10th March, 2020

How is the policy and regulatory environment for rail changing?

With the resolution – for now – of the ongoing debate over the High Speed 2 rail line, as well as debates over public ownership of passenger services, what should businesses with an interest in the rail sector be bearing in mind from a policy and regulatory perspective?


 Rail policy is one of the most important aspects of infrastructure spending by the UK Government and often the front line of greater ideological debates over public and private ownership of essential services. A priority for parties across the House of Commons, it is viewed as both an essential contributor to economic growth and a magnet for media scrutiny when failures arise. Its wide public reach offers significant political influence to stakeholders across the sector, including Train Operating Companies (TOCs), SMEs and larger companies in the multi-product supply chains of UK and overseas rail networks, as well as retailers and caterers operating at railway stations and their own supply chains.

 Over recent years, much of the political attention has naturally been on the approach of both the Government and the Labour Party to passenger services and the role of private companies in operating these, particularly in the context of problems faced by Southern Rail and Govia Thameslink, and the transfers of Northern and East Coast Main Line services to the Government’s Operator of Last Resort. The Government commissioned the Williams Rail Review in 2018 to examine the current franchising model, and Labour’s policy of ‘re-nationalisation’ – waiting for existing franchises to expire and bringing them in-house – has been one of the flagship policies of its last three general election manifestos.

 Outside of the high-profile issues in relation to passenger service franchising and public ownership, as well as the ongoing debate over HS2 and other large projects like Crossrail, there are a number of policy priorities for the Government in terms of expansion of rail capacity, as well as ongoing projects to maintain and improve existing rail infrastructure across the country led by Network Rail. The decision to proceed with HS2 can be taken as an indication of Ministers’ commitment to additional capacity in the rail network, while Network Rail is engaging in an ambitious programme focused on maintenance and renewals.

 Network Rail sets out its priority workstreams according to five-year ‘control periods’. The last control period (CP5) concentrated on electrification (such as the Gospel Oak – Barking line in London and the Transpennine line between Manchester and Leeds), renovation of large stations (including London Bridge) and improving speed and capacity across a range of lines. A number of these projects have been significantly delayed and have come in over budget, creating some pressure on the Government and Network Rail to review how future investment programmes are decided. Control period 6 (CP6) began in April 2019 and will end in March 2024. There is a new programme of work focused on maintenance and renewals, and Network Rail is also aiming to complete outstanding projects from CP5 as part of CP6.

Current issues

Much of the Government’s time on rail policy will inevitably be spent on franchised passenger services as the Williams Review draws to a close and it continues to be a topic of political contention. Beyond this, the timely and cost-effective completion of CP6 projects will be a key issue given the overspend and delays to projects from CP5. The scale of what Network Rail is seeking to achieve in CP6 as it seeks also to complete outstanding elements from CP5 means that there should be ongoing opportunities for contractors to Network Rail, though suppliers should be aware of the continued pressure for the Government to change how rail investment decisions are made. The political priority attached to HS2 as a major national infrastructure should also provide opportunities, despite likely political and media scrutiny of spending and procurement decisions as the cost of the project continues to be debated.

Points to consider
  • Progress of CP6 and flow of funding – where are the opportunities for suppliers and contractors, and which are the priority projects for Network Rail and the Government? What are the prospects for further delays to existing and new projects under CP6 and how is the Government trying to prevent more overspend?
  • The Williams Rail Review – final recommendations for reforming the franchising system for passenger services and potential consequences for other parts of the sector
  • Overall approach to public procurement – in a post-Carillion environment, how does the Government think about outsourcing elements of significant infrastructure and construction projects to the private sector, and how might the regulatory framework for awarding Network Rail contracts change in this context?
  • Brexit and workforce – how will the new immigration system affect recruitment of skilled and unskilled workers, and domestic changes to employment status and IR35 affect engagement with the contractor workforce?

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