(5 min read)
Britain’s railways are at a crossroads: the Railways Bill now before Parliament could finally unlock much-needed private investment and deliver a modern, efficient network. By bringing track and train under the strategic leadership of Great British Railways (GBR), the Bill promises a joined-up, long-term approach to rolling stock and infrastructure. For investors, operators, and the supply chain, this means more certainty, better planning, and new opportunities—especially with a 30-year Long Term Rail Strategy and reforms to support easier financing. Now is the time to engage, review emerging strategies, and position for a bigger role in shaping the future of UK rail.
Setting the scene
Britain’s railway needs investment. Much of the infrastructure dates back to Victorian times and needs modernising. But it lacks a long term vision. Since privatisation of the rail sector in the early 1990s, the trains and the infrastructure they run on have been dealt with separately, with little opportunity for private sector investment. The Railways Bill currently passing through the UK Parliament could be a chance to change all this.
Infrastructure funding
Funding for renewals (the replacement or life extension of core assets) comes from the Government in 5 yearly cycles called Control Periods. Funding for enhancements (investments that improve the capacity or capability of the network) comes from other sources like Spending Review settlements or from devolved funding to regional authorities. Even though the railway was privatised, there is very little opportunity for private investment. In reality, the passenger services (and their rolling stock) were privatised but the infrastructure was soon taken back under Government control when Railtrack plc became Network Rail. The separation of track and train meant there was a lack of coordination between investments in the two.
Rolling stock funding
Rolling stock (the trains, both passenger and freight) is owned by private sector investors known as ROSCOs (Rolling Stock Companies) that then lease them to train operating companies (TOCSs). The TOCs specify and procure the train and associated maintenance package, which is often tied to the term of their franchise. In 2023-24, 65% of private sector investment in the railway was via rolling stock.
Railway reforms and rolling stock
But now, with the Railways Bill going through Parliament, there is opportunity to encourage more private investment in the railway and its associated infrastructure, not just in rolling stock. We have attended various industry events over the last few months where a theme is starting to emerge.
The Railways Bill is designed to implement the reform of the GB rail network which was first set out in the 2021 Williams-Shapps Plan for Rail and since adapted by the Labour Government. The core principle remains the same: a new “guiding mind” (Great British Railways, or GBR) will oversee both track and train, controlling both the infrastructure and the (passenger) services that run on it, plus procuring rolling stock and related infrastructure. This creates an opportunity to take an holistic view and to have a clear strategy for rolling stock and the associated infrastructure, for the first time.
Let’s look at what this might mean in practice. The programme to electrify all the lines in England and Wales has stalled, with only 39% of lines being electrified. Instead, the ROSCOs have been procuring bi-mode trains that can run on an overhead electric line or switch to a battery. Network Rail are now looking at "discontinuous electrification"/"power islands" which help battery trains travel further. This means the rolling stock procurement programme becomes more important: with oversight of the infrastructure needs/power supply, GBR can think about what rolling stock to procure and when. This longer term planning is good news for ROSCOs who need a long term plan to know where to invest. It could also be an opportunity to simplify the specifications for rolling stock (e.g. have a consistent set of standards for intercity, regional, etc), which would improve efficiency and give certainty to the supply chain.
There is legislative power within the Railways Bill to implement the Luxembourg Protocol, an international treaty that could help with cross-border financing for trains, reducing financing costs and enhancing credit access – a boost for both ROSCOs and TOCs.
Long term rail strategy
The Railways Bill requires the Secretary of State for Transport to issue a Long Term Rail Strategy (LTRS) setting strategic objectives for the railway over a 30 year period. This is good news for the whole rail industry, as the supply chain and investors will be able to make decisions with a clear understanding of the industry’s aspirations. If done right, this could balance the needs of the private sector for clarity and a long-term vision, with the Government’s need for flexibility to take account of policy changes. The Transport Committee’s recent Report on ending boom and bust in rail investment pipelines(1) agrees that “A consistent strategic vision of what the railway is for and how it will contribute to the wider priorities of Government is fundamental to achieving stable investment pipelines.”
We don’t yet know what the LTRS will contain, but a Factsheet(2) published alongside the Railways Bill explains it will include 5 strategic objectives to guide decision-making:
- meeting customers’ needs (passenger and freight)
- financial sustainability
- long-term economic growth
- reducing regional and national inequality
- environmental sustainability
A rolling stock and infrastructure strategy is due to be published this summer and will feed into the LTRS. As mentioned above, planning new rolling stock procurement and the associated infrastructure together should mean the right trains on the right track, and lower costs for the taxpayer in the longer term.
Freight
The freight industry will remain privatised under the reforms and a freight growth target will be set for GBR. However, freight operators will still need to apply for access to slots (“paths”) on the national rail network and build their own freight depot facilities and warehouses which link into the national network. They need certainty that they will get guaranteed paths. Otherwise, why would they build a new freight facility alongside a railway that they may not be able to travel over? And if their access application is refused by GBR, the only way they can challenge this is by applying judicial review principles. The Transport Select Committee recommends strengthening the Bill to encourage more rail freight use and address concerns about GBR's incentives for freight paths and business investment certainty.
Network Rail investing in the Barking depot(3) is an interesting development in this context, showing a willingness to invest in freight capacity, possibly with the freight growth target in mind. Although their intentions will need to be well signposted to create the certainty needed to generate investment in other parts of the logistics chain.
There are still some questions around how freight will be prioritised and how the freight growth target fits with clause 63 of the Bill that requires GBR to retain sufficient capacity for its own current or future passenger services. This may put freight investors off unless clarified.
Conclusion
The Railways Bill gives the opportunity for private investors to get more certainty over how their investment into new rolling stock and its infrastructure fits in holistically with GBR’s infrastructure capacity plan and the LTRS. This certainty should encourage more private investment into a railway that desperately needs it.
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