To legislate or not to legislate? That is the question facing transport ministers as they look to balance their predecessors' commitments to rail reform with a fast-approaching general election. The odds of legislation in this parliament have lengthened significantly over recent weeks. If the rumours are to be believed, the King's Speech drafting room now resembles the climax of Shakespeare's great tragedy; the floor littered with the corpses of rejected bills, including the one to create Great British Railways (GBR).
But legislation is not the only route to reform. There is much that can be achieved by proactive ministers, in collaboration with the industry and the wider business community. Most immediately, we need to resolve the current spate of industrial action. The impact that this is having on both UK productivity and the finances of the railways, should not be underestimated. The latest data suggests that the cumulative impact on the industry's finances over the last year is approaching a billion pounds, whilst the impact on the hospitality sector alone is now more than three times that figure. It should go without saying that running a reliable railway service is the foundation upon which everything else is built.
Next, attention needs to turn to fixing the incentives for train operators. Currently, the companies running services and selling passengers tickets do not have the freedom to innovate. Central Government continues to pull the strings in terms of fares and ticketing options, and they are clinging on to structures that were creaking at the seams even before the pandemic fundamentally altered patterns of public transport demand. If operators have the ability to raise revenue, they will find ways to drive passenger numbers up. This was one of the real successes of privatisation but seems to have been forgotten amid the centralisation that the pandemic temporarily necessitated.
Looking slightly ahead, fares reform need not wait for the creation of GBR. We all remember the final peak train rolling in empty and the first off-peak train being rammed – and now many commuters have even more flexibility in when and whether they travel. The fares structures that were designed to maximise revenue from this core passenger segment are now putting many people off travelling at all. On top of this, leisure travel now makes up a much greater proportion of the overall numbers of journeys and these travellers have different requirements in terms of fares and ticketing products. Not to mention the fact that if we want to stand any chance of hitting our growth or net zero targets we need a step change in rail journeys – to a level significantly higher than pre-pandemic levels.
Longer-term we need a stable, sustainable pipeline for investment – especially when it comes to rolling stock. Committing to a holistic programme of refurbishment and replacement of ageing train fleets across the country would provide a boost for both rail passengers and the economy. From the Bakerloo Line to the banks of the Mersey, there are trains in operation that were made in the 1970s – and there are still diesel-powered trains chugging into Marylebone station. Simply committing to a sustained improvement programme would enable further decarbonisation of the rail network and private sector investment in high quality manufacturing jobs in train factories in places like Derby and Goole. The current stop/start approach means it is harder to attract, train up, and retain people for these roles – all of which further adds to the costs of the projects that do eventually get approval.
And all of this really matters because public transport is the grease that enables the machine of the British economy to operate smoothly – especially in and around the most productive regions, our major cities – where people rely disproportionately on public transport to access jobs and services. The Government might only plan in one year cycles, but the rest of the world doesn't. Every month that these decisions are delayed holds back private sector investment and UK growth, and adds to the ultimate costs that will be borne by the taxpayer while undermining the ability of the Treasury to cover those costs.
Transport economics spiral up or spiral down. If the quality of the railways continues to deteriorate, fewer passengers will use them, less fare revenue will be collected, investment will fall, and the cycle will continue. Once things get into this pattern of decline, it is very hard and very expensive to turn around. In the absence of legislation, we need a clear and credible non-legislative plan to get rail back on track before the next election.