A Backbench Business Committee debate on HS2 Compensation is scheduled for Thursday 18 January 2024, in the Commons chamber. The debate is sponsored by Theo Clarke MP (Con).
Documents to download
The future of rail (666 KB , PDF)
The Government’s Rail white paper, the Williams-Shapps plan for rail, presents “the biggest shake up” of the sector in over 30 years.
Privatisation of rail in the 1990s
Following privatisation in 1993, British Rail – a publicly owned company responsible for running the railway – was divided into over 100 separate companies. The private sector became responsible for buying and leasing trains (rolling stock companies), running passenger and freight services (train operating companies and freight operating companies) and managing the infrastructure. The then Conservative Government’s privatisation of the railway in Great Britain was unprecedented. The Transport Select Committee at the time outlined that no other country with a comparable railway was even considering the degree of changes proposed within the Railways Bill.
Privatisation introduced greater private sector involvement and competition into the rail industry. Franchising, the commercial model by which private operators took over responsibility for running passenger services, coincided with a significant growth in passenger numbers. However, these reforms also introduced extra complexity.
The railway in Great Britain: the current system
Responsibility and accountability for the running of the railway is split between a range of different bodies, often operating with different incentives. For example:
- most rail infrastructure is owned, maintained and operated by Network Rail, a publicly-owned company (with some limited exceptions).
- most passenger services have been run by privately-owned train operating companies (TOCs) under multi-year franchises let by the UK, Scottish and Welsh governments.
- trains (or rolling stock) are owned by private rolling stock leasing companies (ROSCOs) and leased to the TOCs.
- most railway stations, while owned by Network Rail, are leased to train operators, except for the main passenger terminals which Network Rail runs itself.
Since privatisation, successive governments have attempted to redress the fragmentation that exists within the rail industry by bringing responsibility for track and train (namely responsibility for managing the infrastructure and running services) closer together.
The Williams-Shapps Plan for Rail was published in May 2021 and sets out the Government’s plans for altering the management of railways in Great Britain. In a statement to Parliament, the Transport Secretary described the Plan as “the biggest shake up in three decades, bringing the railway together under a single national leadership, with one overwhelming aim: to deliver for passengers”.
The Plan proposes:
- thecreation of a new public body, Great British Railways (GBR) as a single “guiding mind” to own the infrastructure, receive fare revenue, run and plan the network and set most fares and timetables;
- a new 30-year strategy for the railway be created alongside five-year business plans to “provide clear, long-term plans for transforming the railways to strengthen collaboration, unlock efficiencies and incentivise innovation”;
- the establishment of anational brand and identity (an updated version of the classic ‘double arrow’ logo) to emphasise that the railways are one connected network, with national and regional sub-identities;
- reform of and upgrades to the fares system, with an emphasis on standardisation and simplicity, together with the introduction of new and innovative products such as flexible season tickets; and
- the replacement of franchising with a new commercial model similar to that used on Transport for London’s Overground and bus network, where the revenue from fares goes to the public sector and private operators are paid a fee to run services.
In the Queen’s Speech in May 2022, the Government announced its plans to bring forward a Transport Bill, which will include the legislative changes needed to implement the Williams-Shapps Plan for Rail. In June 2022, the Government began to consult on its proposed legislative changes. The Government is analysing the feedback from this consultation, which ran until 4 August 2022.
Impact of the Coronavirus pandemic
The number of people using the railways during the first year of pandemic fell dramatically to its lowest levels since 1872. Over the course of 2020-21, just 388 million journeys were made on Great Britain’s railway (equivalent to 22.3% of the journeys made in 2019-20), compared to 1.7billion journeys the year before.
With fewer people using the railways during the pandemic, passenger revenue decreased. According to the Office of Rail and Road, passenger revenue totalled £1.9 billion in 2020-21 (just 18.3% of the £10.4 billion generated in 2019-20).
While the pandemic has presented significant challenges for the rail sector it has also provided the Government with an opportunity to speed up the delivery of its reform agenda. For example, emergency contracts were introduced to keep services running. These contracts are now being used as a stepping-stone from franchising towards the new commercial model outlined in the Williams-Shapps Plan for Rail.
Official statistics show passenger number have yet to return to pre-Covid levels, but have risen to a high of 95%. When the Williams-Shapps Plan for Rail published, the Government acknowledged that the rise of homeworking and online shopping over the pandemic means that the sector now faces deep, possibly permanent, structural change in some of its key markets. However, in the context of the UK Government’s 2050 net zero target and its plans to decarbonise transport, rail has been identified as having a significant role to play in reducing greenhouse gas emissions from transport.
Documents to download
The future of rail (666 KB , PDF)
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