Transport after the General Election: A conference report

Session 2: Rail Reform, Delivery and Funding

Consensus on reform, but differences on the details

Introducing the second session, Ed Thomas, a partner and UK head of transport at KPMG, said the rail sector would welcome the election because it has been "in limbo" for the last few years.

Keolis UK, Middle East and India chief executive Alistair Gordon took up the theme.

"Whoever wins, we need change," he said. "The Williams review came about because the rail industry was in chaos. Public perceptions were at an all-time low. Franchises were in chaos. Projects were going over budget." Then came the 2018 timetable chaos.
He added that things had since "got worse, if anything" with "industrial action, punctuality has got worse, the railway looks neglected, and customers have lost confidence in the fares system." Covid resulted in the loss of a large part of the commuter market. "Whichever party gets in, there will be a big rail agenda," he predicted. Characterising the debate as privatisation versus nationalisation was "too simplistic".

Lead director of Great British Railway Rufus Boyd said: "I would add that we're going into a general election knowing the sector isn't getting the basics right."

He continued: "There's a consensus among the parties on the need for change." Regarding the creation of Great British Railways and what its responsibilities should be, he said: "There's consensus around the guiding mind component, but subtle differences are emerging," particularly on the question of nationalisation of train operators. But he thought there was a less clear divide than might be imagined regarding what the final outcome might be, and advised "Try not to focus on red/blue."

He issued a rallying cry to the sector, arguing: "The real focus for us should be a spending review in the new parliament. With all the other priorities for an incoming government I think we're going to have a very tight settlement. We must respond to that appropriately. Rather than the traditional approach of saying 'if you give me more money I can do more for you', we must be in persuasion mode."

That required improving efficiency in the sector and reducing "the general friction in the system". It was important to increase revenue. Various train operators were making a difference and showing ambition and "we need to harness that".

"This should be a year of delivery. The incoming government will need to reflect on priorities. We must be ready – not sitting on our hands waiting for the plan."

Rail Partners chief executive Andy Bagnall said: "The railway may not matter to the election, but the election will matter for the railway, and shape it for many years to come." Labour had endorsed the creation of Great British Railways. "All roads lead to GBR, but there are different visions of GBR," he said. The Conservative vision was a "a guiding mind"; Labour's was "a directing mind". He took a different view from Mr Boyd on nationalisation/privatisation: "Don't underestimate the difference between having private sector operators and a public monopoly."

Covid had swept away franchising, and currently trains were run under "management contracts micro-managed by the DfT. They are effectively nationalised." But the track record of private sector TOCs had been to increase passenger numbers and increase revenue to the Treasury. "Be aware of the strengths of the current system," he warned. "We saw from the British Rail era, when rail had to compete for funds against the NHS, that it generally lost."

"It doesn't have to be a binary choice between franchising versus nationalisation," he added. "You can get the best out of both with the private sector under a guiding mind" – as demonstrated by Transport for London and by railways across Europe.

High Speed Rail Group chair Dyan Perry OBE advised delegates to "remember the fantastic social and economic benefits rail brings". Her organisation's main purpose was to promote inter-urban connectivity and the social/economic benefits of rail.
What were the messages the sector needed to get across to a future government? They were quite simple: "Connectivity, capacity, climate. They will drive sustainability and they will drive economic growth."

The National Infrastructure Commission's progress report the previous week had said that local and intercity transport infrastructure was a constraint on growth. It had advised the government to commit £22bn from 2028 to 2045 on major public transport projects, of which two-thirds should go to schemes in Birmingham, Manchester, Leeds, and Bristol. "If we don't invest in rail we will not get growth," she said. "It's that simple."

The HSRG had recently put forward a five-point plan for how a future government should improve connectivity.

  • First, reduce journey times from London to Glasgow and Edinburgh, recommitting to a target of three hours.
  • Second, develop, and stick to, a comprehensive plan for north-south and east-west connectivity, prioritising Birmingham to the North West and Liverpool-Hull.
  • Third, devise a funding model to complete the station works at Euston, "or we will end up with the biggest folly in the world. It will be an embarrassment," she said.
  • Fourth, retain the present HS2 land holdings "and stop the fire sale that we know is going on at the moment. We need to be able to preserve the corridor."
  • Finally, engage with the investment community to explore all funding options. Private sector finance has an essential role to play in the future, she said.

Paul Hirst, head of transport at international law firm Addleshaw Goddard, called for more clarity regarding funding of infrastructure projects. He said: "At the moment we do not have an infrastructure plan. But, importantly, we don't have a feel for the available funding for such a plan. "What I've seen over the last ten years, in the context of HS2, is that the debate goes on completely without a conversation about funding. And it takes forever to get to a the business case, and that business case tends to get ripped up. That's what happened with phase 2 of HS2 and it could happen again."

Without getting a plan in place, and some clarity on funding or on finance options, infrastructure planning would never progress from where it is today. That affected connectivity, which it turn affected growth over the country as a whole, and there would not be a rebalancing between the regions, a term used by the then HS2 chair Sir David Higgins when he originally unveiled HS2 phase 2.

Rail Delivery Group chair David Brown said the group's clear ambition was to help create a single better railway for everyone. It represented all the train operators whether privately owned or public, as well as Network Rail, giving it a unique ability to focus on cross-industry issues. It has recently been through an exercise to define really clear priorities for its board.

The key focus was on "getting back to providing customers with a good operational service, with a good, simpler fares system and also getting back to our core rationale, getting more people to use our trains and grow the railway," he said. He continued: "We do agree on the need for reform and we're delighted that all the major parties accept the need for that reform. But my plea would be, while people are getting excited about another reform document in the rail industry, many of which have never been implemented, that we, the rail industry, really do concentrate on delivery for costumers by growing revenue and making operations far more efficient."

The RDG was working with all train operators to improve, and "the key issue thing for us is making sure that the friction [highlighted by Mr Boyd earlier], isn't seen as we move forward with our priorities."

Customers wanted to see an improvement in day-to-day operations, and this was something the industry had not been achieving successfully in the last few years.

But while stressing there was a need for reform, he said, "My plea to the industry would be: work collaboratively on doing what we are paid to do, while bringing our experience and knowledge to get the right sort of reform. Let's not get distracted by moving things around, let's really focus on day-to-day delivery."

Session one: Transport Priorities for the next UK Government

Session two: Rail reform, delivery and funding

Sesson three: Devolution and Transport

Session four: At the sharp end: de-carbonising our transport system