Railways Bill — Written evidence submitted by the Regulatory Policy Committee (RB04)

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Railways Bill
Lead department Department for Transport
Summary of proposal This proposal is to create a simplified and unified
rail sector, through a range of measures such as
establishing Great British Railways as a new body
responsible for planning and operating passenger
services and managing infrastructure.
Submission type Impact Assessment – 17th June 2025
Legislation type Primary legislation
Implementation date
RPC reference RPC-DFT-25057-IA(1)
Date of issue 28 July 2025

RPC opinion
Rating RPC opinion
Fit for purpose

The assessment outlines the rationale for
intervention, based around the lack of integrated
decision making across track and train, a lack of
clear accountabilities and the existence of a set of
market failures. The IA considers various long-list
options, including an alternative to regulation,
progressing two to the shortlist in addition to the
‘do nothing’ option. The assessment should
provide more detail for these options. The SaMBA
provided is sufficient. The assessment includes a
qualitative justification for the preferred way
forward, which could benefit from a more detailed
appraisal of the options. The scorecard provides a
satisfactory summary of expected impacts to
businesses and individuals, which should have
include more monetisation of impacts such as
efficiency gains. The assessment includes a
satisfactory M&E plan, with a clear plan to collect
data and a set of metrics used to assess the policy.
This would benefit from setting out a clearer
timeline.

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RPC summary
Category Quality RPC comments
Rationale Green

The assessment outlines the rationale for
intervention, based around the lack of
integrated decision making across track and
train, a lack of clear accountabilities and the
existence of a set of market failures. The
Department clearly presents a set of SMART
objectives.
Identification
of options
(including
SaMBA)
Green

The assessment considers various long-list
options, progressing two to the shortlist in
addition to the ‘do nothing’ option. The
assessment should have provided more detail
for these alternative options. The assessment
considers an alternative to regulation,
advancing it to the shortlist. The SaMBA
provided is sufficient.
Justification for
preferred way
forward
Green

The assessment includes a qualitative
justification for the preferred way forward. The
assessment could benefit from a more
detailed appraisal of the shortlisted options.
Regulatory
Scorecard
Satisfactory The scorecard provides a satisfactory
summary of expected impacts to businesses
and individuals. A headline NPV figure has
not been included due to insufficient
monetisation. The scorecard should have
included more monetisation of impacts such
as efficiency gains and further consideration
of distributional impacts.
Monitoring and
evaluation
Satisfactory The assessment includes a satisfactory M&E
plan, with a clear plan to collect data and a
set of metrics used to assess the policy. The
plan would benefit from setting out a clearer
timeline, alongside including evaluation
questions, a discussion of potential
unintended consequences and external
factors.

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Summary of proposal
The Department for Transport (DfT) is responsible for governance of the rail sector
and has recently been introducing a programme of rail reform as part of its Rail
Sector Transformation Programme (RSTP). This has included the Passenger
Railway Services (Public Ownership) Act 2024, which ended the previous franchise
based system in favour of provision by public sector companies.

The Government considers the railway industry to be fragmented and lack clear
accountability as it currently exists. As a result, the Government intends to legislate
to create a joined-up system to enable the operation of the new rail system.

The Department proposes three shortlisted options in this Impact Assessment (IA),
assessed against a ‘Do nothing’ counterfactual option:
• Option 0 – Do nothing (counterfactual)
• Option 1 – Non-legislative measures: Intervention within the existing Public
Ownership Act, such as promoting greater collaboration and alliances
between existing rail bodies.
• Option 2 (Preferred) – Legislative measures: A package of measures
including establishing Great British Railways, making it responsible for the
delivery of passenger services and infrastructure management.

Rationale
Problem under consideration
The Department’s problem under consideration is based around the lack of
integrated decision making across track and train, alongside a lack of clear
accountabilities. This leads to a misalignment in incentives across the rail sector,
causing inefficient outcomes. These inefficiencies include a duplication of roles, a
lack of coordination between transport modes and a lack of focus on systemic
issues.
The Department has used evidence from previous reviews of the sector, such as the
2019 Williams review to support its argument that there is a longstanding issue of
fragmentation across the sector. The IA also could have included evidence from
Network Rail’s System Operator, which was set up to address many of the issues
considered here. The problem under consideration would be improved by
summarising the key findings and recommendations from these reviews in more
detail to help support the Department’s case, either as part of this section or in the
evidence base annex.
Argument for intervention
The argument for intervention is based on the current fragmentation and lack of clear
accountability in the rail sector, the existence of multiple market failures and the

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failure of previous attempts to mitigate these within the old franchise model. Some of
these previous attempts include performance monitoring by the ORR and the
introduction of open access operators to encourage competition. The assessment
could be improved by discussing in more detail how these schemes have failed,
including any review exercises that have looked at these policies specifically.
The assessment gives four examples of market failures to support the case of
intervention. These are the information failure caused by the lack of coordination
between parties, principal agent issues caused by the hiring of third-party
contractors, negative externalities incurred by passengers caused by the
fragmentation in the current system and the productive inefficiency from the overlap
and duplication of roles across bodies. The assessment could be improved by doing
more to demonstrate how the proposed intervention will internalise negative
externalities imposed on passengers caused by issues such as train delays, rather
than a relatively broad attempt to reduce poor performance. The argument for
intervention could be improved by doing more to explain why the funding gap has
increased by such a significant amount.
Objectives and theory of change
The Department has set out three policy objectives. These are: integrating track and
train into one organisation, clear accountability and more joined up decision making.
The Department could do more to separate its objectives from the policy itself,
focussing on the desired outcomes of their intervention. The IA does mitigate this by
including a theory of change for the proposal, that demonstrates the process by
which each of the measures achieves high-level benefits such as improved
passenger experience, gains in economic growth and productivity and cost savings.
The assessment sets out how each of these objectives meets the SMART
framework (Specific, Measurable, Achievable, Realistic, Time-limited), describing
how the objectives meet each of the criteria in a table. This could be improved by
setting a framework by which the objective of more joined up decision making
between rail and local authorities could be achieved within a certain timeframe. The
objective of more joined up decision making should be better explained, in terms of
why this doesn't work well now and why the preferred option is the only one under
which this can be achieved.
Identification of options (inc. SaMBA)
Identification of options
The assessment considers four potential interventions to form its long-list, in addition
to a counterfactual ‘do nothing’ option. These include: (i) a non-legislative option
designed to operate within the existing Passenger Railway Services Act, (ii) the set
of legislative measures proposed in the previous government consultation, (iii)
legislative measures as proposed in the draft Rail Reform Bill and (iv) using a
statutory instrument to create an external body. These interventions have each been
briefly summarised qualitatively and assessed against the policy objectives, with the
Department using a scoring system to demonstrate how they have performed
against each objective.

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The Department does well to use the evidence base annex to highlight the process
of forming the preferred option, however it could benefit from providing similar detail
covering both what could be included in the alternative options and the policy
formation process behind them. In particular, the alternative primary legislative
option should be covered in more detail to provide a more suitable comparison
between it and the preferred legislative measures. The assessment could also
benefit from using the Green Book’s Strategic Options Framework Filter (SOFF),
which could help the present the long-list in greater detail whilst retaining a clear and
concise structure.
The assessment has discounted two of the proposed longlist interventions, with the
remaining two progressing to the shortlist. These are Option 1, the non-legislative
option, and Option 2, the Department’s preferred legislative measures. These have
been considered alongside the ‘do nothing’ baseline option.
This assessment uses its SMART objectives as Critical Success Factors (CSFs) to
summarise and assess the longlisted options, and to allow for easier comparison.
This assessment has been used to discount options and advance others to the
shortlist. The assessment would benefit from setting out a fuller explanation for why
discounted options are not suitable, including a discussion of the potential risks and
explanation of why options may not be feasible, as for some options there is little
detail beyond the assessment against the objectives.
Consideration of alternatives to regulation
The IA has considered an alternative to regulation as one of the shortlisted options,
proposing interventions to encourage collaboration and integrated decision making
within the existing structure. This could include promoting greater alliances between
existing industry organisations and achieving greater collaboration through Shadow
Great British Railways, but no further legislative changes. This option has been
included in the shortlist to ensure it has been considered fully. The assessment
provides a sufficient justification for discounting this option following the shortlist
stage and therefore pursuing regulatory change, demonstrating that the non-
legislative option does not meet the Critical Success Factors (CSFs) as effectively as
the preferred option.
SaMBA
The assessment includes an adequate SaMBA. The assessment estimates that
37.5% of firms within the passenger rail sector are small and micro, compared to a
much higher 90.9% in rail freight. Whilst the majority of businesses in the rail freight
sector are small and micro, the proposed changes are not expected to have a
significant impact on the wider rail freight supply chain which makes up the bulk of
these small firms, with greater impacts expected for larger freight operators instead.
Given the scale of the sectoral changes brought about as part of the rail
transformation programme, the Department argues that it is not possible to exempt
small and micro businesses from the legislation. The Department could have
discussed the potential feasibility of providing some mitigations to reduce the impact
on small and micro businesses.

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The small and micro business impact has been assessed for the preferred option,
with the Department usefully providing a table that lists potentially affected
businesses along with their size. These include open access operators (OAOs),
rolling stock leasing companies (ROSCOs) and freight operators, who will likely face
familiarisation and admin costs, along with a weakening of market position due to the
newly created Great British Railways. This could be improved by discussing the way
in which the legislation affects different types of small business in the sector, as the
way the reforms impact OAOs and ROSCOs, for example, is likely to differ.
Justification for preferred way forward
Appraisal of the shortlisted options
The IA includes an assessment of each of the shortlisted options, setting out how
each performs against a set of Critical Success Factors (CSFs) in order to determine
the preferred way forward. These CSFs are potential achievability, strategic fit, value
for money and potential affordability.
The assessment discusses how Option 2 is expected to unlock more significant
reform benefits then Option 1. This is due to the option more effectively addressing
the issues of fragmentation and reducing the long-term cost pressures faced by the
industry. The IA also argues that Option 2 goes furthest in addressing the market
failures and meeting the SMART objectives, however it should set out in greater
detail how it achieves this. As a result of the CSF appraisal, Option 2 performs better
than Option 1 over all four of the criteria, and so is the Department’s preferred
option. The IA would be improved by expanding the qualitative discussion justifying
the Department’s conclusion that Option 2 is preferred to Option 1, instead of relying
on the assessment against the CSFs which only considers the options in isolation.
The level of analysis conducted by DfT is sufficient at this stage. However, the
appraisal of the shortlisted options could be significantly expanded and should
include a greater justification for why these options were not subject to a cost benefit
analysis, as is expected by the HMT Green Book. The assessment could have
included a qualitative discussion of how the policies perform against the objectives
beyond the table provided, a consideration of the non-monetised impacts of each of
the options to show why one is preferred to the other, and extending the indicative
monetised analysis of Option 2 seen later in the IA to Option 1, allowing for a more
straightforward comparison between the two options. The Department does usefully
provide a ‘switching value’ analysis to demonstrate the likelihood of the preferred
option delivering benefits
Selection of the preferred option
Overall, the assessment of the options against the CSFs is a reasonable level of
analysis that helps justify the Department’s decision to prefer Option 2 to Option 1.
The IA should however provide more detail on why their preferred approach has
been chosen, with more discussion of how each option performs relative to the other
and the inclusion of further monetisation.

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Regulatory Scorecard
Part A
The scorecard has been used to provide an indication of the impact of the preferred
options, with a positive impact expected on overall welfare. This is based on the
positive impact of enhanced performance of the railways and cost efficiency bringing
benefits that outweigh the initial capital costs and impact on existing businesses.
This has been largely based on a discussion of non-monetised impacts, with some
indicative monetised figures, such as set up costs to the government, and
familiarisation and administrative costs for both businesses, and government. The
Department should have made a further attempt to monetise some of the impacts at
this Impact Assessment stage, such as providing an indication of the potential
efficiency benefits which have been partially included in the evidence base annex,
but not the scorecard. The Department also could have used examples from similar
international rail systems to help provide an indication of the potential impacts. Due
to the limited analysis of all the identified impacts a headline Net Present Value
(NPV) has not been provided, though a range based on a few monetised costs has
been provided. This estimate is -£203m to -£409m (2024 prices, 2025 pv year),
however the Department expects the non-monetised benefits will outweigh this. The
IA should include more detail and evidence to support the statements made about
the expected benefits, efficiencies, impact on growth and operation of a vertically
integrated system. The Department also should have considered the scale of the
admin costs necessary to both unravel the current contract structure that spans the
rail industry and consolidate it into a new system.
The Department anticipates an uncertain impact on businesses, dependant on the
nature of the future GBR design. As so few impacts have been monetised, an
Equivalent Annual Net Direct Cost to Business (EANDCB) has not been provided.
The Department has monetised small familiarisation and admin costs, providing a
range of £0.5m to £2.6m (2024 prices, 2025 pv year). The key business impacts are
expected to be greater business confidence from supply-chain certainty, lower
bidding costs for contracts and improved productivity for businesses that rely on the
railways. The Department does not anticipate an increase in administrative burdens
on businesses, with a reduction expected in the long-run. The IA includes a brief
assessment of household impacts, with few significant impacts expected. The key
impact on households identified by the Department is an improved service for
passengers, with disruptions during the transition not expected. The Department
could comment in more detail the likelihood of transition impacts, and the strength of
the mitigations put in place.
The Department does not assess the distributional effects of the scheme, arguing
that it does not expect any significant or adverse impacts. Given the variation of rail
coverage and access between different regions and between rural and urban areas
in Great Britain, the Department should have considered the regional impacts of the
scheme, including if the benefits may be more concentrated in certain areas.

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Part B
The assessment considers the potential impact on the business environment for the
proposed intervention, describing how it will boost investment and innovation through
increased accountability and supply chain certainty. The IA should consider the
impact of procurement changes for manufacturers, such as the potential for the
increased standardisation of rolling stock to limit innovation for manufacturers if GBR
leans towards a single supplier model. The IA also comments upon the possible
negative competition impacts of GBR’s likely significant market share, however
should significantly increase its consideration of competition impacts. The scorecard
does not give sufficient consideration to how GBR will mitigate the competition risks
of it being decision maker on access and charging decisions. The IA also does not
provide enough consideration of the impact of the changed role for the ORR in
access appeals may have on legal certainty, and then investment and overall effect
on the market for non-GBR users. The IA could discuss the potential for the new
access system to expose non-GBR operators to the fixed costs of operating the
network given at the moment they typically will only pay the directly incurred costs of
their services operating. This could increase their costs and potentially make their
services unviable.

The scorecard also includes a summary of the international considerations of the
policy, with the possibility of the reforms providing new private financing
opportunities in UK railways. The assessment could have considered the possible
negative impact of ending franchises held by foreign entities on international attitude
to investment in UK rail. The assessment briefly summarises the environmental
impact, with some positive impacts expected, due to a more efficient railway
promoting a modal shift from more polluting transport modes. This could have been
expended to include consideration of the impact of targets imposed on GBR, and
whether manufacturers will be incentivised to invest in low carbon solutions, for
example.
Monitoring and evaluation
The assessment includes a good plan for monitoring and evaluation, committing to
an evaluation of the whole rail reform programme, which includes the Passenger
Railways Services (Public Ownership) Act in addition to the proposed Railways Bill.
The Department has outlined how it plans on used existing datasets to evaluate the
policy, for areas such as demand and revenue, and survey data for monitoring
customer experience. The Department has not yet fully developed its evaluation
strategy, with a scoping study currently in progress. The M&E plan would benefit
from the inclusion of some indicative timelines for when the Department intends to
complete different stages of its evaluation.
The IA also outlines the metrics it intends to use to review the progress in the sector,
using a table to set out the key anticipated benefits and potential metrics used to
assess the progress of each one. The assessment does explain that focussing on
benefits allows the evaluation to easily link to the initial objectives, however the plan
would benefit from considering how the potential costs of the scheme will also be
evaluated. The plan would also benefit from including a set of potential evaluation

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questions, as well as a discussion of potential unintended consequences and the
effect of external factors.
Regulatory Policy Committee

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