The Williams Shapps Plan for Rail: What is the future for Britain’s stations?

In this article, we consider who'll be responsible for Britain’s stations, what the station environment will look like and how the proposed reforms may deliver for passengers and stimulate investment

16 August 2021

The long awaited Williams-Shapps Plan for Rail was published on 20 May 2021, heralding the dawning of a new era for rail with the establishment of Great British Railways (GBR). In this briefing, we explore the plans for Britain’s stations.

Overview

This briefing considers:

  • what we know about who will be responsible for Britain’s stations going forward;
  • what is this restructuring of roles and responsibilities seeking to achieve;
  • what will the station environment look like in the future;
  • what challenges will GBR face in seeking to achieve this vision; and
  • how this approach may deliver for passengers and stimulate investment in the station environment.

The plans for reform set out in the White Paper will take a number of years to complete and we conclude by setting out the key details to watch out for over the coming months.

Who will be responsible for Britain’s stations?

GBR is set to absorb Network Rail and certain functions from the Rail Delivery Group and the Department for Transport, to create a new ‘guiding mind’ for the rail sector. As part of the expected restructuring, ultimate ownership of most of Britain’s stations will pass from Network Rail to GBR.

The White Paper states that dedicated station management teams will be created within the five regional divisions of GBR to manage stations, land and assets. These teams will initially focus on understanding the condition of stations before developing plans for renewals where needed.

New partnerships will be established between local leaders and the relevant regional division of GBR to give local areas greater control over stations. An enhanced role is also expected for Community Rail Partnerships who will advise on how to improve facilities at stations and encourage local businesses and communities to invest in the station environment. Where appropriate, GBR will work closely with LCR Property and Homes England to identify opportunities for station development and suitable housing schemes near the railways. Precisely how these bodies will work with GBR has not yet been proposed – but there are great opportunities and benefits if this can be done well.

The role for train operators at stations going forward is currently unclear. The White Paper states that single operational teams will be introduced by GBR and its operators, bringing together passenger assistance, train dispatch and station management. Further detail is needed on how this will work in practice and to what extent operators will have the ability to influence the passenger experience at stations.

What is this restructuring of roles and responsibilities seeking to achieve?

The White Paper hopes that station management being integrated within GBR will lead to improved accountability and long-term decision-making over how stations are maintained and enhanced. It is also hoped that a clear long-term strategy for stations will unlock investment and stimulate local regeneration and investment as we ‘build back better’ following the pandemic.

The Government tried to achieve a similar objective with the introduction of the 99 year Full Repairing and Insuring Lease for the Greater Anglia, Essex Thameside and East Coast franchises. Under this form of station lease, the operator was responsible for both repairing and maintaining all elements of the station. It was hoped that this allocation of responsibility and the longer term of the lease, would lead to greater efficiencies and stimulate longer-term exploitation and development of the station environment. 

However, this structure didn’t stimulate significant investment as hoped and more recent franchises have reverted to franchise-length station leases with both Network Rail and the facility owner being responsible for the repair and maintenance of different elements of the station. A challenge for the new GBR structure will be to have better success.

What will the station environment look like in the future?

The White Paper paints an appealing picture of modern, accessible stations with good connections for onward journeys and which deliver innovative services for passengers and the local community. Particular themes include: 

  • Accessibility – GBR is to identify ways to improve accessibility at stations, developing a National Accessibility Strategy and forming a single accessibility fund;
  • Role of stations in the community - GBR is to consider the needs of the local community, offering innovative services for passengers and local residents (for example, on-demand shopping collection or other public services);
  • Multi-modal connectivity – Connections with walking, cycling and other transport services are to be improved (for example, with stations becoming hubs for local bus services);
  • Net Zero – GBR is to support greener stations and sustainable travel (for example, by installing charging points for electric vehicles at rural stations and trialling battery technology to improve air quality near stations); and
  • Modernising and improving customer service at stations - Single operational teams are to be introduced by GBR and its operators bringing together passenger assistance, train dispatch and station management and improving passenger communications at stations.

What challenges will GBR face in seeking to achieve this vision for stations?

Resource and expertise

Network Rail’s expertise in managing stations has historically been limited to a small (but slowly growing) number of Major Stations. These are large stations with a high foot-fall, resulting in significant commercial opportunities with demand from retail tenants and those seeking premium advertising space.

Going forward a different approach may be needed as GBR seeks to manage a much bigger portfolio of over 2,500 stations including many small rural stations which comprise little more than a platform and a waiting shelter. 

GBR’s approach will need to emerge:

  • Will it seek to subsume train operating company station staff and recruit additional resource or sub-contract delivery to third parties?
  • How will it work in partnership with other industry bodies and ensure objectives and incentives are aligned?
  • How will funding decisions be made and investment priorities determined?

Cost pressures

It is clear from the White Paper that the current levels of tax payer support for the industry are not sustainable and that GBR will face pressure to reduce costs (in addition to delivering existing cost-efficiency programmes). A specific cost reduction target is to be set by Government.

The White Paper acknowledges that savings from reform will take a number of years to realise. However, it is clear from the Public Accounts Committee report published on 7 July 2021 that the demand for greater financial transparency and scrutiny of costs is already very much a priority given the level of tax payer support provided to the rail sector during the pandemic. 

Network Rail has been challenged by the Public Accounts Committee on how it expects to achieve the efficiency savings set for CP6. GBR will face similar pressure to deliver a comprehensive programme of maintenance, repairs and renewals whilst ensuring that the operational railway continues, high standards for safety are met and additional cost savings achieved.

Cost savings which negatively affect passenger experience at stations have the potential to impact revenue generation to a greater degree than the cost saved. It will be critical that spending at stations continues to be seen as an investment which is realised through the revenue line if financially positive outcomes are to be achieved. There will be a need to look at each station and consider the opportunities for future revenue which can be delivered from it (and the land surrounding it).

The regulated environment and restrictions on Victorian infrastructure

Works involving physical changes to the station environment can be challenging to implement, with changes often requiring a regulated change process to be followed, planning restrictions to be considered and delivery to be planned to minimise disruption to the operational railway.

Will this approach deliver for passengers and stimulate investment?

Will this approach put passengers’ needs at the centre?

The station environment is an important contact-point with passengers and can significantly affect a passenger’s experience and satisfaction with their journey. The White Paper states that GBR will have a mandate to focus on passengers’ needs. We await further detail on how they will be incentivised to prioritise passengers in practice.

Historically the main industry party with direct contact with passengers has been train operating companies, who have been incentivised to improve the passenger experience at stations as their revenue and returns depended on it.

If there is to be a reduced role for train operators in managing the station environment, the impact on the quality and performance metrics that an operator will be expected to meet under the new Passenger Service Contract (the ‘PSC’) will need to be carefully considered. Where train operators are set performance targets relating to the station environment, realistic incentives and associated rights to control that environment will need to be provided by GBR.

There is the potential for tension between GBR’s desire to deliver a maintenance and renewals programme in the most efficient and cost effective manner and train operators’ desire to ensure that it can continue to deliver passenger services on time and meet the performance incentives under the new PSC. Until the draft PSC is made available, it is unclear how this will be managed.

Will this approach stimulate investment at stations?

Investment by operators

Under the Franchise Agreement model, some franchisees were required to establish a Stations Improvement Fund and invest a set amount each year on approved station improvement schemes. Those schemes were to focus on particular areas such as improving accessibility, passenger information, environmental sustainability, Wi-Fi facilities and interchanges with other modes of transport. These are all themes identified in the White Paper. We will need to see the draft form of PSC to understand whether any station improvement obligations will be placed on operators going forward. 

Investment by GBR

The funding arrangements for GBR are currently unclear. The White Paper references that its regional divisions will be empowered and have their own budgets but it is not known whether there will be ring-fenced funding for station improvement schemes. Whether investment is directed into stations will depend on the policy priorities set by Government and the strategic decisions made by GBR’s senior management in implementing those policies.

The pressure on GBR to reduce costs may also impact on station investment. There is a risk that it could result in GBR focussing investment at a limited number of stations where there is high footfall (and therefore the greater potential for revenue generation) which may make it easier to justify a positive business case for investment. This will need to be balanced against the ‘levelling up’ agenda.

Investment by third parties

There have been a number of station enhancements funded by local councils and recently some interest from the private sector in financing new stations.

The White Paper sets out that in addition to the existing 5 yearly funding settlements, a 30 year strategy will be published setting out the key strategic priorities for the rail network. The first such strategy (the ‘Whole Industry Strategic Plan’) has already been commissioned by the Secretary of State and is expected to be published in 2022. Having such a long term strategy is likely to assist in identifying opportunities and giving private investors greater assurance.

What about current projects?

There are various station-related projects currently on-going on the network. Those involving investors and funders associated with long-term projects will want to keep a watching brief on how their contractual rights and obligations (particularly with/against Network Rail) may be affected by the new GBR structure. The details on this will emerge over the coming months.

Conclusion

The White Paper recognises the importance of the station environment in attracting passengers back to rail as we recover from the pandemic. The potential for stations to be vibrant, modern and environmentally sustainable transport hubs which deliver innovative services for both passengers and the local community is an exciting prospect. As is the prospect of stations and surrounding land giving development opportunities and being a source of valuable revenue for GBR. 

The White Paper does not provide the detail of how this vision will be delivered and how the new industry arrangements will be structured to ensure that there are the right incentives in place to ensure GBR delivers on its promises to passengers. The practical implementation of the approach to station management may emerge over a number of years as the new structure beds down and ways of working develop.

The first Whole Industry Strategic Plan and legislative proposals to establish GBR are expected in 2022. However, this will only be the start.

Burges Salmon has extensive experience of advising on station leases, access arrangements, funding arrangements for station enhancement schemes and the delivery of wider regeneration projects (including those which involve private financing). If you would like to discuss any aspect of this article, please do not hesitate to get in touch with Philip Beer, Lydia Cullimore or a member of our rail team.

Key contact

Philip Beer

Philip Beer Partner

  • Real Estate
  • Transport
  • Energy and Utilities

Subscribe to news and insight

Burges Salmon careers

We work hard to make sure Burges Salmon is a great place to work.
Find out more