Getting Britain moving: How will nationalisation of the railways tie in with Labour's devolution agenda?

1. What will be the relationship between devolved authorities and GBR?

Devolution is both a key message within the Manifesto and a central plank of the Rail Policy. Indeed, the third of the "core principles" that underpin the Rail Policy is "decision making will take place as close to local communities as possible, so the railway can be responsive to local needs".

To varying degrees, the rail industry already engages with local community needs. In 2019 Network Rail split its executive structure into five regions, each with its own managing director, so that key decisions could be taken on the frontline in response to the various demands on that region's infrastructure. Network Rail additionally set up 14 devolved routes, which are supported both by the respective regions and planned on a national basis. Of course, TfL procures rail services within in London and Merseytravel directly contacts with Merseyrail in relation to the Liverpool region. Wales and Scotland are devolved and operating services directly. Similarly, the current National Rail Contracts ("NRCs") and the service contracts for the four existing operator of last resort ("OLR") companies require train operators to consult and collaborate with stakeholders - which includes local authorities. Consultation requirements include in relation to station asset management, funding community rail, operating Boxing Day services and, critically, the Secretary of State may take into account relevant stakeholder views in assessing performance under the NRC Scorecard mechanism.

However, the Rail Policy goes further than this by explicitly saying that GBR will be accountable to the UK and devolved Parliaments, devolved regional bodies, passengers and regulators via a "statutory role for devolved leaders in governing, managing, planning and developing the rail network". It is one thing for a rail company – whether one involved in infrastructure or operations – to have to consult with and have regard to local bodies, but "accountability" implies a more stringent obligation, one where devolved bodies can exercise a degree of control.

What does accountability look like?

The obvious question, therefore, is what will accountability look like? Frustratingly, neither the Rail Policy or the Manifesto provide any guidance.

Under both the NRC and OLR regime neither devolved bodies nor other stakeholders in England have any direct rights against operators who fail to engage with them; instead the operators are contractually accountable only to the Secretary of State. This is notwithstanding that the Secretary of State co-manages the Northern and TransPennine operations (including since they transferred to the OLR) with the Rail North Partnership, which represents the local transport authorities in the north of England. Despite this, however, the regional Mayors have nevertheless been able to use their significant public profile to exert pressure on the Secretary of State to address their needs and concerns. For example, the decision to move the Northern and TransPennine franchises to the OLR was in part due to sustained public campaigning by Andy Burnham (Mayor for Greater Manchester) and Steve Rotherham (Mayor for Liverpool City Region) over performance failures. Both Mayors are currently using their public profiles to call for greater infrastructure investment in their regions to improve rail service provision and are joined by the new West Midlands Mayor, Richard Parker who has picked up the baton from his predecessor, Andy Street, and is calling for greater investment in the Midlands Rail Hub. It is noticeable how, now that they are dealing with publicly owned OLRs and the publicly owned Network Rail and therefore the public purse, their ability to secure the results that they want appears to be more muted.

Our second briefing note discussed the possibility of GBR adopting a concession or management contract model for passenger service provision and ironically this may offer better accountability of passenger service provision to devolved bodies. First, such contracts could be drawn up to allow for some kind of liquidated damages regime to be directly payable to affected devolved bodies, which would enable Mayors to say that the private sector is taking some pain while at the same time the "nuclear" threat of losing the contract would always be there as a means of securing genuine engagement and consideration. Secondly – and more cynically – use of the private sector leaves in place a convenient "bogey man" at whom both devolved bodies and GBR can point a finger if services do not go as planned.

The problem with a 100% self-delivering GBR is that unless there is some financial element or other structural element to secure compliance, accountability risks being little more than the regions having a right to complain. It may be that GBR will set up regional delivery entities or divisions akin to the existing Network Rail regional model with the Mayors either having a seat on the controlling executive or perhaps even assuming full management control, given Andy Burnham's calls for full devolution of rail service provision. Either model would give the Mayors oversight over all aspects of regional operational delivery but from a national interest perspective the over-arching GBR entity would presumably have to retain overall control over funding commitments. This is because the existing franchise areas are not self-contained – there are lines that interconnect them with each other and station overlaps. The interface issues that this can create (and which have historically proved difficult to manage in the Northern and Greater Anglia franchise areas) means that some communities may find themselves getting short-shrift. It is precisely for this reason that there needs to be that over-arching "guiding mind" role performed by GBR to ensure that passenger services interface efficiently. We would therefore presume that a Labour government is unlikely to want to give Mayors a seat on the executive of any over-arching GBR entity because of the potential for it to make GBR more of a political football than it already risks becoming by highlighting clashes between regional and national interests and correspondingly, regional and central government. Even so, the Mayors would want to have guaranteed spending commitments from GBR in respect of their regions so as to allow them to plan and meet local needs.

GBR and regional strategy

Given that GBR is to be an arms-length body, any Labour Secretary of State would be unable to tell GBR how and where to commit its resources, but they would be able to point it in a particular direction through the 5-year, long-term strategy that they will set for GBR. To be published "early in a new Labour Government" this strategy will "seek to integrate and reflect the ambitions of devolved and regional and national stakeholders into a single coherent strategy for the railway, underpinned by regionally and nationally focused delivery plans" and will outline rail's role in (among other things) addressing regional and national inequality and delivering an integrated network.

It is unclear, though, how fully Labour will consult with the identified stakeholders in order to understand their "ambitions" – the Labour party may feel that it already knows them given that Louise Haigh's foreword to the Rail Policy mentions the "extensive consultation" and "detailed submissions" that it received in order to draw up the same - or how early in the next Parliament the strategy will be published. Given that there are elections for the new mayoralties of Lincolnshire, Hull and East Yorkshire, Norfolk and Suffolk in 2025, it may be that the Labour party holds back on publishing its strategy until the new Mayors can be consulted. Depending on the Labour government's legislation timetable, such a pause would allow time for the legal arrangements and funding to be put in place for GBR's establishment and the path to nationalisation, but it also risks frustrating those Mayors – Andy Burnham chief among them – who want to see speedy and meaningful change.

A second issue to be considered is that given there are currently 12 directly elected Mayors across England, plus the two devolved governments of Wales and Scotland and dozens of other "regional stakeholders" and GBR will not be granted infinite resources, there are going to be winners and losers when it comes to the focuses of that strategy. It is to be hoped that where devolved regions neighbour each other (as is the case for Greater Manchester, Liverpool City Region and West Yorkshire, which all have Labour Mayors), then the respective Mayors would try to join up to secure the best results for their regions. However political volatility means that come the next round of elections, co-operation cannot be assumed or relied on. With the Secretary of State retaining sign off on the final strategy and also needing to consider the overall national interest, it is therefore not difficult to foresee a temptation to allow political calculations to skewer the final delivery plans, all of which neatly brings us to our next issue.

2. What does nationalisation mean for levelling up?

The Manifesto specifically says that part of the Labour party's 10-year infrastructure strategy will include "improving rail connectivity across the north of England" and the party promises to make the changes needed to proceed with new railways. However, both the Manifesto and the Rail Policy are silent when it comes to explaining how any of this will be funded. As we pointed out in our second briefing note, neither document mentions reversing the cancellation of phase two of HS2, which is seen within the industry as being critical to increasing the capacity needed to improve both passenger and freight services in the north of England. Indeed, recent reports suggest that without it there is likely to be an 8% drop in train capacity for London to Glasgow and 6,000 fewer seats between London and Manchester and 4,000 fewer seats between London and Liverpool, all of which is projected to result in higher ticket prices to discourage overcrowding. It is also likely to result in people choosing to fly rather than take the train, with the associated environmental impact.

This lack of capacity will have a specific impact on the Manifesto pledge to give Mayors a role in designing the rail services in their respective areas and the commitment to give Mayors the power to create "unified and integrated transport systems". Put simply, GBR will have to balance the needs of local and intercity services (whether run by GBR or on its behalf), with services run by open access operators and freight operations. Of course, increasing line capacity does not automatically mean reinstating phase 2 of HS2 or building new lines, such as the new Liverpool to Manchester high speed line that Steve Rotherham and Andy Burnham are trying to progress. Much could be achieved by upgrading signalling, but if capacity does not increase then the Mayors may find that they don't have the frequency of services needed to get the most from joining up with tram and/or bus services around stations.

In particular, this could adversely affect the ability of the Mayors to get the most out of another key Manifesto transport pledge: giving local councils the ability to franchise bus service provision and take delivery back in-house. For transport integration to work efficiently the timetabling of rail services needs to join up with the timetabling of bus (or, where relevant, tram) services so that there is sufficient time for passengers to get off one and connect to the other. It also requires rail, bus and tram services to run frequently enough for people to be able to use them whenever they need to rather than having to plan their day or journey around availability. Research has already proved that people are deterred from using public transport if they think there will be long wait times between using different modes or if the infrequency of services means that their journey time will be significantly longer than travelling by car. Fewer passengers means less revenue for franchised or in-house bus services, which may in turn mean a need for greater Mayoral or local council funding and adds to the strain on the local government purse. As a result, there is perhaps a case for allowing Mayors to take over responsibility for both procuring bus and rail services, to ensure intermodal connectivity.   

The Mayors may find themselves facing a bigger headache given the Rail Policy's desire to make use of the "considerable land value potential in unused, rail-owned land". A recurring theme in the Manifesto is the Labour party's plans to promote housebuilding, including through fast-track approval of urban brownfield sites, and it is entirely possible that GBR's estate could be earmarked for this purpose. On the one hand, selling off GBR land for this purpose would help to ease pressure on housing shortages that affect many regions but on the other, the corresponding influx of new residents would place pressure on local infrastructure, including rail services and other public transport.

An obligation on GBR to ensure that any revenue raised from a land sell-off is reinvested in infrastructure in the surrounding area would go some way to address these entirely foreseeable issues. However, it would arguably be more beneficial for the Secretary of State's 5-year, long-term strategy to set out the top infrastructure priorities for GBR together with guaranteed long-term funding, and for the local Mayors and GBR to ensure that this dovetails in with their own plans for the GBR estate and local transport provision. This does require co-ordination and agreement though and as we pointed out above, the compromises that come with balancing the various competing interests at play make it difficult to see how this could be achieved.

GBR – One rail entity, many guvnors?

Although the Labour party appears to be sincere in its intention to give devolved bodies and Mayors more of a say in how local rail services are carried out, there is a lot of detail that remains to be provided on what this actually means in practice. What is also plain is that without a clear and significant funding plan for its own activities and an unambiguous, long-term commitment from a Labour government for rail infrastructure more generally, GBR's ability to meet and respond to regional needs will be limited.

In our first briefing note we pointed out that GBR's funding could easily become a political football between parties. It is worth pointing out that depending on how much of a say the devolved bodies and the Mayors have in directing GBR's activities, the greater the risk that rail operations generally also become a political football and not just between the political parties, but also between the political regions. The Rail Policy is clear that the Labour party wants a "unified and simplified governance structure" that (among other things) "places passengers at the heart of the mission". This is the rationale for making GBR the "directing mind" for infrastructure and services. Unless it is very careful though, both a Labour government and GBR may well find themselves caught in a balancing act between interests that cannot easily be squared, which could in turn lead to fractured decision making and a worse overall outcome for beleaguered passengers.