Rail team update: October 2020

2020 has not been the year many were expecting it to be when the clocks struck midnight on New Year's Eve. It has continued to be an interesting year for the railway and in this update we summarise some of the latest key themes, as well as share some of our thought leadership pieces from across the Stephenson Harwood rail team on the latest issues impacting the industry.

In this update, we take a look at:

• COVID-19, ERMAs and Williams
• Infrastructure
• #MeToo
• Fares reform
• Procurement: rail franchising litigation
• Competition: railway collective actions – Merricks and ticketing
• Team news

COVID-19, ERMAs and Williams

Unsurprisingly, COVID-19 has dominated the headlines recently and the impact on the railway has been significant, with frontline key workers continuing to ensure essential travel has continued throughout the crisis. With the decimation of passenger numbers using the railway, an urgent and dramatic rethink of the franchise proposition was needed. This led to the introduction of Emergency Measures Agreements for franchise operators at the start of the lockdown where revenue and cost risk was shifted to the government, whether in Westminster, Edinburgh or Cardiff.

More recently, Emergency Recovery Measures Agreements – or ERMAs – have been branded by the Department for Transport (DfT) as "axing" franchising. What this means in practice remains to be seen but the DfT has indicated it proposes to move towards a concession-style model in future. The move is reported to have the "full support" of Keith Williams, Chair of the Williams Rail Review (the Review), so perhaps his thinking was heading in this direction in any event. Whilst the outcome of the Review remains eagerly anticipated, we considered some of the emerging themes in our series last year – can we expect more of these to be addressed when the White Paper is eventually published?

More immediately, in response to the emerging crisis, Suzanne Tarplee set out a series of helpful tips on the impact of force majeure for the rail industry in this briefing note. Tammy Samuel also contributed to a piece for Rail Review magazine on how COVID-19 has been a catalyst for change for businesses.

Infrastructure

"Build, build, build" was the message to come out of government by injecting billions of pounds into public projects as a way of recovering from the economic impact of COVID-19. Of course, at the top of the list is High Speed 2, which the government has publicly renewed its commitment to delivering, with work on Phase 1 now underway. Rail infrastructure will continue to be a high priority and a way of delivering economic benefits. Other examples include the East West Rail Project, which continues to progress, as well as the Northern Powerhouse initiative and the implementation of the European Train Control System/European Rail Traffic Management System on the southern part of the East Coast Main Line.

Of course, COVID-19 could have longer term implications for the delivery of existing infrastructure and construction projects, as well as for the delivery of facilities management services, with the need to be flexible and respond quickly. In a series of articles for Rail Professional magazine, the Stephenson Harwood rail team consider some of these areas and offer some top tips:

• Caroline Hooton and Tammy Samuel consider the impact of the relaxation and re-imposition of lockdown measures on "foreseeability" and available protections in infrastructure contracts in 'The new normal of a post-lockdown environment'.
• Caroline Hooton and Suzanne Tarplee consider recoverability of increased costs such as those required to comply with new coronavirus measures in 'Are PPE and social distancing costs recoverable under service contracts'.

Next in the series, Caroline Hooton and Darren Fodey will be looking at whether COVID-19 can relieve an employer from its obligations under an infrastructure contract.

#MeToo

The importance of a diverse workplace has never been greater and the Black Lives Matter movement over recent months has highlighted that we all need to do better. The Stephenson Harwood Advancing Racial and Ethnic Diversity (SHARED) network have been considering the implications for us as a business and of course the rail industry is no exception, with diversity taking many forms. As an industry, we need to ensure that everyone is comfortable and able to be their best selves in the workplace, whether that be on the frontline at a station, depot or on-train or at a head office.

The 2017 #MeToo movement sent shockwaves across the world and prompted a renewed focus on preventing sexual harassment in the workplace. This is particularly relevant for the railway where there are a number of factors which increase the risk of unwanted behaviour and recent examples from other sectors demonstrate that this is an issue which is – rightly – being taken seriously by authorities. In this article for Rail Professional, Anne Pritam, Natalie Edwards, Kate Higgins and Darren Fodey consider the implications for rail businesses and what you should be doing now.

Fares reform

Another expected outcome of the Review is reform of the outdated fares system in Great Britain, as well as the industry arrangements such as the Ticketing and Settlement Agreement that underpin it. Supported by the Rail Delivery Group, it seems that this will be an area of change – and soon. In Rail Review magazine, Darren Fodey peer reviewed an article on fares reform by Anthony Smith, CEO of Passenger Focus, agreeing that the need for reform was urgent and setting out principles around which reform could be based. An abridged version of that peer review can be found here.

Procurement: rail franchising litigation

The long awaited decision of the High Court in the rail franchising litigation was published which is likely to have a significant impact on future public procurements for contracting authorities and potential tenderers. In a win for the DfT, the court decided that contracting authorities retain discretion in relation to non-compliances and/or disqualification and this did not breach the requirements of transparency or fairness. Key points from the judgment are summarised in this briefing paper by Suzanne Tarplee, Paul Thwaite, Michael Barron and David Stephens.

Competition: railway collective actions – Merricks and ticketing

A case was heard by the Supreme Court earlier this year on the boundaries of the "collective action" regime in competition law. The outcome of the case could have significant financial implications for train operators operating into and out of the Transport for London zonal fares area. It will determine how high the threshold will be set before a person will be granted the right to bring a collective action. Waiting in the wings is the Gutmann case, which has been paused pending the decision of the Supreme Court as it will directly impact on whether Mr Gutmann will be able to bring his claim. Mr Gutmann's claim is against South Western Railway/South West Trains/Southeastern and relates to alleged overcharging for tickets going beyond TfL fare zones already partly covered by a Travelcard. Our briefing note prepared by Rhiannon Davies, Marta Garcia and Darren Fodey can be found here.

Team news

Hot off the press is news that the Stephenson Harwood Rail team has again been ranked in the top tier for Transport – Rail by the Legal 500 directory, with special mentions for a number of members of the team. We are delighted with this ranking and with wonderful comments from clients such as:

"They don’t have an A and B team – you just get the A team. Plus they work as a team – they support you, but also each other."

Thank you to everyone who contributed to this, both within the Rail team and our clients.

Finally, we'd like to congratulate Tammy Samuel on being "highly commended" at Legal Business Magazine's 2020 awards. Commenting, Tammy said "I’m thrilled to have been highly commended for this award. While testament to the hard work and dedication of the many exceptional lawyers with whom I work – both at Stephenson Harwood and in-house with our clients – it is particularly heartening to have my efforts to promote diversity within the rail and legal industries recognised in this way." Well done Tammy!