Is Rail Reform still on track? Consultation on the Future of Britain's Railways

Direction Setting and Driving Delivery:

It is proposed that the Secretary of State for Transport will have responsibility for setting the long-term strategic objectives for the railway, while GBR will retain autonomy over the operational and planning decisions required to achieve these objectives.

It is anticipated that GBR will primarily be held to account by the Secretary of State through its Board. Additionally, GBR will be subject to a "substantively streamlined and simplified licence reflecting its unique position as the network's preeminent operator of both infrastructure and passenger services," which will be enforced by the ORR but drafted, issued and amended by the Secretary of State. The consultation emphasises that the licence will be focused on the minimum viable set of conditions required for safety, performance, efficiency and passenger experience.

Passenger Watchdog:

A new watchdog is being proposed to provide passengers with a strong independent voice and to act as a statutory consultee on government and GBR policies, strategies, and business and infrastructure plans. The consultation suggests that the watchdog may be either an entirely new body or an enhancement of Transport Focus, the existing independent watchdog for transport users.

The consultation remains open as to whether the watchdog's role will be purely advisory, or if it will have a regulatory function. If it is to have a regulatory function, the watchdog will take over some regulatory functions from the ORR, such as overseeing passenger information and complaints processes and providing guidance on Accessible Travel Policies for rail operators.

Updated Access Framework:

The DfT plans to establish in legislation a new framework to enable GBR to take access and charging decisions governed by its duties to deliver whole system benefits, government priorities and the goals of devolved governments and Mayoral Strategic Authorities. The DfT is also proposing to include safeguards to ensure fair access to the network for freight and non-GBR passenger operators.

As part of this change, the provisions of The Railways (Access, Management and Licensing of Railway Undertakings) Regulations 2016 will no longer apply to GBR or the GBR network. However, the consultation notes that legislative requirements are critical for providing certainty for investors, so the Railways Bill will provide simplified requirements and obligations which make GBR accountable for planning the use of its rail network. The consultation proposes a number of requirements that the DfT expects to be included in the new legislation and invites suggestions from consultees on additional obligations.

The consultation also makes it clear that GBR will be selling long-term access rights to non-GBR operators and, while GBR's own operators will not pay access charges, GBR will be required to publish and put in place a cost apportionment process to ensure transparency and provided non-GBR operators with confidence that access charges are fair and non-discriminatory.

Additionally, it is made clear that although the role of the ORR as safety regulator, competition authority and consumer law enforcement body for rail will not change,  the ORR will no longer approve access to or the sale of access rights for the GBR railway.

Fares, ticketing & retail:

The consultation proposes that GBR will set fares for its services, while open access and devolved operators will continue to set fares for services they operate and that the Secretary of State will retain the role of ensuring overall affordability in primary legislation.

It is also anticipated that GBR will take over functions from the Rail Delivery Group, including managing central retail systems, standards, and access information. To ensure the retail market remains competitive, transparent, and fair, the DfT is considering how the retail market will be licensed and which entity will adopt responsibility for licensing.

Financial Framework:

The new funding model proposed by the DfT would replace the current periodic review system. While much of the new funding model will align with current practices (i.e. settlements lasting 5 years and the ORR having a role in assessing business plans and settlement viability), the DfT is proposing that the focus of the new model should be on determining the amount of funding the government needs to provide to achieve its stated aims rather than the level of access charges. The DfT's view is that this change in focus aligns with the transition to network ownership and passenger train operation being conducted by a single entity although observations are invited from consultees. 

Devolution and collaboration:

The consultation acknowledges the role that devolved regulatory entities play in shaping the rail sector in their respective jurisdictions. Consequently, the DfT aims to promote conversations between GBR and devolved entities by providing a statutory role for devolved governments and Mayoral Strategic Authorities in governing, managing, planning, and developing the rail network. In considering the scope of this role, the DfT notes that it must strike the right balance between serving local communities and recognising the importance of having a nationally integrated network.