In-depth review of Department for Transport’s Rail Group finds severe weaknesses and supports creation of arms-length Rail Delivery Authority

Transport secretary Patrick McLoughlin has announced a restructuring of the Department for Transport’s Rail Group designed to pave the way for the creation of a new arms-length Rail Delivery Authority (RDA) staffed by rail professionals rather than civil servants.

The decision follows a review of the DfT instigated by the Brown Report which called for a study into whether the DfT should retain responsibility for franchising following the collapse of the West Coast competition in October 2012. However, the scope of the review was far broader than Brown envisaged. It extended to an in-depth organisation review to consider how the entire DfT Rail Group is functioning.

The review was led by DfT director of rail change and capability Adam Jackson, who was recruited for the task from the Department for Business and Skills where he was enterprise director, and advised by consultancy Deloitte. It identified a number of severe weaknesses in the way the Rail Group operates. They include the lack of a joined-up approach to policy delivery resulting in the design and delivery of infrastructure, rolling stock and franchising contracts and projects being adversely affected, additional costs and lower value for money. In addition, the review considered that DfT lacks railway expertise.

As a result, the review team stated a clear preference for creating a new arms-length RDA. Its role would include negotiating, awarding and managing franchises, and assuming the DfT’s current responsibility for defining the scope and business case for major infrastructure and rolling stock projects and overseeing their delivery. The DfT’s role would be to set policy and strategy objectives for the RDA and provide its funding.

However, the review considered that creating the RDA rapidly is not practical due to insufficient parliamentary time to pass the required legislation before the 2015 general election and the logjam of full franchise contracts and Single Tender Awards the DfT is due to negotiate. Instead it recommended that the RDA should be created in 2016. In the interim, it called for the DfT Rail Group to be reorganised to enable a smooth transition to the RDA.

McLoughlin said that he had accepted the review’s recommendations and that work would begin immediately on restructuring the DfT to create an integrated Rail Executive. “A single team will manage the interdependencies between rolling stock, track, stations, freight and passenger services; and between existing services and HS2,” McLoughlin said.

He added that the move would provide “a strong foundation for future evolution and the government will consider moving to a more arms-length body
[the RDA] in 2016”.

The Rail Executive is expected to be established in April and involve bringing together the separate and disjointed DfT teams responsible for areas including major projects, designing the franchising programme, franchise management, and rail strategy. It will include a new Office of Rail Passenger Services (ORPS), headed by a managing director from outside the department, to implement all aspects of franchising policy, franchise management and contract awards. The DfT said ORPS would be established by the autumn.

The executive’s early tasks will include developing a framework agreement to outline how DfT will exercise authority over Network Rail from September 2014 when it will be classified as
a public sector body. Authority over Network Rail would be among the responsibilities passing to the RDA.

This article appears inside the latest issue of Passenger Transport.

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