Out-Law News 2 min. read

UK government plans overhaul of rail franchising

The UK government has proposed significant reforms to the railway sector, setting the stage for the biggest overhaul of rail franchising since the early 1990s.

The Queen's Speech outlining government priorities said that it will publish a white paper on railway reform later this year, with the priority being to improve services for passengers.

The move follows initial proposals from Keith Williams, who was charged with leading an independent review of the railway sector last year. In July Williams said he would be recommending a move to a new commercial model for running the railways, with the aim of creating a different relationship between the public and private sector that allowed operators to run services in the interests of passengers.

While Williams’ final recommendations are yet to be published, the government said it would start implementing reforms next year based on the review’s outcome. The inclusion of railway reform in the Queen’s Speech (130 page / 399KB PDF) also follows the September 2019 announcement of plans to give northern cities more of a say in the running of the railways.

The government acknowledged that demand for rail services in the UK remained high, but performance levels were dropping and passenger satisfaction rates were at their lowest in 10 years last year.

Infrastructure expert Jon Hart of Pinsent Masons, the law firm behind Out-Law, said: “For a long time now, there has been broad political consensus that the rail sector needs reforming – and with the results from the Williams Review due next year, it was unlikely that the Queen’s Speech was going to say everything is fine and dandy with the current structure."

“So, although there are no changes yet, the next year or so could be a big one for rail as details are revealed as to what reforms might look like. Amidst the crowd-pleasing, election-friendly commitments of getting trains to run on time and simplifying the byzantine ticket structure, the speech mentions coming up with a new commercial operating model, that’s ‘flexible’, ‘creative and innovative,” Hart said.

“There is no talk of nationalisation, but any new model is likely to require primary legislation and some kind of funding commitment from the Treasury in what might be the first big overhaul of the franchise structure since the early days of the Railways Act 1993,” Hart said.  "All this is going on against a back-drop of some of the current franchises being extended by management contracts and more widely, private sector entities continuing to invest in current franchise holders."

The Queen’s Speech also confirmed that the High Speed Rail 2 (West Midlands – Crewe) Bill is still on the government’s agenda.

The bill was originally introduced in 2017 and provides the power to build and operate the next stage of the High Speed 2 (HS2) network, connecting northern cities to the network earlier than originally planned.

The legislation sets out the way railway regulation will apply to HS2 and will modify existing legislation applying to the scheme’s construction.

The bill’s inclusion in the speech comes despite a review of the scheme which was announced in August, following significant delays to phase one of the project.

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