The General Election and New Government

The UK General Election, held on 4 July 2024, was won by the Labour Party with a substantial (landslide) majority. Despite being criticised by some for its ‘safety first’ election manifesto, a number of the new Government’s early policy proposals covering transport, planning and devolution are set to be radical reforms foretelling significant structural and commercial changes. While many details are yet to be published, MDS Transmodal examines in this article the early changes proposed and any potential impact on the freight transport sector.

The King’s Speech to Parliament on 17 July 2024 set out the new Labour Government’s legislative agenda for the year ahead, thereby providing insight into its early priorities. A total of 34 Bills are to be brought forward, with five being directly promoted by the Department for Transport (DfT). Transport sector reforms are clearly an important part of the new Government’s early agenda, despite barely featuring as an issue during the election campaign. Two further Bills covering planning and devolution are also likely to impact on the transport sector.

The Passenger Railway Services (Public Ownership) Bill, published shortly after the King’s speech, will amend existing legislation to make appointing a public sector train operator the default position, rather than as the ‘operator of last resort’ (under current rules train services have to be tendered to private operators in the first instance). This measure will allow the remaining passenger services that are contracted by the DfT, but operated by the private sector, to revert to public ownership as contracts expire or when performance is poor. All existing private sector contracts can be given termination notices by October 2027.

Longer term, a Railways Bill will legally establish a new integrated railway body, which will bring together the management of the track infrastructure (currently undertaken by the publicly owned Network Rail) alongside the planning and operation of most passenger rail services in England (and those extending into Wales/Scotland). Acting at ‘arms length’ of DfT and as a ‘directing mind’, the new body currently has the working title of Great British Railways (GBR). This Bill is still being prepared, meaning the contents cannot yet be confirmed, albeit the proposed legislation is expected to reflect the policy proposals set out in the document Getting Britain Moving: Labour’s Plan to Fix the Railways, which was published by the Labour Party before the election in April 2024. Fares simplification is also expected alongside improvements to digital ticket systems.

Getting Britain Moving confirmed that rail freight operations will remain within the private sector. The legislation is likely to place a statutory duty on GBR to promote the use of rail freight, with a long-term rail freight growth target set by the Secretary of State (a long-term target was published by the previous Government in December 2023, informed by forecasts produced by MDS Transmodal). Legal safeguards will be established in order to ensure that freight operators receive ‘fair access’ to GBR’s track network, with the Office of Rail and Road remaining as the independent access regulator.

While significant reforms are planned for the passenger sector, it would appear that little will change for rail freight. On-rail competition between the private freight operators will remain as the cornerstone of the market. The private sector will continue to invest capital in equipment and terminals (see below). However, freight operators will need to secure access rights (train paths) on GBR’s track network alongside the latter’s own passenger trains (a vertically integrated network, in contrast to the vertically separated arrangements that have existed since the 1990s). The precise details of how that will be delivered contractually and commercially, and how additional capacity will provided to accommodate market growth, remains a watching brief.

The High Speed Rail (Crewe-Manchester) Bill has been carried over from the previous Parliament. It will provide powers to construct new railway infrastructure in the North West related to the Northern Powerhouse Rail (NPR) project, including a new line linking Liverpool to Manchester and new stations. While primarily aimed at improving passenger connectivity across the north of England (related to economic growth and improving productivity), it should over the long-term release capacity on the existing network which could be reallocated to freight operations.

Completing the picture, the Better Buses Bill will provide powers to local authorities allowing them to introduce franchised bus services similar to those operating in London and Greater Manchester (replacing the current deregulated model that has operated since the mid-1980s). The Sustainable Aviation Fuel Bill will support sustainable aviation fuel (SAF) production in the UK by providing revenue certainty to encourage investment in the construction of SAF plants.

Two further Bills being promoted by other departments are likely to have an indirect impact on the freight sector. Getting Britain Moving proposed that the Combined Authority Mayors in England will have a statutory role on the railway network, including the ability to agree local/regional rail services with GBR and powers to integrate local railways with other forms of public transport. This policy could be taken forward through the English Devolution Bill, which proposes to grant local leaders enhanced powers over strategic planning and local transport networks, in addition to any provisions that will be in the Railways Bill. The precise details of how that will be delivered have yet to be published.

Local and regional railway networks play an important role for the freight sector. Many nationally important rail freight services pass through city centres, such as intermodal services from the south east ports needing to access the Trafford Park terminals via Piccadilly station and minerals for construction projects often being delivered into urban distribution centres by rail, thereby removing HGVs from congested city roads. It will therefore be important for the Combined Authority Mayors, when exercising their new statutory powers for passenger railways as described, to fully understand the role rail freight plays in their respective areas. While the role of sub-national transport bodies remains uncertain at this point, the Combined Authority Mayors in England – most likely through their transport delivery arms such as Transport for Greater Manchester and Merseytravel – may assume more significant strategic planning responsibilities.

Finally, the Planning and Infrastructure Bill will reform the planning system, including streamlining the delivery process for nationally critical infrastructure. The primary focus of the Bill is on accelerating house building and the net-zero electricity generation/distribution system, including bringing on-shore windfarms into the Nationally Significant Infrastructure Projects (NSIP) planning system. The Bill is also expected to simplify the consenting process for NSIPs, accelerating their delivery. This includes proposals to bring forward improved National Policy Statements and allow for them to be updated every five years. New rail-connected distribution parks (Strategic Rail Freight Interchanges or SRFIs) are currently examined and consented under this process. It should therefore be simpler and quicker to bring forward plans for new SRFIs which will be crucial for the growth of rail freight. The expansion of both on-shore and off-shore windfarms envisaged by this Bill (alongside the creation of Great British Energy) should also provide new commercial opportunities for the ports sector, which can be expected to handle much of the necessary equipment.

Overall, while many of the early changes planned for the transport sector concern passengers, there are a number of important implications for freight. Despite rail freight remaining in the private sector, the industry will be dependent on gaining access to a new vertically integrated track network. The delivery of new rail-connected distribution parks should, in time, become simpler and quicker and future strategic transport planning is likely to transfer to the Combined Authority Mayors.