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Investment a Shaw thing?

Developers, operators and potential investors into the UK’s rail industry are eagerly awaiting Nicola Shaw’s review of Network Rail.

There have been some elevated expectations about its findings, with some quarters suggesting this could be a prelude to dismemberment of Network Rail and possibly full privatisation of the track operator.

But with Ms Shaw and her team quick to rubbish claims that privatisation is a foregone conclusion, what are the alternatives to boosting UK rail infrastructure?

Avoiding privatisation

Ms Shaw’s brief is about finance and since many rail users are often left wondering how their season ticket money is spent, the review is an opportunity for the industry to press the pause button and consider how service could be improved and how efficiency and much-needed investment can be boosted.

A more grown-up discussion around privatisation is required. For the same reason that breaking up Network Rail should be seen as a non-starter, red-blooded privatisation could be seen as unnecessary political diversion.

If there is a real intention to achieve the secretary of state’s objective of improving passenger (or customer) experience, then ownership should be a secondary concern. As Ms Shaw is mandated, the real question should be about delivering funds to help finance improvements.

“A more grown-up discussion around privatisation is required”

Breaking up Network Rail has been mooted by politicians but is unlikely to become reality. The organisation has taken huge steps in devolving the decision making and management of routes.

Its approach to being a major property owner, and how to realise new benefits from that, is also under (piecemeal) review. 

Yet while structures and individuals are changing at Network Rail, questions remain unanswered as to how projects can be more efficient.

This is unlikely to be achieved by changing governing legislation and giving the franchisee operators responsibility for the network on their routes – the return of the holy grail of vertical integration beloved of those who harken back to British Rail. 

Having a multitude of semi-independent rail networks could produce a (new) legal nightmare and divert attention and resources from where they are needed.

Resources required to boost efficiency of service and delivery of large-scale upgrades will be crucial to revitalising UK rail infrastructure. 

“The Shaw report faces some tough challenges over attracting private investment into the sector”

This is one of the downsides on the mooted hiving off of power assets, as trailed by chief executive Mark Carne at the end of last week.

Having a separate stakeholder to Network Rail with responsibility for power as opposed to other infrastructure could exacerbate the pass-the-blame game, which frequently bedevils the operation of current train operations. What is needed is closer and better co-operation.

Tried and tested

The irony is that Network Rail has made strides in using its so-called ‘alliancing’ model, bringing its own teams together with train operators and construction contractors.

While this model has gathered pace, the challenge to break down aspects of the master-servant relationship, which can have a negative impact on new projects, remains.

Indeed, the Office of Road and Rail could possibly be scrutinised over how it has overseen the distribution of funds on past rail projects.

Coming hot on the heels of the unveiling of plans to hive off power assets, the Shaw report faces some tough challenges over attracting private investment into the sector.

But the biggest obstacles may well prove to be political and cultural, rather than financial and technical. 

Jon Hart is an infrastructure partner at Pinsent Masons

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