Introduction

A Railway of the North, for the North: time for a new approach

Rail Reform Group

Introduction

On January 29th, the Secretary of State Grant Shapps announced that the Arriva Rail North franchise was to be terminated, with the DfT-owned ‘Operator of Last Resort’ (OLR) taking over from March 1st. It did not come as a shock. The last two years have been a bad time for rail travellers. In the midst of chaotic scenes following the introduction of new timetables, the then Transport Secretary Chris Grayling announced a ‘fundamental review’ of how Britain’s railways are managed, financed and structured, chaired by Keith Williams, former British Airways MD (and, significantly, Deputy Chair of The John Lewis Partnership). He wanted to see proposals that include ‘commercial models for the provision of rail services that prioritise the interests of passengers and taxpayers’ together with ‘rail industry structures that promote clear accountability and effective joint-working for both passengers and the freight sector.’ At the same time, the review wants to see a rail system that is ‘financially sustainable and able to address long-term cost pressures’. 

The January 29th announcement presents a great opportunity to develop long-term solutions that benefit the North’s passengers and the wider economy and communities. The transfer of the franchise to OLR provides a breathing space, not only to get the rail network stabilised, but to look at long-term solutions that avoid making the same mistakes again.

There is no longer any doubt that the current mix of public and private, set up by the 1993 Railways Act, isn’t delivering on any of these. Many senior rail managers recognise that the current system is dysfunctional but don’t want a return to the short-termism and Treasury control of the 1970s and 80s. As things stand, we have state-owned Network Rail responsible for infrastructure, with train operations delivered by the private sector but specified (generally in considerable detail), mostly, by the Department for Transport. Privatisation brought in a plethora of additional players creating hundreds of additional interfaces and adding further to costs. This combination of fragmentation with short-term franchises – railways are essentially a long-term industry – is enormously costly and inhibits new development even when we know there is a strong business case.

The North of England suffered particularly badly in the rail meltdown and problems persist. The introduction of a new timetable should have been a ‘good news’ story with additional services and new trains on the way. But the system was simply unable to cope, and the lack of a strong ‘guiding mind’ led to a collective nervous breakdown on the North’s railways, from which we are only just recovering. It’s in the North where the need for change is greatest.

The Rail Reform Group has brought together a small team of senior rail professionals whose experience goes back to BR days in the 1970s, many of us having worked at the ‘sharp end’ of operations in the North. Our submission to the Rail Review, argued for a new approach to railways in Britain which avoids the rigidities of nationalisation as well as the limitations of the fragmented and short-term privatised system that we have now.

Building on a great tradition

The North has a great railway tradition. Some of the most entrepreneurial railways were based in the North – such as the Lancashire and Yorkshire Railway which stretched across from the Humber to the Mersey. It was ‘vertically integrated’ with infrastructure and operations run by the same company. It built its own locomotives at its Horwich works and had a range of ‘peripheral’ but commercially successful businesses: hotels and catering, feeder bus services, cross-channel steamers to Ireland and mainland Europe and tourist-based enterprises. It was an early pioneer of electrification. It wasn’t totally self-contained, sharing tracks for longer distance services with other companies. Through ticketing was achieved by the companies working together through the ‘railway Clearing House’. The L&YR disappeared in 1922 and a year later formed part of the giant London Midland and Scottish Railway. This too was absorbed in the nationalised British Railways in 1948.

The Rail Reform Group is proposing a new ‘Lancashire and Yorkshire Railways’ that could cover much the same area as its forebear, taking in the towns and cities stretching from the Mersey to the Humber. It would reintegrate the Northern and TransPennine Express operations, currently stand-alone franchises, into one railway business, managing more of its infrastructure in partnership with Network Rail. We are arguing for a ‘Network Rail North’ which would cover the whole of the proposed area of Lancashire and Yorkshire Railways, Cumbria and the North-East, to bring a much clearer focus to the needs of the North of England rail network.

Creating a dynamic, passenger-focussed railway: the mutual answer

Franchising, at least in the rail context, has failed. The problem is how to avoid the drawbacks of traditional nationalisation whilst ensuring national and local public accountability and commercial dynamism,  that does not throw away the many real achievements of the last 25 years. Railways in the North are a long way from covering their full costs and this is currently recognised through franchise payments. Even a more sustainable system will require public funding, and accountability is essential.

We are proposing that Lancashire and Yorkshire Railways should be constituted as a ‘mutual’ social enterprise with a strong degree of accountability to regional bodies including Transport for the North and the northern combined authorities, but with employee and passenger involvement. If the ‘new’ L&YR was set up as such a mutual enterprise (a great Northern tradition), the people who travel on the trains, and work on them, would have a direct say in the business. It should be managed as a commercial business run by railway professionals, free of bureaucratic micro-management, free to innovate and attract investment funding from a variety of sources.

Let’s hope that review chair Keith Williams has brought some of his experience in the John Lewis Partnership and applied it, creatively, to rail. We need to find a model that gives accountability combined with a greater degree of commercial and operational freedom to the railway, avoiding ideological fixations.

Lancashire and Yorkshire Railways should in effect be created by Government as a free-standing social enterprise, with a basic framework requirement of services, and allowed to get on with it – with no ‘end date’. Periodic reviews, yes, but passengers and employees want to see stability, and benefit from a long-term vision which includes much-needed investment in electrification, new trains, better stations and rail re-openings. There is scope for external investment, particularly in new station development and line re-openings. 

Splitting the franchise?

There have been suggestions that the Northern franchise is too big and should be split into (at least) two halves – an east and a west franchise, mirroring the successful operations that existing in the mid-1990s at the time of privatisation. Whilst there are strong arguments for making the franchise smaller, at the same time there are risks in separation that could adversely affect east-west connectivity which is increasingly recognised as a major issue. Creating two wholly separate franchises would add to costs for which there would need to be a corresponding  benefit. An alternative could be to have geographical directorates with strong operational devolution – potentially, North-East, Yorkshire and Humberside, Greater Manchester and Merseyside and Lancashire and Cumbria.

We would argue for a separate ‘InterCity’ directorate within L&YR Railways based on former TransPennine Express routes with some additions e.g. Blackpool – York and Leeds – Nottingham.

The important issue is to ensure that any future organisation both reflects the strong needs for loval travel into and around each of the north’s major cities and at the same time ensure a high degree of connectivity between these cities, especially in the context that some train services perform both functions.    

Getting more from ‘community rail’

One area of great potential is in the less intensively used parts of the network. The ‘Community Rail’ initiative, first launched in the 1990s, has been highly effective in revitalising local lines, many of which had been threatened with closure in the 1960s and bus substitution in the 1980s and 2000s. Community involvement through bringing station buildings back into use, ‘station adoption’ schemes and schools involvement in arts projects have combined to give many ‘no hope’ lines a new lease of life reflected in major increases in passenger numbers.

The Government introduced its new ‘Community Rail Development Strategy’ which highlights the importance of community engagement, encouraging healthy journeys and enabling social and economic development which is diverse and socially inclusive. There is no reason why much more of the rail network should not be covered by community rail partnerships with a much wider scope than simply marketing and promotion.

Conclusion

Our proposals are for a specific part of the country, the North of England; it’s the area that we know best. Our ideas could work equally well in other parts of Britain, including East Anglia, Scotland, the South West and elsewhere.

Intercity operations, particularly north-south services, should not be broken up, but may operate over different infrastructure regimes and work with regional services. ‘One size doesn’t fit all’ and other models should be tried, and successful operations, such as Merseyrail and Chiltern, should be left as they are, and even extended. It’s noteworthy that both are relatively self-contained and have long franchises.

Revised January 30th 2020