The Williams Review: The future of rail?

Louise Butcher

Rail passenger journeys have soared over the past 20 years and there is more public and private money being put into the rail industry than at any other time in history. Yet concerns continue to be raised that rail travel is overpriced and railways are under-performing and fragmented.

This Insight looks at the Williams Rail Review, which will shape the future of the railway. The independent chair of the review, Keith Williams, will appear before the Transport Select Committee to discuss these issues on Monday 28 October.

How did we get here?

Successive governments have said that the performance of the railways was: “not good enough. Too frequently, and on too many lines, the quality of service fails to meet the travelling public’s expectations” (Department of Transport, New Opportunities for the Railways, command paper 2012, 1992) and that: “For every train operator that has improved punctuality and reliability, there is another that has let standards slip.”

The last major review of the railway in 2011 observed: “there is widespread recognition that the industry has problems in terms of efficiency and costs […] passengers and taxpayers … are paying at least 30% more than their counterparts in other European countries.”

For all the restructuring and issues the rail industry has gone through over the past 25 years, it was the service meltdown across the North and the South East following the May 2018 timetable changes that caused then Secretary of State for Transport, Chris Grayling, to commission the Williams Review.

Launch of the Williams Review

On 20 September 2018 the Government launched a “sweeping review to transform Britain’s railways.” The review – led by Keith Williams – was charged with considering all parts of the rail industry.

The terms of reference for the Review were published on 11 October. Its remit did not include big projects like HS2 and Northern Powerhouse Rail and it was told to avoid “negative impacts on the public sector balance sheet.”

What is the Review likely to recommend?

Williams has published a series of papers setting out initial thoughts about where the problems with the industry lie and what principles he intends to apply to address them. He is focusing on achieving a better outcome for customers (passengers and freight companies). The areas he is looking at include:

Tackling the fragmentation, short-termism, lack of accountability and conflicting interests which result from the current structures of the network;
Ensuring that Britain’s railways are financially sustainable for both taxpayers and users; and
Improving accessibility.

Williams has been clear that franchising cannot continue in the way it is today, as it’s no longer delivering clear benefits for either taxpayers or farepayers.

In his July 2019 Bradford speech, Williams reflected on his commitment to “put passengers first.” He said the measures his review is considering “all contribute to 10 fundamental, evidence based, passenger needs,” including: reliability and punctuality; safety and security; value for money; consistency and transparency; accessibility; accountability and leadership; accurate information and communication; and proper compensation and redress.

A ‘guiding mind’

The idea of an ‘independent guiding mind’ for the railways is not new. For a brief period in the early 2000s, one existed – it was called the Strategic Rail Authority (SRA). It was set up to provide leadership for the rail industry but lacked the power to bring together its various elements. As a result, it was abolished in 2005. Its responsibilities were distributed between the Department for Transport (DfT), Network Rail and the regulator.

In his Bradford speech, Williams said there needs to be:

“… a new industry structure, reducing fragmentation, better aligning track and train, creating clear accountability and a greater distance between government and running the day to day railway […] A wide range of organisations have argued in favour of a new arm’s length body or bodies to act as a ‘guiding mind’. It is an idea we’re looking at closely […] what would be the right scope of any body’s responsibilities be?”

Williams made it clear that he is not considering handing over ‘guiding mind’ powers to Network Rail.

A concession model

In the same speech, Williams said the current franchising model has “had its day.” His principles for a new system would include a different relationship between the public and private sector, “that lets train operators get on with running services in the interest of passengers,” and long-term incentives for creativity and innovation.

What this is likely to mean in practice is a shift from the current franchise model to one involving longer term concessions. Concession agreements are very similar to franchises, but the legal framework is different. There are already a few rail services that are exempt from the franchising provisions of the Railways Act 1993 and are operated by the private sector on behalf of a public sector body (in London and Merseyside, for example). Under the concession model, a public sector body tends to retain the revenue risk rather than passing this on to the appointed operator and bidders generally do not have to produce timetables or revenue projections.

What are the next steps?

When it announced the review, the Government said that its findings and recommendations would be published in a White Paper in autumn 2019, with reform to begin in 2020. Grant Shapps told the Transport Committee on 16 October that all of Williams’s recommendations would be incorporated into the White Paper, to be jointly written by Williams and DfT and published before the end of 2019.

Regionalisation

Devolution has been on the rail industry agenda for a long time.

The major metropolitan areas outside London have both won and lost powers to specify local services in franchise agreements. While bodies like Transport for the North and West Midlands Rail have an increasing say in franchise design and management, the DfT retains ultimate responsibility.

In March 2016, a report by Nicola Shaw, then Chief Executive of HS1, recommended deeper route devolution and a dedicated route for the North. Since then, Network Rail has significantly reformed how it delivers its services and has reorganised on a regional delivery model. However, this reorganisation does not fully reflect these recommendations, as the North remains split into two regions.

In his Bradford speech, Williams said: “What comes next must be anchored in the regions and communities — and nearer to the people — the railway serves.” For regions like the North and cities across the country, this would mean “greater opportunities to influence and inform decisions about services and upgrades” in their area.

What have the Government and Opposition said?

In a June 2019 speech the Permanent Secretary of DfT, Bernadette Kelly, said that it was time for the DfT to get out of the business of letting franchises. In September the Prime Minister announced his intention to devolve more rail powers to the regions as part of the Williams Review. On 1 October, Secretary of State Grant Shapps said the DfT should not be letting to franchise contracts, and the industry needs a ‘fat controller’ who is ultimately responsible for network performance and letting contracts. He later told the Transport Select Committee that new contracts should be for 15-20 years and that long-term incentives should be aligned between track and train operators.

Labour has said that the Review “misses the point” and that a single state-owned company should be managing the track and trains.