November saw the Railways Bill to establish Great British Railways (GBR) enter Parliament. The Bill has since had its second reading in the House of Commons. Clearly depositing the Bill was a landmark moment in a rail reform programme that has been unusually protracted. This has been due to a combination of the Covid pandemic, changes in political direction under the previous Government and the focus of the new Government being on public ownership in its first year.
The Government's response to the consultation on the Bill provided further detail on the future industry landscape including the roles of the Secretary of State, the Office of Rail and Road (ORR), the new Passenger Watchdog and devolved governments and Mayor Strategic Authorities (MSAs). However, for many, the future structure of GBR and how it will make a difference remains opaque. The timetable for rail reform is also uncertain. If the Government's aim is that GBR is stood up and be seen to have made a tangible difference to customer and taxpayer outcomes in this Parliament then time is ticking.
There are three areas where further work could reduce this uncertainty and build momentum around reform.
The first is how the proposed elements of the new system will come together to improve upon the responsiveness and speed of decision making of the industry compared to today's structure. The Government has stated that GBR will have operational autonomy, act as a commercial organisation and be empowered to be innovative and agile in responding to emerging trends. However, at the same time it will be subject to varying degrees of oversight from each of the Secretary of State, the ORR, the Passenger Watchdog and the MSAs. While the Bill is progressing through Parliament a number of real-world scenarios that might be faced by GBR, such as, managing a funding shortfall or developing a major timetable change, should be worked through and shared with stakeholders to show how decisions would be reached in practice. This would help to demonstrate to the industry that the proposed future institutional arrangements can work in a way that is consistent with DfT's aspiration for a simplified system.
The second is accelerating work to realise the benefits of reform. Central to the Business Case for GBR is a view that local Business Units, where track and train are integrated, can deliver better taxpayer and customer outcomes by giving leadership greater autonomy in the operational and commercial management of the railway. However, at present the potential benefits of integrated management are only capable of being articulated at a relatively high level. DfT has established integrated Business Units at Southeastern and South Western. To build the case for change it should allow local leadership the maximum possible commercial freedom and financial flexibility to experiment. As well as accelerating benefits within these geographies this will help:
- Support quantitative analysis of the benefits from integration and providing greater autonomy in the wider GBR Business Case which will face increased scrutiny in the coming months
- Provide an understanding of the barriers within today's industry set up, whether contractual, cultural or in working practices, that might stop benefits from being realised. This can help inform the future operating model for GBR including the capabilities required by Business Units and the Financial Framework that they will require to operate effectively
- Inform the timescales in which the financial / customer benefits from reform are likely to be realised
Finally, building on the extensive design work that was originally undertaken by the Great British Railways Transition Team, more needs to be done both to socialise the future structure of GBR and to plan for its implementation. A positive signal would be to appoint an interim Chief Executive for GBR, or if this is not possible, at least a Transition Director who is publicly accountable for delivering the stand up of the new body. This is critical because:
- The merging of Network Rail, 14 train operators, Rail Delivery Group and parts of DfT and ORR is clearly a significant and complex undertaking that will need to be carefully planned and phased if it is not to distract the industry from delivering on urgent financial and operational challenges.
- Without more visibility of the direction of travel industry stakeholders such as MSAs are reluctant to work up their own plans for Rail Reform. They need to see what type of GBR they will be docking into
- Prolonged uncertainty around the shape of the industry runs the risk that leadership talent leaves the railways and the supply chain is less inclined to invest.
The progress of the Railways Bill through Parliament has undoubtedly made the prospect of rail reform feel more real. However, it still feels as if more thinking is needed around how the reform package as a whole will make the industry more agile and what benefits will be realised from integrating track and train and over what timescale. In addition, greater visibility around the future shape of GBR and how it will be stood up can help build confidence among stakeholders that there is real momentum behind reform.
Transport Times will be hosting its annual Rail Summit in association with KPMG on 17 April in London, providing a timely opportunity to take stock of the rail reform process. The event will examine the evolving shape of the Railways Bill as it progresses through committee stage and the House of Lords, and will explore the role of devolution and the lessons that can be drawn from existing examples of vertical integration in the UK. The Summit will also feature perspectives on maintaining innovation within the sector, including discussion of a potential new approach to rolling stock procurement.
