Williams-Shapps Plan for Rail – A briefing for RFG Members

What is the Williams-Shapps Plan for Rail?
The Williams – Shapps Plan for Rail is the Government White Paper that sets out their plans for significant reform to the structure and operation of the railways.  The policies have been developed under the Williams Rail Review, which started in Autumn 2018, and also take account of the very significant changes to the passenger railway due to the impacts of Covid-19.

Although the Plan sets out the planned reforms, it acknowledges that the detailed proposals are yet to be developed. Many of the changes will require new primary legislation before they can be enacted – hence why the document is a White Paper. A significant amount of work will therefore be required across the industry to work out the exact plans, deliver legislation and implement change.

What are the plans?
The centrepiece of the policy is the establishment of a new public body, Great British Railways (GBR), which will own the infrastructure, receive the passenger fare revenue and run and plan the network. Network Rail will be absorbed into this new body, as will passenger rail, with the new body responsible for awarding contracts for passenger operation. These contracts will be concessions, with operators rewarded for operational performance but without taking revenue risk. GBR will operate with a single national brand and passenger offer. It will also be responsible for developing a 30-year strategy for the railway and for five-year business plans, which will form the basis of railway funding.

GBR will be charged with delivering significant efficiencies in railway costs.

The plans are far-reaching and include proposals for wholescale reform of the access regime, and other important areas such as the performance regime.  The role and structure of other bodies, including ORR and RDG will also change as will the way that rail funding is set and allocated.

What will it mean for rail freight?
On the face of it, the Plan is good news for rail freight.  Certainly, the document has freight engrained throughout, and it is clear that it has been well considered throughout policy development, rather than a last-minute ‘add on’. The document makes clear statements about the value of rail freight to the UK and to decarbonisation and recognises the commercial and private sector nature of freight operations.

There are some specific proposals to support freight too.  GBR will have a new statutory duty to promote rail freight, and Government will set a freight growth target similar to that in Scotland.  A new national freight coordination team will sit at the centre of GBR to oversee the development of freight services across the regions.   And the ORR will be given new powers to act as an appeals body for operators if GBR does not apply new policies and practices fairly.

The document also references the case for investment to support freight, both for capacity and infill electrification.  However, there is no specific commitment to any new schemes at this stage.

Finally, reform of the access framework could create opportunities for freight capacity to be better managed, and for improvements in the quantum and quality of freight paths available for growth.  However, this is expected to be a complex area of reform and with some risks attached.

What are the challenges?
Perhaps the largest challenge at this time is the lack of detail in key areas and the necessary work that will be needed to develop this. Freight businesses who are already working hard on the ‘day job’ of delivering growth will have to find the time and resource to influence change and make sure that it will work for their customers and shareholders.

A fundamental question is around the detailed structure of GBR and how it will work for freight. GBR will have both a central function and regional bodies, and relationship and governance between them will need to be established. The relationship with Scottish Government and other devolved bodies also needs to be confirmed, although the Plan is clear that currently devolved powers will not change.

One of the most significant challenges is likely to be the reform of the access regime.  The Plan states that there will be a new rules-based access system replacing the current arrangements, and when GBR make decisions on how to allocate scarce capacity they will do so in line with the new system.  It suggests that this will allow more flexible use of the capacity for freight, including consideration of the value of a freight path against competing choices. Whilst there are clearly opportunities if this can be delivered, there are clearly also risks, including around a potential loss of certainty.  It is also unclear how track access charges will be calculated in future.

Systems such as the performance and possessions regimes will also be subject to change and could have implications for freight.

Finally, changes to the role of other bodies, in particular the ORR, will have implications for freight, and the design of new powers will need particular attention to ensure that they give the protection that is suggested.

When will it all happen?
The changes are expected to take some time to develop, and we have been told it is likely that legislation will be laid before Parliament sometime in middle to late 2022. This might align with changes ‘going live’ at the end of this control period in April 2024.

For areas that do not need legislation, it is possible that changes could be implemented earlier, or in ‘shadow’ form. The Plan lists some possible areas for early adoption, including infill electrification to freeports.

What happens next?
Andrew Haines, CEO of Network Rail has been asked to develop plans for the interim arrangements and beyond.  DfT is also establishing a Rail Transformation Programme which is expected to lead on the legislative programme.  We can expect to see more details on the programme and next steps in coming weeks, and we will advise members as more details become available.

And in the meantime.
Despite these proposals, the railways continue in business as usual mode, and the pressure to grow freight and meet the needs of our customers remains as important as ever. With record traffic levels in some sectors and new customers and services coming to rail freight, there is a positive move towards growth, and we are optimistic that these reforms can, if implemented well, support that movement.