Posted 17th April 2012 | 6 Comments
ATOC sounds warning over future franchises
First Capital Connect is one of several franchises which come to an end soon
ATOC chairman Tom Smith has warned that the Government must take advantage of a window of opportunity to reform the railway industry, as it prepares to renew some key franchises which account between them for more than two-thirds of passenger revenue.
The operators' organisation is concerned that its members will not gain enough freedom from regulation and tight management from the DfT.
Tom Smith told an audience at the Institution of Civil Engineers that the Government must shift from telling train companies 'what they must do in every last detail, to drawing out what they will do over and above a minimum set of requirements'.
The process of change has already begun, with the announcement of the bidders for three key franchises at the end of last month. One of the new contracts will combine the present operations of First Capital Connect and Southern, while the other two are for Great Western and Essex Thameside, which is currently branded c2c.
Mr Smith explained: "We need a new spirit in the relationship between the Government and the companies enfranchised to run train services and a new form of contract. Without reform, we will continue with inflexible, overly prescribed franchises that do not unlock the full potential of the industry to achieve growth and efficiency.
"Over the two year period since the coalition government came to power we have heard a lot about their commitment to reforming franchises along these lines – to be longer, less prescriptive, more output based and giving incentives to train companies to be innovative to grow their businesses in ways that meet the needs of their customers.
"Sadly that commitment has barely begun to be turned into reality, and we need tangible evidence that it will be. I call on the government to live up to its promises and make franchise reform a reality. The moment is now."
He also called on politicians and others to have 'greater confidence' in the industry, and welcomed the moves to devolve Network Rail to local units, some of which are set to work more closely with the operators in their areas through a series of 'alliances'.
Mr Smith's remarks have come at a time when ATOC is also concerned that the Government is proposing to move some monitoring of franchises from the Department for Transport to the Office of Rail Regulation, which it fears could distract the ORR from its existing responsibility to regulate the finances and performance of Network Rail.
Reader Comments:
Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.
Chris Burton, Cambridge
I have no problem with TOCs making a profit provided they are committing capital to the franchise, which they are. However, it's the Open Access and freight companies who are the real model, who really take on risk, truly innovate and generally do what all franchise TOCs would love to do, if only the politicians, the Treasury and probably we the voter would let them. CB
HH, Bham
The proof that franchises are not the best way forward is given by the way Net Rail ans TOCs now merging controls as if it were a new idea. Railways work as a network not as a series of disjointed profit seeking bodies.
Political masters who set up this silly organisation hoped to
1 see rail slowly die and then sell all the town centre sites off to their political friends
and or
2 Destroy union power but in fact have strengthened the unions.
The quicker the national rail network becomes just that the better.
Jamie, Farnborough
Bring Back British Rail.
Steve Alston, Crewe
General translation of any ATOC statement on longer franchises usually boils down to 'we want longer franchises so we can make more money', and 'we want the DfT safeguards removed' - it's in their financial interests to.
The DfT need to remind ATOC that they are a body which represents businesses out to make money. Decisions on franchising should be left to solely the DfT and organisations / user groups who have no financial interest.
david c smith, milton keynes
Franchising gives the"worst of both worlds" - government control that prevents enterprise, innovation and investment whilst the TOC's rake off shareholder profit simply for day - to - day running.
Those routes where effective competition can feasibly give public accountability could be given over to open - access, allowing TOC's to freely develop within a competitive environment. Those operations( many commuter, eg.) that are natural monopolies could have accountability through being consumer cooperatives with directly elected management boards.
Instead of fixed - contract subsidy, performance - related "incentive payments" could be offered to all TOC's on a given route to represent " hidden" costs / benefits in the marketplace.
Lee, Manchester
I suspect the general public might have more trust in franchise operators if their priority was level of service provided rather than profit. Privatisation was meant to open the rail market yet we have seen instead, a few companies emerge to run virtual monopoly franchises. First owns Scotrail, Transpennine, First Great Western, Great Eastern and GB rail, Stagecoach owns East Midlands trains, Southwest trains and a large chunk of Virgin West Coast. DB own Arriva Wales and West, Cross Country and DB Schenker, etc. Reforms are needed but these need to tighten up how these operators provide services and maintain relaibility rather than givving them longer monolopistic franchises and more freedom to do as they like.