Dr Reid, in his first major speech on railways since being appointed to the brief, will tell an audience of industry figures at the Railway Forum that he is making the quality of services his top priority.
He is expected to outline penalties the Government will impose on train operators whose passengers suffer poor standards. He will remind them that taxpayers, who subsidise rail services, deserve and must be given better services - a veiled warning that failing companies may lose their franchises.
It is understood that John Prescott, the Deputy Prime Minister, may order rail regulators to intervene more swiftly when trains are repeatedly cancelled or late. One possible sanction is said to include instant fines of at least pounds 1m.
Statistics show a marked fall in standards on the railways for the first full year since privatisation. Last month, the official passenger watchdog attacked the "truly dreadful" performance by some companies.
Figures by the regulatory body, the Office of Passenger Rail Franchising, show punctuality had declined on 48 routes and improved on 16. Reliability decreased on 33 routes and improved on 21, nine staying broadly the same.
Dr Reid will come under pressure from railway executives to detail plans for new legislation. It is believed Mr Prescott has failed to win a promise from Tony Blair that his plans, outlined in the Transport White Paper for a Strategic Rail Authority, would be included in the Queen's Speech in November.
David Morphet, Railway Forum director-general, said: "Uncertainty over follow-up to the White Paper, and particularly over the timescale for the promised legislation, is causing a lot of nervousness in the industry. We are keen to see a Strategic Rail Authority developing a strategic vision for rail."
He warned that delay on crucial issues, such as the process for renewing franchises that expire in 2003, would have a serious impact on orders for new rolling stock.
"Existing franchisees need to be told quickly and clearly what they have to meet in order to secure renewal," he said.
The Railway Forum, which includes about half of the privatised train operators, as well as Railtrack, train builders and railway contractors, starts its annual conference tomorrow.