TRANSPORT secretary, Mr Mark Harper, has reaffirmed the British government’s commitment to the rail reform programme centred on the creation of Great British Railways (GBR), a new governing body for the country’s railway which aims to bring together a fragmented industry and provide a single point of accountability.
“As a whole government, we are pressing ‘go’ on rail reform,” said Harper, delivering his first speech as transport secretary and giving the George Bradshaw address 2023 at the Institution of Civil Engineers in London on February 7.
“I’ve spent my first few months in this job listening to the experts,” he said, “to understand what’s holding back meaningful change and how we move forward.”
Harper said that delivering the policy set out in the Plan for Rail announced in May 2021 was his priority, “moving from the words to action.”
“The railways need fundamental reform and that is what we will deliver,” he said. “We know what the underlying issues are. A fragmented structure that quickly forgets the customer. Decision-making with too little accountability, but with too much centralisation. And a private sector rightly criticised for poor performance but with too few levers to change it.”
Reflecting on the recent disruption caused by industrial action, Harper noted that passenger operators were “essentially dependent” on drivers volunteering to work overtime on Sundays to provide a full timetable.
“We can’t run a reliable seven-day-a-week railway on which customers can depend,” he said. “Modernising working practices must be part of reform.”
Turning to the impact of the Covid-19 pandemic on railway finances, Harper said “thanks to hybrid working, an economic model dependent on five-day commuting is out of date.” Season ticket sales are at just 28% of pre-pandemic levels, he noted.
“The impact on the industry’s bottom line has been stark. Revenue is around £125m to £175m lower each month and costs keep rising year on year.
“Any other industry would have collapsed years ago but the railways have only survived because of the taxpayer and the public purse - the source of over 70% of income over the past two years at a cost of £1000 per household.”
“Operating the railways is currently financially unsustainable and it isn’t fair to continue asking taxpayers to foot the bill. Most of them don’t regularly use the railways,” Harper said. “But they find themselves subsidising an industry that delivers only 1.5% and 2% of all journeys that are taken by the public.
“We have a broken model. Unable to adapt to customer needs and financially unsustainable. Left untreated, we will drive passengers away with poor performance that will lead to fewer services, that will drive more passengers away and so on and so on. Only major reform can break that cycle of decline.”
“We will create a more customer-focused and joined-up railway. But we want to go further,” Harper said, “and actually enhance the role of the private sector. Not just in running services but in maximising competition, innovation and revenue growth right across the industry.”
To increase revenue, Harper said it was necessary to instil “a customer-first culture,” and tackle the issue that was of the greatest concern to passengers, namely fares and ticketing.
“With 55 million fares available, how can anyone feel confident they’re getting the best value for money?” Harper asked.
In line with government policy to simplify ticketing, he confirmed that pay as you go ticketing will be extended to 52 stations in southeast England this year, including routes served by Chiltern Railways, West Midlands Trains and c2c.
Harper also announced that, following a successful trial at London North Eastern Railway (LNER), single leg pricing would be extended to other LNER routes from this spring, and potentially more widely.
“It means a flexible single fare will always be half the cost of the equivalent return, giving passengers more flexibility and better value,” Harper said. “We’re also going to learn from the aviation sector and better manage capacity as well as raise revenue by trialling demand-based pricing on some LNER services.”
Moving to freight, Harper said that the sector’s “untapped potential for green growth” could not be overstated. “I intend to create a duty to ensure the new industry structure realises that potential with a dedicated Strategic Freight Unit tasked with creating better safeguards, more national coordination.” A long-term freight growth target would be set later this year.
“We’ll pick up the pace of reform,” Harper said, turning to the creation of GBR. The location of GBR headquarters will be announced before Easter and by the summer the government will respond to consultation on GBR’s legislative powers.
“GBR will be wholeheartedly customer-focused,” he said. “Serving as the single point of accountability for the performance of the railway and, crucially, following ministerial direction, the GBR Transition Team will develop the guiding long-term strategy for rail which we will publish later this year.”
Tackling some of the “myths” concerning GBR, Harper said it would neither be “Network Rail 2.0” nor a return to the state-owned British Rail. “Taking politics out of the railways is the only way to build a truly commercially-led industry and, for me, that is non-negotiable,” he said.
“GBR will be an arm’s-length body ensuring a balanced approach to both infrastructure and operations. With both sides getting a seat at the table and both sides delivering an efficient, high-performing railway for customers.”
The final area of reform that Harper addressed was the role of the private sector, and in the operation of passenger services in particular.
“The National Rail Contracts and current overcentralised approach are temporary, a short-term fix that has helped steer the industry through the pandemic and this will be phased out,” he said.
“There will be new Passenger Service Contracts that will balance the right performance incentives with simple, commercially-driven targets. Risk will sit where it is best managed and that includes with operators, but only where it drives the best outcomes for passengers and taxpayers.”
“We’ll also open up railway data and systems, whilst lowering barriers to entry for the industry. For ticketing, that means a more competitive retail market and I will welcome new players to spur more innovation and give passengers the services they need.”
Harper also said that “commercial opportunities around land and property near stations” would be expanded. “In Japan, rail companies take full advantage of these investments, generating even more income for the railways and we should look to do the same.”
The government will also support more open-access services where this benefits passengers and taxpayers. “Open-access operators will play an important role in the industry’s future, especially as we grow new markets and make best use of spare capacity on the network,” he said.
In conclusion, Harper said that his words had “the full support” of both the prime minister, Mr Rishi Sunak, and the chancellor of the exchequer, Mr Jeremy Hunt. As the whole government presses ahead with rail reform, day-to-day work will be led by rail minister, Mr Huw Merriman.
“He will provide the stability and leadership needed, while also giving the industry freedom to deliver meaningful change,” said Harper.
“This is our chance to resurrect some national pride in our railways. A chance to harness the political will that is there, the economic imperative and I believe the industry buy-in to build the modern railway Britain deserves. It’s a chance we cannot waste.”
Responding to the speech, Railway Industry Association (RIA) chief executive, Mr Darren Caplan, welcomed the “clarity” provided over the role of GBR as a strategic guiding mind rather than a controlling mind. Caplan said this was “essential to ensuring that rail projects are delivered cost-effectively and efficiently by the rail supply chain, providing value for money to both the farepayer and the taxpayer.”
“However, more still needs to be done to ensure there is a smooth and visible pipeline of work, and that rail suppliers are represented in plans to develop the pipeline, during what will be a period of significant change for the industry,” he said.
Mr Andy Bagnall, chief executive of Rail Partners which represents passenger and freight operators and independent owning groups, said that Harper’s speech was “a much-needed push to reinvigorate rail reform, which is essential for passengers and freight customers as well as for the taxpayer and the wider economy.”
“We now need a clear timetable for legislation as well as pushing ahead with those reforms that don’t need to wait for parliamentary time, such as establishing an ambitious freight growth target or the contractual reforms that will free up operators to accelerate recovery,” he said.
An in-depth feature on Great British Railways appeared in our October issue.
