British railways set for disruption as government moves forward on reform plans

Out-Law News | 17 Jun 2022 | 11:51 am | 3 min. read

The UK government has set out planned legislative changes required to bring about wholesale reform of the British railways system, which experts say could lead to a period of inevitable disruption.

Building on last year’s publication of a white paper on rail reform, the consultation (74 page / 1.02 MB PDF) focuses on the legislative and regulatory changes required to introduce the proposed new public body, Great British Railways.

The government has set out the proposed functions and duties of Great British Railways, and how it plans to bring ‘track and train’ together to create a ‘single guiding mind’ for the British rail system. The body will be required to provide leadership across rail systems, act transparently, encourage private sector involvement in the railways and ensure the railways’ capabilities in the longer term.

Great British Railways will also oversee and procure new rail contracts and most of the powers and responsibilities held by the Secretary of State for Transport will be transferred to the new body.

Commercial law expert Andrew Brydon of Pinsent Masons said: “The transport industry as a whole is facing a time of both challenge and opportunity. Patterns of passenger demand continue to evolve post-pandemic, funding models are under strain and technology is evolving quickly, and can be used to deliver transformational change. The rail industry also needs to ensure that rail’s strong green credentials are utilised and developed further”.

Brydon Andrew

Andrew Brydon

Partner

The transport industry as a whole is facing a time of both challenge and opportunity … significant change is essential

“All this means that significant change is essential, although changing established industries is never easy. The competing demands of industry, government and passengers will need to be balanced carefully during this period of reform. It will be hard to keep everyone happy at every stage,” he said.

The consultation refers to the need to lay the foundations of a new commercial model for the railways based on a ‘passenger service contract’, as proposed in last year’s white paper. These contracts, which will be designed to encourage greater collaboration and innovation, will replace the old franchising model.

Transport expert Anne-Marie Friel noted that the consultation was “rightly non-committal” on the content of this new contracting model, leaving it to the public and private sector to find models that work.

“The market engagement stage will be a key opportunity for consultation with industry,” she said. “It will be vital for Great British Railways to quickly translate this into clearly understood contracting strategies, which provide the necessary confidence for industry to make the required investments to ensure that GBR’s key strategic outcomes will be delivered on.”

“Prolonged uncertainty or inappropriate decisions on risk allocation will cause delays in getting projects to market and will frustrate industry, so GBR will need to invest in credible commercial leadership and expertise to give it a good running chance of delivering quickly on its ambitions for the new model within a challenging market,” she said.

Friel Anne-Marie

Anne-Marie Friel

Partner

Great British Railways will need to invest in credible commercial leadership and expertise to give it a good running chance of delivering quickly on its ambitions for the new contractual model within a challenging market

The consultation also asks for views on how the government proposes to ensure clear accountabilities in the rail sector through a new governance framework underpinned by statute. Great British Railways will be issued with a Great British Railways Licence, enforced by the Office of Rail and Road (ORR), but the minister for transport will retain the ability to intervene or issue guidance and directions on any matter in a relationship similar to that between the Mayor of London and Transport for London.

The government said there would need to be independent scrutiny of Great British Railways to ensure it met its obligations at the heart of a customer-focused system. ORR will remain the competition authority for the railways and will have enforcement powers to take action to ensure Great British Railways is complying with its licence.

In order to bring about the change which the government believes is necessary, the consultation also outlines reforms to the wider rail industry structures and processes that are needed to deliver transformation of the railways and a new industry culture.

These changes include the reform of passenger watchdog Transport Focus to turn it into a ‘passenger champion’, with new responsibilities including passenger advocacy, strategy development and monitoring on top of its watchdog role.

Great British Railways will additionally be handed powers currently held by the Secretary of State around open data, and will be able to make permitted information disclosures to carry out its functions and activities.

The consultation is open until 4 August 2022.