Draft Bill is tiny step towards rail industry restructuring

The publication of the draft Rail Reform Bill represents a tiny step towards restructuring the industry, although it is of course almost inconceivable that the Bill in its present form will ever progress, given that the Conservative government appears to be in its death throes. 

The guts of the draft Bill are the transfer of the Secretary of State’s franchising responsibility to an “Integrated Rail Body” (“IRB”).  While the draft Bill is mostly a technical document, much of it consisting of amendments to the 1993 Railways Act, there are few points of substance:

  • The IRB is required to prepare and publish a business plan and must have regard to the impact on its plan on businesses in the private sector – indeed it must prepare an annual report on what it’s doing to increase the involvement of the private sector.  I doubt whether those provisions will survive the potential election of a Labour government!
  • The Secretary of State may give the IRB directions or guidance about the way it exercises its functions; this is similar to the approach taken with the Franchising Director at the time of the initial privatisation and is entirely reasonable. The key question is how prescriptive the directions and guidance will be.
  • Despite Ministers’ professed enthusiasm for open access, the general duties of the Office of Rail and Road (ORR) are to be amended to include “so far as such competition does not unreasonably increase the cost to public funds of providing railway passenger services”. ORR is also to “have regard to any access policy statement approved by the Secretary of State and published by the IRB”.
  • There isn’t convincing evidence that Department for Transport actually wants to free the IRB get on with job within the framework of its guidance and instructions. Thus “The Secretary of State may by regulations make provision about:
    • The authorisation of persons to operate train services;
    • The operation of, and access to, railway infrastructure and ancillary services;
    • The management of persons operating train service, infrastructure operators and ancillary services providers”

The explanatory notes published with the Bill state that the Government intends to designate Network Rail as the IRB.  However, there is no clarity on the management structure of the IRB, what objectives and guidance it will receive and no designate appointments have been made. 

The statement to Parliament by the Secretary of State when the Bill was published was full of motherhood-and-apple pie: “Great British Railways will be best placed to optimise the railway to work effectively as a whole system” and “GBR will be a customer focused arm’s-length body” which will “leverage private sector investment to help deliver a better offer for customers”.  Network Rail’s expanded role wasn’t mentioned.

So, industry reform is to be taken forward on the basis that DfT simply transfers its franchising responsibilities to a beefed-up Network Rail, which potentially remains production and engineering oriented, unresponsive to the needs of passengers and freight customers and still tightly controlled by DfT.  In short, a true descendant of the old British Rail before the late, great Bob Reid 1 drove through sector management more than thirty years ago, creating smaller business units closer to the regions they served and able for the first time to bring costs and revenues together  – ironically also creating a structure which enabled privatisation in the first place.

I believe there are two essential conditions for the industry to meet its full potential in the future.  Firstly, creation of sensible sized business units which relate to identifiable markets and bring costs and revenues together and, secondly, giving managers freedom to manage without being double-guessed by Ministers and civil servants.  Delivering an effective and responsive structure is the key challenge – ownership is not the key issue.

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Scotland is truly a distinct country in rail terms with the Scottish government taking forward a rolling programme of electrification.  

Electrification to Barrhead is now complete (£63 million) and work has now started on the East Kilbride route (£140 million); the Levenmouth branch will also be opened later this year, at a reported cost of £117 million. 

The West Highland Line is getting modest investment too, with platform lengthening at eight stations for just £1 million.  I’ve included the costs of these schemes because they appear so much lower – and so much more affordable – than any equivalent projects in England. 

However, not everything in Scotland is perfect.  Reston is a new station on the East Coast Main Line between Berwick and Dunbar, opened in May 2022 at a cost of £20 million.  There is very little there; the village of Reston is tiny and its catchment area is sparse too.  The nearest town is Eyemouth, 6 miles away, with a population of 3,600.  Not surprisingly, usage of the station is very low, just 13,190 in 2022/23, or an average of 36 passengers a day. 

There are 8 trains a day each way, giving an average of just over 2 passengers per train and it’s difficult to see that there was ever an economic case for the new station.  But the dirty secret is the hidden costs.  Not surprisingly, with the exception of one token call in each direction by LNER, both LNER and Cross Country declined to stop there, so the service is provided by TransPennine Express in the form of additional Newcastle–Edinburgh trains. Essentially, these trains are only there to serve Reston, as they provide relatively little benefit to the other principal stations on the route – Berwick, for example, has 26 fast trains a day to Edinburgh.

Not only is the cost of serving Reston astronomical but the trains that do stop there impact on both the capacity and operational performance of the long, two track Newcastle-Edinburgh route.  The “Reston” trains also consume potential capacity for freight on a corridor which has seen growth, particularly in intermodal flows from Tees Dock and Doncaster to Scotland.

This is certainly not to argue that all new stations are bad – although Reston certainly is – and its close neighbour East Linton, between Dunbar and Edinburgh, which opened in December also looks quite doubtful.  I understand that it’s unreasonable to expect local politicians to understand the operational and financial implications of their local schemes.  However, senior managers in the industry should speak truth to power and DfT and Scottish Government officials should support them.  Perhaps the IRB will rise to this challenge?

chrisjstokes@btopenworld.com

Photo credit: Paul Bigland.

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