Posted 29th April 2024 | 4 Comments

Monday essay: Welcome to the hybrid railway

Labour’s plans for the passenger railway have received plenty of attention during the past few days, although some of the general media coverage was ill-informed or potentially misleading (writes Sim Harris).

The BBC, for example, said ‘private train companies have overseen a boom in rail usage in Britain’.

It is right to say that passenger figures have risen sharply since the 1990s (until Covid, anyway), but this sentence could have been taken to imply that the increase in demand was the result of privatisation.

In fact, passenger figures had started to rise in the mid-1990s before the franchises could have made any difference to the quality of services, although it is also the case that after privatisation the internal ticketing system tended (and still tends) to inflate the totals because each train used during a journey is counted separately.

Leaving the knotty problem of statistics aside, some sources talked about ‘UK Rail’, when Northern Ireland is nothing to do with this, but few commentators seemed to notice the quiet change of the status of Great British Railways from ‘guiding mind’, as suggested in the ‘Williams-Shapps Plan for Rail’ of 2021, to ‘directing mind’ in Labour’s document.

Another change was the treatment of the private sector operators who currently have National Rail Contracts, as successors to the former franchises. In the Keith Williams version, Great British Railways was to be a facilitator, not an operator.

He had said: ‘Great British Railways will specify the 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. In most contracts, fare revenue will go to Great British Railways, with operators delivering to the specification and managing their costs in doing so.’

In other words, the new train operators would have concessions rather than old-style franchises, similar to those already awarded by bodies like Transport for London for the operation of London Overground and the Docklands Light Railway. Confusingly, the operating contracts for bus routes in London, Manchester and probably other places soon, although under the firm control of the local authority, are now being referred to as ‘franchises’.

The Government’s draft Rail Reform Bill, published earlier this year, steered clear of Great British Railways, creating instead an ‘Integrated Rail Body’, which would be ‘the appropriate franchising authority’. Although the Bill is very brief, this did suggest that private sector operators would be eligible to bid for operating franchises, although not necessarily on the previous model. Nothing is said in this Bill about any kind of ‘mind’, guiding or otherwise.

Labour has now suggested yet another structure. Under its proposals there would also be a Great British Railways, but this will not be awarding operating contracts. Instead it would be ‘responsible for the day-to-day operational delivery of the railways’. Labour says the reforms set out in Keith Williams’ Rail Review ‘do not go far enough’, because ‘they will not fix the fundamental problems that beset the industry – continuing fragmentation, inefficiency and waste’.

Labour says its proposed Railways Act would transfer ‘expiring train operator contracts directly to the new statutory body’ and remove ‘the requirement to return franchises to the private sector’.

The word may not appear in Labour’s plans, but this is renationalisation. The result will be a curious hybrid, with most passenger trains and all the infrastucture controlled by a state-owned body, while the private sector will be allowed to continue with train leasing, train building, open access passenger services, most freight services, ticket retailing and, presumably, running charter trains.

Great British Railways has already been given a temporary headquarters in Derby. If all this comes to pass, it is going to need a bigger building to get the job done.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • david C smith, Bletchley

    This "hybrid" model we are discussing involves a similar delineation between the equivalent of "Sectors", with operations in the sectors where commercial competition is feasible ( eg. InterCity, Railfreight, ROSCOs) to run as private / independent operators, whilst the natural monoply parts of the railway, with captive markets need public ownership within which to find accountability , hopefully with a democratically elected authority on a "City region " basis.

    As far as I can discern, all that differs between this and the Labour proposal is the "interface" between private and public operation / ownership. A report by the Competition and Markets Authority on alternatives to Franchising, from some years ago , particularly "option 4", covers very similar ground.

    Franchises were an attempt to "straddle"the public and private parts of the railway , within themselves, The current proposals here just really shift this divide hopefully to a more rational place.

  • david C smith, Bletchley

    It appears some form of "hybrid" railway has quie a number of us interested. I've felt supportive for at least 10 years.

    The Beeching reports started attempts to analyse the structure of our railways with the notion of discovering a profitable core, whilst abandoning the rest. Resulting closures could probably never be profitable, but at later dates, it was realised that there are often "hidden" costs and benefits, that if taken into account , might give rise to the retention of some services that otherwise spelt closure.

    With private and public sectors benefiting from cost / benefit analysis,there could be a structure of subsidy and charging that could become the remit for the folks at DfT, instead of their slapping controls on everything, Such payments to be designed to incentivise TOCs under which they manage their own decision making.

    What then about the TOCs? for those "sectors" that are able to deliver effective competing businesses on an "open access" basis, full privatisation may give the best results for accountability, whereas those that are captive market natural monopolies need some form of publc ownership in order to best serve the public.

    The point at issue here is that the modern railway needs more than one single arrangement to cover the diverse needs of various sectors.

    PS Back in the 1960s and ' 70 's, the railways of North America were in crisis, with dwindling customers. In 1980 / 81, the US passed legislation to largely do away with obsolete regulation , and hey - presto, the rail industry recovered and won back much custom.
    [If Labour puts through its plan, there will be no TOCs as we have known them, except open access. There will also be no 'remit' for the DfT, because most of its powers will be transferred to GBR.--Ed.]

  • John Porter , Leeds

    An interesting article, but I would describe the key report as the Williams/Shapps report and wonder how many of the identified differences arise from Shapps input. I see the Labour announcement as the default position where local Mayors haven’t organised matters differently. Day to day supervision needs to fall to the equivalent of Regional Directors including TfL, TfN, etc. Pressure or real experience is likely to lead to that, including pressure from Network Rail, so I don’t expect much growth in staff numbers in Derby, rather growth in the role of “Franchisees” TfL, TfN etc., who will let Franchises. An important argument made by Labour is that Shapps “guiding mind” was too dependent on the current infrastructure body “Network Rail”, which has just spent £3 billion on ECML diversionary route without carrying the service operator with them, rather than at the instigation of the service operator.
    [The official name of the report is the ‘Williams-Shapps Plan for Rail’, as we said, although other descriptions would do. Neither TfL nor TfN will be offering franchises in the sense used on National Rail from 1995, and TfN none at all. There is no sign of the ‘important argument’ you quote in Labour’s new document.--Ed.]

  • Chris Jones-Bridger, Buckley Flintshire

    The use of ridership statistics does require more than a little nuance in order to make any sense. The main danger is when politicians use them to selectively to justify their own prejudiced position. For those who care to take an interest in following the trends over time ridership has ebbed & flowed in line with the overall condition of the economy or where there have been exceptional shocks such as the downturns that followed the Hatfield crash, the financial crash or more recently the pandemic.

    One thing that is clear is that privatisation as legislated for in the 1993 Act is dead. The over complicated contractualised structure created has not only proved costly to service with cash leaching from the industry at each contract boundary but it has placed an overly bureaucratic structure over the operational railway complicating day to day operations. Plus, and let's be perfectly honest, with a few notable exceptions the franchises created have at best only resulted in a lackluster performance. The past 30 years have been littered by many failures. The short term duration with constant rebidding, apart from adding additional cost, has seen relatively innovative operations such as Virgin easily replaced by duds such as Avanti.

    Time has run out on the current government to legislate & implement the Williams recommendations. While his predecessor had admitted that franchising was dead the current Transport Sec chose to prevaricate & try to revive the corpse. As you note assuming Labour form the next government they will legislate to reintegrate the passenger railway, nationalisation. However the private sector is not excluded. Perhaps the one aspect of privatisation that can be said to have been successful is the freight companies. And that is probably because they have been able to exist in a totally free competitive environment whereas the franchisees have been little more than managing agents for the DfT.