Out-Law News 3 min. read

Oxford-Cambridge rail link to test closer links between train operators and infrastructure, says expert


The government could use the planned new rail link between Oxford and Cambridge as an opportunity for a "wholesale appraisal" of the way in which the UK's rail network is operated, an expert has said.

The East West Rail initiative will be delivered by a "new and separate organisation", which will work with the private sector to design, build and operate the new route. This organisation will be established in the new year and will be the first to have responsibility for both train services and infrastructure without the involvement of Network Rail, an approach which could then be rolled out to future franchise agreements, according to an announcement by transport secretary Chris Grayling.

While the announcements indicated the government's desire to encourage greater coordination between national network infrastructure operator Network Rail and local train operators, it was the announcements about the so-called 'Varsity Line' that were the most interesting, according to transport law expert Jonathan Hart of Pinsent Masons, the law firm behind Out-Law.com.

"Grayling would appear to be suggesting that the development of the next stages of the East West Rail link between the two university towns is taken out of Network Rail's hands and given over to a private operator and developer," he said. "If this comes to pass, this could see new opportunities for project-financed investment on the rail network in a way that has largely been absent from the post-1993 privatisation landscape, particularly since the demise of Network Rail's predecessor, Railtrack."

"Delivering any rail infrastructure is hugely complex. Network Rail has been criticised for the way in which it has delivered major capital projects as part of its high output specification commitments and its control period spending limits across the entire UK network. Is a private sector company, focused on a single rail route, going to fare any better? One of the central tenets of Nicola Shaw's recent report into Network Rail's activities was that investment strategies and questions of ownership were only a means to an end - namely, the efficient operation of the rail network and overarching benefit for passengers. This point may be worth bearing in mind over the coming months as this is debated," he said.

The plans announced by the Department for Transport (DfT) this week are designed to improve train services for passengers by more closely integrating responsibility for the running of the trains and the infrastructure that they run on. This will begin with the award of the new South Eastern and East Midlands rail franchises in 2018, both of which will be required to have "integrated operating teams between train services and infrastructure". Although Network Rail will retain responsibility for the rail infrastructure at this stage, the government envisages "greater alignment of track and train" as further franchises are awarded. This could include the award of franchises to joint ventures.

According to Grayling, "closer working across the industry" will allow problems to be resolved more quickly as they arise.

"When things go wrong, a lack of a joined up approach can make things much worse for the passenger," he said. "Our railway is much better run by one joined up team of people. They don't have to work for the same company. They do have to work in the same team," he said.

"If our railways are to cope with the challenges of today and tomorrow it will take more investment, new ways of working, new ways of funding improvements, more joined up management. We can and will make this a real golden era for rail," he said.

"For many years, delivering better integration of the wheel/rail interface has been seen by many commentators as a hold grail of addressing some of the flaws in the UK privatisation model, which separated the network operator from train operator," said transport law expert Jonathan Hart. "If Grayling's announcements mark the start of the process in achieving this, then many commuters will no doubt be delighted."

"However, this approach will represent a change in direction for most rail stakeholders. Whilst what is being called for falls well short of 'vertical' integration of train and track, what DfT are calling is going to require a change in thinking and approach, if the proposed changes are going to be more than a mere talking shop. Legally and contractually, this can probably only be delivered by major changes to the Franchise Agreement model," he said.

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