Opinion: GBR starts to take form

Our anonymous industry insider asks whether the new organisation will be a regional or business-led structure.

In this article:

• The government has launched the Great British Railways (GBR) Shadow organization to prepare for its full establishment, amid debates over regional or business-led structures.
• Devolved rail management in Scotland, Wales, and cities like London will likely remain, with possible future expansion of regional concessions under mayors.
• Rail freight growth is a priority, with new measures and infrastructure plans, but meeting targets may need more innovation and stricter road transport regulations.

The government has announced that the Great British Railways Transition Team will become a Shadow GBR organisation, as a precursor to the passing of legislation necessary to create the substantive organisation.

Rail Minister Lord Peter Hendy has directed the head of Network Rail, the Department for Transport’s Director General Rail Services, and the Chief Executive of OLR Holdings (the body responsible for the train operating companies running under the government’s Operator of Last Resort regulations) to begin the process of deciding how GBR is organised.

Tensions already exist, as there is a debate about regional or business-led structures. This is a throwback to past organisational choices, where in its final years of stewardship BR opted to enlarge the original sectors and their subsidiary business units to control the engineering functions.

In an updated form, this would mean that GBR has its leading executives responsible for service delivery and financial discipline - based on routes that (for example) might mirror the former InterCity organisation, which exercised control where it was regarded as the prime user.

The GBRTT has carried out an extensive study of infrastructure costs and associated revenue, by developing an Industry Finance Model which has drilled down in great detail by examining the financial performance of 2,000 route sections.

When applied to a network of close to 10,000 route miles, which has some 19,500 track miles (reflecting the provision of more than one running line), segments of five miles within each route have been evaluated to provide a financial measure.

This is much more sophisticated than the station passenger counts used in the Beeching era that decided the fate of many services.

A regional structure has the advantage that it already exists in the form of the Network Rail regions. Another factor is that there will not be an immediate absorption of train operating companies where time on their National Rail Contracts has still to run.

The Scottish and Welsh governments are responsible for rail service provision as part of the devolved responsibilities agreed when these bodies were established. In both cases, subsequent nationalisation of the previous ScotRail and Wales & Borders franchises has taken place.

A different approach has been followed by Transport for London and the Liverpool City Region, where concessions agreed with private sector operators continue on services that include the London Overground, the Elizabeth line and Merseyrail.

In each of these formats, Network Rail has continued to be responsible for infrastructure enhancement, renewal and maintenance, with the exception of the South Wales Metro where ownership of the Core Valley Lines has passed to the Welsh ghovernment.

A similar novation of infrastructure ownership was seen as a logical development for the operation of Merseyrail services. But this has remained with Network Rail, given the potential for exposure to high risks and the cost of restoration in the event of a major infrastructure failure.

The indications are that there will not be a pull back from existing devolved management by absorbing the services within the future GBR organisation.

There are even suggestions that the number of concessions could be expanded to include control by elected Mayors, particularly in Manchester. The relationship with these operators could become akin to the open access services.

In terms of the timetable, NR’s System Operator function is the controlling mind. It holds nationwide train planning expertise and now functions well, following a dismal period when expertise was lost following the closure of regional train planning offices and the unwillingness of experienced staff to transfer to Milton Keynes.

This is truly one of the hidden arts of running the railway and is an expertise that should not be dissipated by a change of location. The days of expecting staff to transfer from their base at Milton Keynes to either Derby (as the headquarters of the new GBR organisation) or a regional centre have long gone.

Although train planning skills are a vital ingredient, decisions about track access remain a matter for the regulator, with the function of the Office of Rail and Road remaining unchanged. This is important, because the availability of paths for a growing number of freight services will bring inevitable conflict with GBR aspirations to sponsor more passenger services.

There is to be a statutory growth target for freight traffic. This is a welcome measure but will be challenging, because although new intermodal traffic flows are boosting volume, the legacy bulk trainload activity continues to decline in sectors such as the steel industry, and in the elimination of coal movements for electricity generation which was once the largest rail freight activity.

In this category, it is only the demand for construction materials that is buoyant. Much of this is associated with building HS2, although targets for increased housing development will also provide a stimulus for rail traffic. The effect can be seen in the last financial year, with rail holding a market share of just 4% for tonnes lifted and a 7% share of tonne kilometres hauled.

It is unclear what interventions will be necessary if targeted freight growth does not take place. Infrastructure improvements are in the pipeline to allow full-length (120 SLU - 775 metres) intermodal services to run over a larger part of the network, and in particular trans-Pennine routes. An increased number of rail-connected distribution hubs are also available that reflect the growth in consumer home deliveries.

Growth will need innovation, and a recent agreement by NR to waive track access charges for new traffic flows for an initial six-month period will reduce overheads, as traffic builds up on new flows to deliver a sustainable financial outcome.

Other tools include the Mode Shift Revenue Support scheme, whereby grants are available when rail transport costs exceed road haulage rates. However, in the past, the number of qualifying flows has been restricted by a budget ceiling, and the Freight Facilities Grant that covers terminals and rolling stock is not currently available in England.

A more drastic approach would be to impose planning restrictions on the number of road vehicle movements at appropriate ports, which could be justified as a measure to reduce the emission of harmful pollutants. If rail growth targets are not achieved, it is inevitable that this will be the direction of future policy.