The Rail Reform Bill

In February 2024, the Government published its draft Rail Reform Bill for pre-legislative scrutiny. When enacted, it will implement those parts of The Plan for Rail which require primary legislation. At the end of April 2024, the Labour Party announced its plans for rail reform should it win the next General Election. Putting aside the political spin, are there any significant differences between the two plans?

In 2018 the Northern and Thameslink rail franchises introduced new timetables which reflected commitments made when bidding for their respective contracts. The changes encountered operational issues from the start, resulting in significant delays and cancellations to services. The separation of infrastructure management (Network Rail) from train service specification and contract awards (Department for Transport) was widely considered one of the underlying causes. At the same time, a number of franchises were struggling to meet their financial commitments, including the inter-city east coast operation run by a Stagecoach/Virgin joint-venture (Virgin Trains East Coast). The Government subsequently asked Keith Williams, the former CEO of British Airways, to chair a review of the railways sector. 

Delayed by Covid-19, The Plan for Rail was eventually published in 2021. Proposals included:

• A new integrated rail body (IRB), bringing together track infrastructure management and the planning of passenger rail services into one national organisation. The IRB was given the title of Great British Railways (GBR); 
• GBR was to specify passenger train services, draw up timetables and set fares;
• Most passenger rail services in England (outside London), while specified by GBR, would be operated by private sector train operators using the ‘concession model’ (i.e. recovery of costs plus a performance related management fee, similar to the way TfL contracts Overground and Elizabeth Line services); and
• Train services in Wales, Scotland and London were to remain devolved, albeit they would operate over GBR owned tracks.

The draft Bill more or less reflects the proposals set out in the Plan for Rail. In summary, assuming it becomes an Act of Parliament, Network Rail will be designated as the new IRB (though whether the GBR name will be retained or another branding adopted is not addressed). In addition to its existing infrastructure management role, it will assume responsibility for the planning and contracting of passenger rail services across most of England. It will be required to produce and update a business plan, which will provide the Office of Rail and Road (ORR) a tool against which its performance can be assessed. How this fits with the Plan for Rail’s assertion that GBR will not be an updated version of Network Rail remains to be seen.

Schedule 1 of the draft Bill covers how the IRB’s network licence will in future be granted and amended. For freight, the IRB will as a condition of its network licence be required “to make appropriate provision for services for the carriage of goods by railway”. It is assumed this will satisfy the Plan for Rail’s promise of ‘fair access, underpinned by legislation’.

At the end of April, the Labour Party published the reforms it intends to implement should it win the next General Election (Getting Britain Moving: Labour’s Plan to Fix the Railways). The plans are actually broadly similar to those proposed by the Government. Labour would also establish GBR as an ‘arms length body’ and a ‘directing mind’. It will have operational independence, being responsible for both track infrastructure management and planning passenger rail services. A Railways Act is promised in the first parliamentary session to enact the plans. Fares would be simplified, with safety and economic regulation remaining with the ORR. Passenger and freight rolling stock would continue to be leased from the private sector.

The role of freight, and the economic and sustainability benefits it generates, is particularly noted. It confirms that freight operations would remain within the private sector under a future Labour Government, with a statutory duty placed on GBR to promote the use of rail freight; the long-term growth target would also be retained. Safeguards would be put in place to ensure freight operators receive fair access to GBR’s network, with the ORR remaining as the independent access regulator.

The key difference is that under Labour’s proposals, GBR would also directly operate passenger rail services, rather than being outsourced to private operators as concessions (as under the current Government’s plans). As the current train service contracts with the private sector operators expire, services will be brought ‘in-house’ to be operated directly by GBR. It is estimated this process will be completed over the next five year parliament. Some open access passenger services will remain where they ‘add value’ and capacity.

Whoever wins the next general election, the railways are going to experience a period of change – almost certainly the most significant changes since privatisation in the 1990s. A new arms-length integrated rail body will be established, combining responsibility for both track infrastructure management and passenger rail services. The Labour version of this body will operate passenger trains directly, whereas the Conservative’s plans will see services continue to be outsourced using the concession model.  The freight sector, and the benefits it generates, features prominently in both plans. There is a broad consensus across both plans; it will remain in the private sector with a duty placed on the IRB to support growth, backed by a long-term target. Additionally, both sets of proposals appear to have ‘solved’ the issue of how a vertically integrated railway, which is in effect what the IRB will become, can provide open access to its network for on-rail competition between private sector operators alongside its own services.