Williams-Shapps Plan for Rail - Summary

1. Introduction

On 20 May 2021, the Government released the Williams-Shapps Plan for Rail (the "White Paper"), setting out its proposals for reform and restructuring of the Great British Rail Industry.

This document is intended to provide a high-level summary of some of the key proposals contained within the White Paper. We have produced an Executive Summary of the Review, and our comments on the Ten Key Impacts of the Review are set out here.

The White Paper contemplates a raft of reforms across all aspects of the Rail Industry, including significantly:

• The creation of a new public body, Great British Railways ("GBR") as a single "guiding mind" to own infrastructure, receive fare revenue, run and plan the network and set most fares and timetables (from a practical perspective, the White Paper anticipates that Network Rail, along with relevant functions of the Rail Delivery Group and Department for Transport will be absorbed into GBR);

• The establishment of a new, unified brand and identity across the whole system, with national and regional sub-identities;
• Reform of and upgrades to the fares system, with an emphasis on standardisation and simplicity, together with the introduction of new and innovative products such as flexible season tickets;
• The end of the franchise system, to be replaced by concessions for the operation of passenger rail services, similar to Transport for London's Overground and bus network contracting systems;
• The introduction of Passenger Service Contracts, under which revenue risk (generally) is expected to remain with Government, and cost risk to be passed to the operating companies; and
• The overhaul of track access regulation through new legislation, with the aim of giving GBR powers and duties to plan the use of the network, balance priorities and maximise overall public benefit.

It is acknowledged that implementation of certain reforms may take a number of years (in particular, where new or amending primary legislation is required, and/or to provide time for the expiration of existing 'legacy' commitments). However, the White Paper anticipates that this simpler, more integrated structure could, after five years, deliver savings of around £1.5 billion a year (equivalent to 15% of the network’s pre-pandemic fares income). 

2. Integrating the Railways

Summary

The White Paper anticipates that accountability for the integration of the 'whole system' proposals contemplated by the White Paper will sit with the new public body, GBR, which will:

• Be a single guiding mind;
• Develop a 30-year strategy and long term business plans;
• Manage railway budgets;
• Have control of ticketing;
• Own stations and infrastructure;
• Be composed of regional divisions;
• Have a national brand and identity;
• Plan track access arrangements; and
• Be accountable and regulated.

Single guiding mind

GBR will be responsible (and accountable) for meeting the punctuality, quality, efficiency, safety and other goals set out in the White Paper and by Ministers, as well as being tasked with implementing whole system planning and operating functions in a cohesive manner.

It is proposed that GBR will bring the railways' finances together in a single organisation across track, train and the rail estate, empowering it to manage cost and revenue decisions for the network (with budgets pushed down to regional and even local levels).

The White Paper describes GBR as being a 'new organisation' (rather than an extension of Network Rail), and explains that GBR would be given a binding mandate to serve the interests of passengers, freight customers and taxpayers and to grow rail usage, with future funding streams conditional on meeting this mandate.

Funding and Strategy

In the context of the Government maintaining the current infrastructure settlement (which runs until 2024), the White Paper retains the concept of five-year infrastructure funding deals from 2024 onwards, including funding for GBR.

The White Paper references a commitment to maintain, and even increase, private involvement and private finance in the rail industry.

It is proposed that (in addition to 5-year business plans), GBR will be responsible for developing a long term 30-year strategy for the industry (planned to be ready by 2022), with the intention of creating a stable foundation for innovation and problem-solving.

The White Paper notes that GBR will aim to make substantial net savings (without detriment to service or fare levels), building up the existing programme of efficiencies which aim to deliver £3.5bn of savings over the five-year period to 2024 (around £700 million per year).

Ownership of stations and infrastructure

Station management will be integrated within GBR to improve accountability for long-term investment in stations. Dedicated station management teams will be created locally within regional divisions of GBR to manage stations, land and assets.

Regional and local influence and accountability

It is proposed that GBR will be made up of regional divisions with a degree of independence, meaning that budgets and delivery responsibilities may be held at the local level within GBR, not just nationally.

Key strategic decisions will be taken centrally, with operational matters led by five regional divisions (in line with the regions established in Network Rail's recent 'Putting Passengers First' programme).

Whilst the White Paper acknowledges that GBR will be a single point of accountability, it proposes that new partnerships with GBR's regional divisions in England will give towns, cities and regions greater control over local ticketing, services and stations.

Devolution

The White Paper states that devolved services (Scotland, Wales, London, Merseyside, and Tyne and Wear) will be maintained and strengthened, with closer collaboration with GBR intended to improve services, consistency and co-ordination across the country.

With respect to the devolved authorities, the White Paper proposes that:

• GBR will continue to own the infrastructure in Scotland and Wales (other than certain South Wales Valley Lines), as Network Rail does now.
• SCOTLAND: the UK Government will explore options with Transport Scotland to enable the railway in Scotland to benefit from the reforms on the wider network of Great Britain.
• WALES: A joint working agreement (building on existing Wales and Borders arrangements for rail services) between Transport for Wales and GBR will be explored to improve the rail offer for passengers and freight customers in the connected network between Wales, the West Midlands and the West of England.
• LONDON/SOUTH-EAST: A new strategic partnership will be established to support housing, economic growth and the environment bringing together GBR, TfL and local authorities.

Brand and Identity

There will be a new national brand and identity to emphasise that the railways are one connected network (with variants reflecting the English regions, Scotland and Wales). The brand will use updated versions of the classic 'double arrow' logo as well as the Rail Alphabet typeface used in the White Paper.

Track access

New legislation will give GBR powers and duties in respect of access management and capacity allocation, to enable it to plan the use of the network, balance priorities and seek to maximise the overall public benefit.

It is anticipated that key contracts and functions relevant to the existing access framework will initially transfer from Network Rail to GBR.

Existing access contracts will be honoured, and a 'new generation' of access contracts and processes will be developed for freight and other private operators to provide clear legal rights in the future.

Accountability and regulation

The Secretary of State for Transport will be responsible for the appointment of the Chair of GBR, and agreeing the framework for pay, including any performance-related pay. In turn, the SoS will continue to be accountable to Parliament for how the railways deliver for passengers, communities, the economy, the environment and taxpayers.

The Office for Rail and Road ("ORR") will scrutinise GBR's delivery of its objectives and provide support in developing an open and transparent self-assurance process. Following legislation, the White Paper contemplates that the ORR will be able to direct GBR to change decisions that are not in line with policy or the rules-based access system underpinned by legislation and will act as an appeals body for operators.

Current safety and security roles will remain in place across the rail network. A consultation will be undertaken to ensure safety roles, rules and standards are appropriate for the future.

Industry Structure

The following diagrams, extracted from the White Paper, demonstrate the proposed changes to the overall structure of the rail industry:

Current

Proposed

3. Replacing Franchising

PSCs

Under Passenger Service Contracts ("PSCs"), GBR will specify timetables, branding, most fares and other aspects of the service, and agree a fee with the competitively-procured passenger service operator to provide the service to this specification. GBR will draw up contracts and the service plans that underpin them in line with its mandates to grow the railways and improve efficiency. The White Paper notes the intention to launch initial competitions for PSCs in 2022.

In most contracts, fare revenue will go to GBR (i.e. taking revenue risk), with operators delivering to the specification and managing their costs in doing so (i.e. taking cost risk), although there is suggestion that flexibility in the contracts may allow some operators to 'act more commercially', and take on more revenue risk (predominantly on long-distance routes).

PSCs will be tailored to the specific characteristics (including markets and passenger needs) of the relevant parts of the network (with input from relevant regional divisions of GBR), and may vary from one to another, including in respect of which operator incentives are included, and in terms of contract length.

New open access services will also be explored 'where spare capacity exists'.

Operator of last resort

Operators will be held accountable and risk termination of their contracts if they are not delivering punctual, efficient and high-quality services. If operators fail, the Government will retain its existing operator of last resort function.

4. A New Deal for Passengers

Summary

The White Paper emphasises its focus on customers and building an expanded "turn up and go" railway, and includes proposals for:

• Introduction of easy, frictionless payment options across the network, including digital tickets;
• Expansion of Pay As You Go ("PAYG") journeys outside of London;
• Modernised and simplified fares, including flexible season tickets;
• Review of Peak services and Off-Peak services;
• A GBR website and app;
• Integration of the rail system with different transport methods;
• Improvement of passenger services, including train and station conditions and accessibility; and
• Improvements to passenger information and compensation schemes.

Easy, frictionless payment options

Digital tickets (including both online and mobile versions) will be developed for regional, long-distance and frequent journeys. This will include the digitisation of season tickets.

PAYG

New PAYG contactless methods of payment will be introduced to networks outside of London.

Modernised and Simplified Fares

Under the White Paper it is proposed GBR will set fares under a framework agreed by Ministers. This will tightly control fares on most services, although the White Paper suggests that long-distance service operators will have more commercial freedom (e.g. control over fare setting and advanced booking tickets).

Protections will be ensured for "turn up and go" fares, ensuring walk-up fares remain available and conventional season ticket fares remain capped.

Flexible season tickets are to be introduced to cater for the growing number of people who do not commute every day. Passengers will get a discount without having to pay for a full-time season ticket. These tickets will be sold to allow travel on 8 days in a 28-day period, with no pre-determined days of travel, and are to be launched in summer 2021.

Peak and Off Peak Services

The applicability of peak and off-peak services will be reviewed when demand patterns post pandemic become clearer. Regular off-peak services across the network will continue to be important and therefore protected. GBR will continue to consider the optimum number of services and the impact of engineering on off-peak services.

GBR Website and App

GBR will (alongside partners) become accountable for ticketing and retail offers across the country. A single website and app will be created to replace the current array of train company sites and standards. The aim is for the GBR website and app to become a portal for all public transport services, selling integrated tickets across different transport modes. This will initially include real-time updates on delays and services and simple options for PAYG. It is suggested this could further expand to include:

• An integrated compensation claim systems;
• An ability to book services (such as Passenger Assist);
• An ability to book external services such as hotels and car or bike hire.

The White Paper expects that the single website and app will also allow GBR to leverage customer data by collecting and utilising data in modern and efficient ways to improve the retail proposition.

Alongside the GBR website and app, tickets will continue to be sold by independent retailers.

Integration of the rail system with different transport methods

In connection with the Government's Bus Strategy, the White Paper proposes that GBR will work with operators to promote and improve the PlusBus scheme (including through digitalisation), which already allows rail-bus through-ticketing.

GBR will seek to reverse the trend of decreasing on-train space for bikes. Future train fleets will include more bike spaces where possible and relevant to the markets served.

Improvement of passenger service

Customer Service: Operators' customer service will be monitored under the PSCs, and incentive and reward structures will be developed based on performance and passenger satisfaction.

Stations: Stations themselves will play a bigger community role and will be developed/re-developed to include services (e.g. shopping collection and public services). Such services will be adapted to local community needs and design standards for stations will be updated by an expert working group.

Trains: Trains will be governed by new design and ride standards introduced by GBR to seek to ensure that all new trains are more comfortable, together with bringing forward the normal replacement cycles of certain existing trains.

Accessibility: GBR will be given a statutory duty to improve accessibility. ORR will hold GBR to account for matters that affect accessibility, alongside its general obligations. A comprehensive audit of network accessibility will be conducted to provide robust, consistent and detailed information across the full range of facilities and standards, with data generated to be made publicly available.

Passenger Information and Compensation schemes

The current array of information will be replaced by a 'single source of the truth' across GBR, underpinned by new standards for communications.

GBR will provide new information such as average punctuality data, expected service crowding and real-time updates on station accessibility and service times, to be rolled out at stations, on trains and directly to passengers, as well as through third-party providers so they can also provide consistent information. This data will be shared openly whilst maintaining information security.

5. Unleashing the Private Sector's Potential

Freight

A national freight co-ordination team is to be created within GBR to act as a single point of contact for freight operators and customers, and freight will be incorporated into the new 30-year GBR strategy.

The White Paper proposes the introduction of safeguards to ensure freight operators receive fair access to the network within the new proposed 'rules-based' access regime.

GBR will also have a statutory duty to promote rail freight to secure economic, environmental and social benefits, with the Government to issue guidance on rail freight priorities in funding settlements.

The Government will also consider network enhancements to increase capacity for freight, and explore future Strategic Rail Freight Interchanges to be located more appropriately across the country.

Rolling stock

The White Paper does not assume any direct changes to the current industry model for procurement of train fleets by operators, or the maintenance by independent train-leasing companies. The Government will, however, consider the sustainability of the supply chain and how to sustain and generate high-value jobs and economic activity, and will assess options to ensure reliable delivery and value for money.

Key infrastructure

Private sector funding will be used to modernise the digital infrastructure of the railways through the Project Reach imitative, including upgrading the fibre network on the railways.

As a first step, a PPP between Network Rail, Govia Thameslink Railway and Cellnex will introduce full and fast mobile connectively from Brighton to London by 2023.

Contestability

New contracts will be designed to encourage innovation, collaboration and efficiency. The White Paper references the potential creation of new opportunities in the supply chain, including for technology providers, banks, payment partners and investors.

6. Accelerating Innovation and Modernisation

Introduction

The White Paper sets out the ambitious approach to decarbonisation, climate change adaption and data in furtherance of the Government's overall net-zero strategy. The White Paper identifies opportunities for rail to contribute further to cutting transport emissions, particularly through:

• Electrification;
• Hydrogen and Battery technology;
• Implementation of the Environment Plan;
• Land Management Procedures;
• Data;
• Research, Development and Innovation (RD&I); and
• Project Speed.

Electrification

GBR will bring costed options to decarbonise the whole network to the government, in line with the 30-year net zero strategy. This will build on the forthcoming Transport Decarbonisation Plan and Network Rail's recent Traction Decarbonisation Network Strategy.

Hydrogen and Battery Technologies

Both battery and hydrogen-powered trains will be trialled for passenger routes where conventional electrification is an uneconomic solution, supporting the ambition to remove diesel-only trains from the network by 2040.

In the short term, on-train batteries will be trialled to cut pollution around stations, options are under consideration for the extension of third-rail electrification to areas that depend on diesel operation, and short 'infill' electrification projects will be accelerated.

Implementation of the Environment Plan

A comprehensive Environment Plan for the rail network will be published in 2022, which will form a key part of GBR's 30-year strategy.

A specific duty will be placed on GBR to consider environmental principles in all its operations, making it "accountable for … the sector’s delivery of a more environmentally sustainable rail network". As part of this, a single measurement methodology for carbon across the railways will be adopted and data on progress will be published transparently.

Land Management

A sustainable approach to land management will be implemented to support biodiversity and improve reliability by reducing risk of environmental hazards (e.g. landslides).

Green barriers (e.g. tree planting) will be used as carbon offsets and noise barriers.

Other initiatives will include the roll-out of LED lighting and water fountains at more stations, machine-learning systems on trains, and renewable power generation on the rail estate (e.g. the Hampshire solar farm), to be aligned with relevant new incentives across the sector.

Data

The White Paper proposes the creation of a new Rail Data Service within GBR to implement an 'open by default' approach to data, improving transparency and unlocking new technology.

Open data will be compiled by GBR and shared with the aim of encouraging new opportunities "for partners to work with the railways to integrate rail data into passenger-facing apps, connect data across systems, and strengthen understanding of operations and services".

RD&I

GBR will become the primary public funder of RD&I initiatives in order to deliver priorities determined by Minsters, with stronger links to centres of industry and private sector innovators central to this.

GBR's regional divisions will, alongside the UK Rail Research and Innovation Network, be tasked with delivering RD&I projects, focusing them on passenger and freight customer needs. Changes will be implemented in close consultation with existing bodies (including the Rail Safety and Standards Board) and Innovate UK.

Project Speed

DfT and Network Rail will apply the principles of 'Project Speed' to their work on the railways. SPEED (Swift, Pragmatic, Efficient Enhancement Delivery) is a rail specific initiative and has been established "to identify opportunities to reduce the timescales and cost of delivering rail infrastructure". The focus is on changing the ways of working, including:

• • Simplification of funding process; and
• • Reducing the time to agree blockade timetables during construction.

This follows the introduction of PACE to Network Rail's internal governance process. To further underline the commitments under Project Speed, the DfT has set up an Acceleration Unit to unblock issues that affect infrastructure projects.

7. Empowering Rail's People

Introduction

In order to respond to the changes brought about by the pandemic, the Government has set out plans to implement a flexible and sustainable workforce. This will include measures with respect to:

• Training and Talent Development;
• A Workforce Plan;
• Diversity; and
• Productivity and Pay.

Training and Talent Development

The White Paper sets out that a sustained programme to invest in skills, training and leadership across the sector will be introduced to increase collaboration, openness to innovation, and to support productivity improvements.

A new virtual leadership academy will be created to "professionalise and standardise the skills offer across the entire sector". This will be accompanied by system wide skills and accreditation programmes to be offered in advance of the academy.

Workforce plan

GBR will develop a workforce plan which brings to together in one place the demands of the railways and the supply of skills, to enable strategic assessment of skill requirements.

Diversity

GBR will use "leading industry-wide recruitment campaigns" that will demonstrate that railways provide modern and inclusive career opportunities. This will be complimented by a sector-wide people strategy to attract diverse talent.

Productivity and Pay

In collaboration with the ORR, the Government will introduce transparency requirements and reporting analysis on pay and productivity across the industry. The ORR will collect and publish data on salaries and productivity, alongside comparisons to other sectors and labour market.

A standardised approach for reporting staff costs will be introduced for passenger operators and GBR. Regular reviews will be undertaken to determine the effectiveness of resource management and technology use.