Railways: 2004 White Paper
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Railways: 2004 White Paper Standard Note: SN/BT/3142 Last updated: 31 March 2010 Author: Louise Butcher Section Business and Transport This note summarises the White Paper The Future of Rail published on 15 July 2004. The document and associated information can be found on the Department for Transport's archive. The then Secretary of State for Transport, Alistair Darling, announced a review of the railways in January 2004; this was followed by a report of the Transport Select Committee in April; and the Government’s conclusions and response to the Committee was published in a White Paper in July. The Secretary of State had ruled out renationalising the railways before the review took place and after consideration, he decided against radically changing the structure to a system of common ownership of the track and train. The White Paper identified weaknesses in the existing system for managing the railways and proposed changing the structure by: • Abolishing the Strategic Rail Authority (SRA) and moving its strategic functions and financial obligations to the Department for Transport; • Giving responsibility for operating the network and for its performance to Network Rail; • Reducing the number of passenger franchises and aligning them more closely with Network Rail's regional structure; • Increasing the role of the Scottish Executive, the Welsh Assembly and the London Mayor, in determining passenger services and where appropriate, infrastructure; and • Giving the Office of Rail Regulation (ORR) responsibility for safety, performance and cost. A number of these changes – notably the closure of the SRA, the transfer of safety regulation, and proposals relating to devolved decision-making – were legislated for in the Railways Act 2005. 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Contents 1 Rail Review, January 2004 2 2 Transport Committee report, April 2004 4 3 White Paper, July 2004 5 4 Impacts of the White Paper on the railway industry 7 4.1 Department for Transport 7 4.2 Strategic Rail Authority (SRA) 7 4.3 Network Rail 8 4.4 Office of Rail Regulation (ORR) 8 4.5 Train operating companies (TOCs) 9 5 Railways Act 2005 10 1 Rail Review, January 2004 Rapidly rising costs and continuing poor performance led the then Secretary of State for Transport, Alistair Darling, to announce a review of the rail industry on 19 January 2004. In a statement to the House, he explained how the industry stood: The recent regulatory review published last December confirms that the cost of upkeep of Britain's railways is £1.5 billion a year more than was thought necessary just three years ago. The review implied that Network Rail inherited a business from Railtrack with unit costs substantially higher than they ought to be. Network Rail is tackling these inefficiencies and is working to bring costs down. Taxpayers and fare-paying passengers alike need to know that their money is being well spent and that increased spending will improve performance. Cost control is absolutely essential (…) There remains a further and very serious difficulty facing the industry—that is, its structure and organisation. The way in which it was privatised has led to fragmentation, excessive complication and dysfunctionality that have compounded the problems caused by decades of under-investment. Quite simply, there are too many organisations, some with overlapping responsibilities, and it has become increasingly clear that that gets in the way of effective decision making and frequently leads to unnecessary wrangling and disputes. That is no way to run the railways. 1 Mr Darling went on to restate the Government’s commitment to public-private partnership on the railways and he ruled out any return to nationalisation: The Government are committed to a partnership between public and private sectors. It happens on railways throughout the world. However, the long-term inefficiencies and costs of privatisation have, as time has passed, become an even bigger barrier to the success of the railways, so in the spirit of partnership between private and public sectors, we need to put right the problems that the authors of privatisation left behind. We need to build on that investment and on the structural changes we have already put in place, not only to put the railways on a sound financial footing, but at the same 1 HC Deb 19 January 2004, cc1075-76 2 time to provide them with the right structure and organisation to take them through the next 20 or 30 years [...] However, structural change is not just needed in order to make better spending decisions. It is also needed if rail is to operate effectively and to meet the needs of passengers and other customers. Privatisation had some disastrous and far-reaching consequences for the railways—Railtrack's performance, for example—but the private sector has brought considerable increased investment, and in many cases train companies have provided innovation that was conspicuously lacking in the past. We want to build on that. That is why the Government believe that renationalisation would not solve the problems that the railways face. What is essential is to put in place a structure that works and can deliver not just cost control but safe, reliable railways that work efficiently.2 He then set out the objective of the rail review as follows: Our objective is a streamlined structure and organisation with clear lines of responsibility and accountability. Network Rail is already operating in the public interest, and with the right franchising arrangements so should the train operators, but we have a clear responsibility to examine the roles and relationships of all the other organisations with a view to streamlining the present structure. The review will therefore look at the regulation of safety, which at the moment is the responsibility of the Health and Safety Executive, the Health and Safety Commission and the Rail Safety and Standards Board. Safety is of paramount importance, and all those involved undoubtedly work hard to ensure safe railways, but there is now a plethora of industry standards, some of which are over-cautious or are being applied in an over-cautious way. Safety regulation needs to be focused on the real risks to passengers and employees and should not be an obstacle to providing reliable services. We need the right organisation to do that. Our reforms must make the structure as simple and as straightforward as possible. The complex structure at privatisation has contributed to the daily frustrations of the public, many of which are shared by the dedicated and committed people across the country working to improve the railways and deliver better services.3 Responding to the statement, the Conservative Transport Spokesman, Theresa May, criticised the ‘chopping and changing’ of rail policy since 1997 and the centralisation and bureaucratisation that the industry was now subject to: This statement heralds the fifth change in the structure of the railways in nearly seven years of this Labour Government. They came in promising immediate benefits for the travelling public, but after seven years passengers are seeing no improvement on the railways, and for many services are getting worse. One in five trains run late, targets for increasing passenger numbers have been cut, and work on new lines has been scrapped [...] Having obstructed those at the sharp end of the industry with regulation, targets and ministerial intervention, now, when they are failing to deliver, their answer is to set up a review, change the system and put decisions in the hands of the politicians. The statement makes one thing clear—this is not about finding the right structure for the railways, but about increasing centralisation and political control. The Government are 2 ibid., cc1076-77 3 ibid., c1078 3 tearing up the very structure that they created less than four years ago ... Who created the Strategic Rail Authority? It was the brainchild of the Deputy Prime Minister. Who created Network Rail? It was the right hon. Member for Tyneside, North (Mr. Byers). This Secretary of State is having to clear up the mess left by his predecessors. As ever with this Government, when there is a problem to be solved they do not look for efficiency and new ideas, but reach straight for centralisation, interference and bureaucracy. The statement takes 57 paragraphs to tell us that the Secretary of State is setting up a review.4 2 Transport Committee report, April 2004 Following the announcement in January 2004 the Transport Select Committee held an inquiry into the future of the railway. Its three main conclusions were that a public sector Railway Agency should be set up to combine the functions of the SRA and Network Rail; that economic regulation of the railways had largely failed; and that industry and the safety regulator needed to work better together: A public sector Railway Agency is needed. This new executive body would combine the strategy and output delivery functions of the SRA with control of the infrastructure, and must be given all the powers required to manage the entire rail system and to deliver excellent services for the travelling public.