All change - UK Government plans rail reform

Published 07/10/2022   |   Reading Time minutes

The railways have dominated news this summer through ongoing strike action. But behind the headlines work is ongoing to reform how they operate.

The UK Government has called its plans “the biggest reform to the railway in three decades”. Meanwhile, two of the biggest unions behind the strikes, the RMT and ASLEF have called the plans a missed opportunity.

But why are changes needed, what is being proposed, and what does this mean for Wales?

A network of track vs train

The rail system in Great Britain is complex. Network Rail owns and operates most rail infrastructure while the UK Government’s Department for Transport (DfT) or devolved authorities are responsible for managing the services that run on that infrastructure. The rail system as a whole is reserved to Westminster, with executive powers in some areas devolved to Scotland and Wales.

Under the existing franchising model, passenger services are typically run by private train operating companies (TOCs). The franchising authority sets out a specification which TOCs bid to operate. TOCs can set timetables and they profit from fare revenue but also take on board the risk – an issue which was highlighted in the extreme by the Covid-19 pandemic.

The Welsh Government is responsible for letting the Wales and Borders Franchise, which was awarded in 2018 through Transport for Wales (TfW).

Aside from the Core Valleys Lines, which transferred into Welsh Government ownership in 2020, rail infrastructure is not devolved in Wales (unlike in Scotland).

The case for devolution of rail infrastructure has long been made by the Welsh Government and others. Arguments around underfunding of Welsh rail infrastructure are also well rehearsed. Peter Hendy’s Union Connectivity Review stopped short of recommending devolution of rail infrastructure, but did recommend the UK Government enhance rail infrastructure to improve connectivity into and out of Wales.

The pandemic accelerates plans

The impact of the pandemic on public transport was unprecedented. The Welsh Government estimates that the use of public transport declined by 95% in the early days of the pandemic compared to the same period the year before.

Even two years later passenger numbers have not fully recovered. The Climate Change, Environment and Infrastructure Committee (CCEI) heard a range of evidence during its recent inquiry into bus and rail transport that passenger numbers remain below pre-pandemic levels.

The huge drop in passengers in 2020 led to both the UK and Welsh governments taking action.

The UK Government introduced emergency measures for the rail franchises it oversees, while in Wales TfW took rail services under direct public control as an “operator of last resort”. A move expected to last at least five years.

By the UK Government’s own admission, the franchising system was in trouble even before the pandemic. Franchises in England had failed and others were headed down the same track. It had already begun a root and branch review of rail – the Williams review – and was due to publish a White Paper in 2020 when the pandemic struck.

Giving evidence to the House of Commons Transport Committee, the former Secretary of State for Transport explained the need for emergency measures had “superseded” much of the Williams review recommendations. He said:

Coronavirus…has changed the picture, because we have now ended up holding the entire network in our hands…It has potentially speeded things up.

All change - UK Government reform

In 2021 the UK Government published the Williams-Shapps plan for rail which it described as “the biggest reform to the railway in three decades”.

Under the plans, a new centralised “guiding mind” – Great British Railways (GBR) – will integrate track and train bringing the whole system together as opposed to the current fragmented approach. GBR will:

…run and plan the rail network, own the infrastructure, and receive the fare revenue. It will procure passenger services and set most fares and timetables.

A GBR transition team has been established and begun work on developing a 30-year Whole Industry Strategic Plan. The process to choose a location for GBR headquarters is also well underway and branding has been revealed.

The plan also proposes an to end franchising, moving to a fee-based concession approach. GBR would specify things like branding and timetables and procure an operator to deliver the service to its specification through Passenger Service Contracts. Under this model, the revenue risk would largely be borne by the public sector.

The 2022 Queen’s Speech saw the UK Government announce its intention to introduce a Transport Bill which would include provisions to give GBR the statutory powers it needs. It has already begun its consultation.

Signals for Wales

The Williams-Shapps Plan says the “devolved authorities” will continue to exercise their current powers such as awarding contracts and setting fares. It also says a joint working agreement between TfW and GBR “will be explored”.

Beyond this there is little detail on how the plan will affect devolved railways.

Earlier in 2022 the GBR transition team lead told the House of Commons Transport Committee “we are…very committed to GBR being a heavily devolved entity”. However the Welsh Government is concerned that:

…the new GBR will be solely answerable to the UK Government, including over the operation and performance of all rail services into and out of Wales…

The Welsh Government has also described GBR as “not showing much sign of being a co-operative arrangement”.

It’s also been questioned whether or not Wales would gain from the plans.

Giving evidence to the CCEI Committee, Transport Focus said it was unclear how vertical integration of track and train, a key benefit of the proposed approach, would apply if TfW procured Welsh services. Professor Mark Barry says that while the plan does “bring forward some very sensible proposals”, the key issue for Wales is that it doesn’t address underinvestment in Welsh rail infrastructure. He suggested:

…The issue for Wales is not whether it's vertically integrated or not, it's whether we've got enough money to invest in our network, to expand the network capability, so we can operate more services.

TfW has also raised concerns. Its Chief Executive, James Price, has suggested a charge would be levied on TfW that “wouldn’t necessarily be optional”. Ticketing was used as an example where systems at a UK level don’t do what TfW want them to.

Concern has been raised by TfW that “GBR is all about the railway” when a multi-modal approach to planning the network is needed. These thoughts are echoed by the Welsh Local Government Association, particularly in light of the Welsh Government’s plans for bus reform and the need for integration.

Only time will tell as to what the full implications of UK reforms for Wales are, but it appears many of the Welsh Government’s key asks from the beginning of the reform process aren’t due to appear on the arrivals board.

Article by Francesca Howorth, Senedd Research, Welsh Parliament