Rail reform: No-one in Govt putting needs of passengers and taxpayers first, PAC reports

The Public Accounts Committee (PAC) has published its report scrutinising the Government's programme of rail reform.

The report finds that Government has made little progress in implementing its ambitious plans for rail, with much of the proposed reforms and associated benefits now largely on hold until the next Parliament. In particular, the Department has not yet established Great British Railways (GBR), the new organisation intended to act as the ‘guiding mind' for the whole rail system and which it originally planned to have set up by March 2024. 

The PAC's report finds that no one in Government is putting the needs of passengers and taxpayers first, with poor performance persisting across the rail network – in 2022-23, 13.7% of trains were delayed and 3.8% were cancelled. In the meantime, taxpayers continue to subsidise passenger rail services at a level that Government considers unsustainable (£3.1 billion in 2022-23).

You can also read the attached report here.

You can find out more about the inquiry, including oral and written evidence, here.

All media enquiries to Ed Sheridan on sheridane@parliament.uk / 077190005551.

Conclusions and recommendations

1. It has been six years since the Department identified the need for a root and branch review of the railway, but it has achieved very little in this time.The Department set out an ambitious reform programme in response to the findings of the Williams Review it commissioned in 2018. But it has not progressed rail reform as it intended and many of the proposed reforms and associated benefits are largely on hold until the next Parliament when legislation can be passed. However, getting legislation through Parliament is just one element of rail reform. Previous rail reviews over the last 20 years have failed to bring about the improvements needed and, although the Department says that it now has a whole system assessment of what needs to improve, we have yet to see convincing evidence that this reform programme will turn out to be any different.

Recommendation 1: The Department should set out, as soon as possible during the next Parliament, how and by when it will successfully deliver the reforms that are urgently needed in the rail sector.

2. There has been too little focus on passengers and taxpayers and how to get them a better deal.The Department claims that improving passenger experience is at the heart of its reform plans, but poor performance persists across the rail network. In 2022-23, 13.7% of trains were delayed and 3.8% were cancelled. While the Department is fully aware of what is important to passengers, it has not delivered on the basic things that matter most. Taxpayers also continue to subsidise passenger rail services at a level that the Department considers unsustainable (£3.1 billion in 2022-23). It is disappointing to hear that it took a pandemic to make the Department seriously focus on making efficiency savings and changes to improve services. The Department know it needs to increase revenues and reduce costs to get to a more sustainable position, but its focus is on managing costs, while revenue goes directly to HM Treasury, along with responsibility for making up any shortfalls. This means that the Department, train operating companies and HM Treasury have different priorities when making decisions which impact revenue, and the current set up does not create the right incentives to get the best value for money for taxpayers.

Recommendation 2:

1. a)The Department should commit to producing a specific passenger-focused plan that is clear to passengers what they should expect from travelling on trains following rail reform, including clear targets that train operators are expected to achieve.
2. b)The Department should work with HM Treasury to resolve the disincentives in the system so that it can bring the level of government subsidy on passenger services to a sustainable level and improve value for money for taxpayers. The Department should set out in its Treasury Minute how it is addressing the disincentives ahead of the next Parliament and full rail reform.

3. It is unacceptable that so much of the rail network remains so difficult to access for so many people.The Department committed to improving access to the rail network and other modes of transport as part of its 2018 inclusive transport strategy and has been running its Access for All programme to address the issues faced by disabled passengers since 2006. However, the Department has made little progress in improving rail services and station infrastructure and this affects various groups of people; for example, disabled passengers, as well as parents with young children, and even the many passengers and tourists carrying luggage who would like to have access to lifts. The Department says that it will be going out to consultation shortly on a national rail accessibility strategy, but it should already have enough information about the current condition of stations and where there are accessibility issues to start tackling problems now and without further delay.

Recommendation 3: The Department should fulfil its commitment to improve access to the rail network for all who wish to use it and does not need to wait for further consultation or legislation to make improvements to station facilities and train services. It should report back to the Committee alongside the Treasury Minute on its plans and timetable for when stations and trains will be accessible to all.

4. We are not convinced that the Department has paid sufficient attention, in advance of the delayed creation of Great British Railways, to the changes it can make now to improve the situation for passengers and taxpayers.The Department expected its reform programme to result in annual savings of £1.5 billion. But GBR has not yet been established and this scale of saving will not materialise for many years. The Department is framing its ambitions for rail reform around the introduction of GBR, seeing this as the point at which it can start to accelerate its reforms. However, it could take up to 2 years after legislation is enacted before GBR becomes operational, while passengers and taxpayers must continue to wait for much-needed improvements. The Department is planning improvement work that does not require legislation in the meantime, but we have not seen any real sense of urgency in what it is trying to do. 

Recommendation 4: The Department needs to make tangible, visible progress in implementing reforms which improve outcomes for passengers and taxpayers. Its Treasury Minute response should set out a) what passenger improvements and outcomes it has delivered and b) an update on the savings it has made from rail reform in this interim period and how it has made these savings.

5. Six years since the Department started work on rail reform, it has failed to resolve fundamental disagreements and clarify key aspects of reform.The Department acknowledges that, while its white paper set the broad direction and detail for some areas of reform, there were still disagreements with HM Treasury and other stakeholders in some important areas. Unresolved issues remain regarding the extent of GBR's role and responsibilities including the level of independence and ability it will have to be a “guiding mind” for the railways; the future commercial model between GBR and commercial operators; and how fares would be set. While it may be quite common in complex policy areas for there to be some areas of disagreement, it is surprising that the reform programme got underway without the Department and HM Treasury agreeing on such core elements.  It remains to be seen how, in practice, GBR will balance providing a “guiding mind" with stepping in and directing stakeholders to a specific course of action when required.  

Recommendation 5: The Department should urgently resolve disagreements ahead of taking forward reform in the next Parliament. Its Treasury Minute response should set out what areas remain to be agreed and how it and HMT plan to resolve these.

6. The Department has failed to engage with the workforce to successfully deliver its reform ambitions.Good policymaking relies on effective stakeholder engagement. The Williams Rail Review involved extensive consultation with trade unions and workers across the railway to understand their perspectives. However, while the Department expects to implement significant reforms through the workforce, officials have had little engagement with the workforce on rail reform. The absence of such engagement means that the Department risks not having a full understanding of the challenges and practical realities faced by the staff on the ground responsible for implementing the reforms. Network Rail notes that it improved productivity through engaging with its workforce, reaching agreement on modernisation measures and changes in terms and conditions, saving around £775 million.

Recommendation 6: The Department should meaningfully engage with the workforce in order to implement its reforms successfully. In its Treasury Minute response it should set out how it plans to engage with the workforce as part of implementing its reforms.