On 9 June 2022 the Department for Transport (DfT) published a consultation on the primary legislative changes to implement the rail reforms outlined in the Williams-Shapps Plan for Rail (Plan for Rail). The consultation covers the core functions of Great British Railways (GBR), the new governance framework and the reform of wider industry structures. Responses on the consultation are requested by 4 August 2022.

LEGISLATIVE REFORMS

To implement the Plan for Rail the consultation outlines the key legislative reforms to:

  • establish GBR and provide it with the powers necessary to perform its envisaged functions;
  • facilitate the introduction of the passenger services contracts; and
  • enable wider rail industry reforms including the creation of an open access Rail Data Marketplace and the implementation of a new National Rail Accessibility Strategy.

Great British Railways

GBR will bring together activities from several existing organisations, including Network Rail, the DfT and the Rail Delivery Group. The aim of combining all these functions and having one body responsible for a larger scope of the operational management across the rail system is to enable GBR to act as a new guiding mind for the rail sector.

Establishing GBR Rather than establish a new statutory body, the DfT propose that the corporate entity used as the main operating company for GBR will be Network Rail Infrastructure Limited (NRIL) as it is expected this will negate the need for a transfer of staff and/or significant assets/contracts.

The new legislative framework will enable the Secretary of State to appoint an integrated rail body (ie GBR) to be the body responsible for the mainline railway in Great Britain.

Functions Under the Plan for Rail, GBR will have the following core functions:

  • to plan and manage access to, and ensure safe and efficient use of, the UK rail network;
  • to manage the GBR owned infrastructure; and
  • to manage and secure delivery of high-quality passenger services and be accountable for the customer offer.

Additionally, it is anticipated that GBR will have an overarching duty to perform its functions, and act in the public interest. The DfT suggest that this should include a duty to act in a manner it considers maximises the social and economic value of the UK rail network. Respondents are asked to comment on the scope of GBR’s proposed duties and highlight issues with the proposals to have GBR as a “guiding mind for the railways”.

Licence As part of the new governance framework GBR will be obliged to comply with the terms of the new “state-issued licence” that, following, consultation, will be issued by the Secretary of State for Transport under the Railways Act 1993.

The new licence is intended to be broader that than the current network licence held by Network Rail, reflecting GBR’s wider functions and duties. It will also set out behavioural requirements in terms of how GBR manages and delivers its functions.

The Secretary of State will have the power to review and amend the terms of the licence, following consultation.

Relationship with Government Once established GBR is intended to have an arm’s-length relationship with government although the legislative reforms will reserve powers for the Secretary of State for Transport to issue guidance and directions on any matter when necessary.
Role of the ORR  The current role of the Office of Road and Rail (ORR) is intended to be modified to reflect the role and nature of GBR. As part of this new approach:

  • it proposed to widen the ORR’s existing duty to promote competition to require the ORR to take into consideration public sector funding of rail services, including in terms of access to the rail network;
  • the ORR will be under a new duty to help further GBR’s policies on access to and use of the railway where approved by the Secretary of State for Transport and to take such policies into account when regulating access to the rail network;
  • the ORR’s existing powers will be amended to exclude the ability to impose a financial penalty on GBR for breach of its licence conditions as it is considered that the levying of a financial penalty of a publicly funded and owned body has limited impact.

 

Passenger Rail Services

While the consultation makes clear that no legislative changes are necessary to implement the new commercial arrangements for passenger rail services contracts, the consultation outlines a number of legislative changes that are intended facilitate the introduction of the new passenger rail services model contemplated by the Plan for Rail:

  • the DfT propose to amend the Railways Act 1993 to transfer its franchising authority powers and responsibilities to GBR (although the powers for specifying which passenger services GBR will be responsible for procuring and the power to grant exemptions will be retained by the Secretary of State for Transport).
  • It is also proposed to amend the Railway Act to enable GBR to appoint directly a public sector operator in certain circumstances, such as where there is a major infrastructure project or industry reforms or where a short-term direct award to a private operator may lead to poor value for money.

Amendments are also proposed to EU retained law. The key change suggested in the consultation is for the limitation period for challenging the award/procurement process for public service contracts to be shortened to one month (in line with other subsidy and procurement regimes). Those responding to the consultation are asked to comment on whether they support these proposals.

Wider industry reforms

In addition to the legislative changes centred on GBR, the Government are intending to make a number of other legislative reforms.

The Plan for Rail contemplates an “open by default” approach to data sharing. As part of this, the Railways Act will be amended to extend GBR’s powers in respect of information and data. Additionally, a new Rail Data Marketplace will be established to promote transparency and help drive innovation. In support of this GBR will be required to develop and implement an open data policy which will be reflected in future train operating contracts.

Respondents are also asked to what extent they agree with the Plan for Rail proposal to ratify the Luxembourg Rail Protocol to the Cape Town Convention. The aim of the Protocol is to reduce the cost of finance for rolling stock leasing companies by harmonising the creation and registration of legal interests in rolling stock and the remedies for default or insolvency. It is hoped that ratifying the Protocol will encourage greater levels of private finance within the UK rail industry.

NEXT STEPS

Following the conclusion of this consultation, it is expected that the DfT will consider and publish its responses before the end of 2022. Legislation for the creation of GBR as well as the implementation of other industry reforms proposed by the Plan for Rail are expected to be introduced into Parliament during the course of 2023.

Tom Marshall
Tom Marshall
Partner, London
+44 20 7466 7470
Tim Briggs
Tim Briggs
Partner, London
+44 20 7466 2806
Nusrat Zar
Nusrat Zar
Partner, London
+44 20 7466 2465
John Williams
John Williams
Of Counsel, London
+44 20 7466 2392