more strategic - and that’s what will happen when this body is set up.”

But given Conservative ministers have been talking about rail reform for the best part of a decade, and Great British Railways for three years, why did it take until the tail end of this Parliament to get to this stage?

“For me, I've been in post for short of a year and a half, so the King's Speech was sort of the first opportunity I had to advance the matter forward,” said Merriman.

“I think it’s important to be able to land on one choice.

"And it’s this classic bit of legislation in that it’s not that detailed in terms of what it does, and it needs to go through the parliamentary process and get that support - cross-party, cross-industry - that this is the right thing to do.

“The beauty of giving it pre-legislative scrutiny is that we can find out if it does have support, and I believe it will.

"And then all the surprises will have been dealt with, and then it has a very simple path for the legislative path itself.”

Boyd suggested the Bill had been drafted to assuage and not exacerbate political differences: “All the three parties are kind of in the same place. Taking railway decisions further away from ministers is a key feature. That is a very helpful feature of the Bill and its explanatory remarks and supported by all the major parties.”

Clark concurred, saying he had “quite high confidence” that it will still be of use whatever the outcome of the election.

Power grab

Boyd started his career at British Rail in the late 1980s, serving in the company’s public relations department in the run-up to privatisation.

“I have seen what it took to set up the current system,” he said.

He believed this will help him “not unpick it completely, because people have not quite got all of the detail of this”, but “unpick the relevant bits” - particularly around fragmentation.

One clause of the Bill requires the new integrated body to “prepare a report setting out what it has done during each financial year to increase the involvement of businesses in the private sector in the provision of railway services”.

Is this designed to assure the industry there won't be a power grab?

Boyd believed it’s more serious than that: “People who draft parliamentary bills will not put PR fluff into bills.

"I think this isn’t a bit of hand-waving to say something to the sector. I think it’s a deep commitment by the current Government that is set out in a clear way… we absolutely think there is a role for the private sector, both in broader supply, and there will be in future.”

Said Clark: “I think [the Government] made that explicit on the face of the Bill to reassure the sector and the Conservative Party that this is a new private-public balance - it wasn’t tipping over too much into a public body with this integrated railway, it was there to facilitate and set a framework for the private sector to succeed.”

However, it's the kind of thing that could persuade some in the Labour camp and the rail unions of the need to start afresh. RMT General Secretary Mick Lynch thinks the Bill is a non-starter.

“If you put them under any pressure, it will never see the light of day,” he told RailReview.

“There are some ideas they’ve stolen from other people, but they want to maintain privatisation, they want to maintain the profit system in the railway, and it’s basically a patch-up job for the failed policies.”

“The industry bigwigs know there’s going to be a Labour government"

Lynch believed there is a “danger” that private sector pressure could persuade Labour to adopt an amended version of Great British Railways rather than full public ownership, but he is “fully engaged with the [shadow transport] team”.

He added: “The industry bigwigs know there’s going to be a Labour government, there’s going to be a change. So, they’ll be lobbying to preserve as much as they can, and they’ll be lobbying for chief executive jobs in various sectors.

“So, the only game in town is public ownership as far as we’re concerned. It’s making sure it’s meaningful and brings real change, and what the structure’s like, and what it delivers for the passenger, what it delivers for the environment, and of course from our point of view, for the workforce.”

Meanwhile, the purpose of GBRTT has shifted. The NAO report explains that in autumn 2023, “DfT took the decision to pause some of its work on rail transformation, particularly around structural reform” following the King’s Speech, which effectively killed off the possibility of legislating in the current parliamentary term.

“We are not GBR in waiting,” said Boyd.

“We might have been actually if you went right the way back to when there was a really tight legislative timescale. We had to be thinking as if we were GBR.”

He turned to Clark to ask: “But right here, right now, what do you think the earliest we could get legislation is? A couple of years from now?”

Clark replied: “I’d say two years, but it could easily be quicker.”

Merriman, incidentally, was rather nonplussed when asked if that's the timescale he was working on, too: “Well, I haven’t got a date at all.

"I don’t know where that date comes from, because any legislation is down to the Prime Minister and a chief whip of any political party that’s in government.

"We obviously know that there’ll be a General Eection at some point this year as well. If that’s the case, then there’s a new King’s Speech and a new list of legislation, so I can’t speculate on a date and I don’t know how they could either really."

Boyd stressed that “the key thing is supporting government”, and that the GBRTT “will sit on the right-hand side” of the DfT in a “series of engagements with the sector”. The DfT will “do the technical work", with GBRTT explaining why the course of action it is taking is strategically helpful.

Boyd continued: “What has changed very recently, but did start before the Bill, is that we have been identifying incremental improvements to rail that we should and could be getting on with. Whether it’s 18 months or two years away from a Bill, you can’t just wait for it and say it will be better after.

“So, whether that’s revenue generation, which is a big thing for us, developing some tools such as single profit and loss accounting for the sector to work out where the money goes. These are things we’re getting on with now - and that is a change.”

Clark elaborated: “What we were doing a lot last year as if GBR was nine, 12 months away - that’s a huge sectoral transformation on an operational railway that you’ve got to get right.”

GBRTT set about preparations on issues such as ticketing, integrating franchising into Network Rail, and working on the plan for the business units of the new configuration.

“We did a lot of work with the private sector. We did a lot of work with regional mayors. Incorporating a new system-wide integrated railway, what would they like locally on services and their desire to integrate? And that included fares and ticketing, of course.”

All that would come together as a “long-term strategy for rail”, he said, but it’s now further off.

“We’ve got that on the shelf.

"As Rufus was saying, now we’ve pivoted to the practical and how we can start baby-stepping to get benefits.”

“GBRTT doesn’t matter"

There is a word of caution on this in the NAO report, which warned that “it is not yet clear how GBRTT in [its revised] role will work with other bodies, including how DfT can hold it to account as sponsor and act as a collaborative delivery partner”.

 

GBRTT’s management seemed distinctly relaxed about criticism over the pace of change or political uncertainty affecting the organisation.

“GBRTT doesn’t matter. The ‘transition’ is quite key in that, we’re a time-limited entity,” said Clark.

“Everyone is seconded, they don’t have a permanent job here. We’re not building an institution that people care about.”

Boyd said: “We’re not short of people who’ve got their ideas about other plans. Not Government - Government’s very clear. There is continuity, the three parties are very clear. There’s a lot of people who say ‘Why are we doing this again, just remind me?’. And I think it’s absolutely critical.

“The problems of 2018 have got worse, not better, because of COVID and because of, effectively, the private sector having to transfer risk back to government.” ■

Five tests for other options

At a RAIL100 breakfast, GBRTT’s interim lead director Rufus Boyd set out five tests for alternatives to the Great British Railways transition, warning: “Perhaps one of the biggest risks is that we return to a debate on alternatives.”

1 Does it make the railway simpler and better to use for passengers and freight customers? And specifically, will it facilitate and deliver the Government’s rightful ambition for a ‘retail revolution’?

2 Will it set the railway up to better deliver the Government’s other strategic objectives for rail, such as financial and environmental sustainability, economic growth and levelling up?

3 Does it give the sector’s employees, suppliers, innovators and investors the confidence they need to make long-term commitments?

4 Would an alternative proposition bring the sector’s revenues, costs and decision-making closer together, and closer to the operational railway to deliver better outcomes?

5 Would it ensure that accountabilities are clearer, and the different parts of the system work better together, so that the benefits of major investment are maximised, and the resulting risks are reduced?

This article is an edited version of an article that originally appeared in the 2024 Q1 issue of the RailReview journal