Posted 11th July 2013 | 11 Comments
Government claims franchising is back on track
THE transport secretary Patrick McLoughlin has confirmed that franchising is back on track, following the collapse of the West Coast franchise competition last October and the two critical reports which followed.
His statement has come just 24 hours since the Association of Train Operating Companies published data which sets out how much franchising has contributed to the success of the rail industry since privatisation began 20 years ago.
The second of the DfT reports was prepared by Richard Brown, who has just stepped down as chairman of Eurostar and now heads the Department for Transport's Franchising Advisory Panel.
The transport secretary said the government had made 'significant progress' strengthening its rail franchising programme after it had accepted key recommendations outlined by the Brown Review.
Mr McLoughlin added: "The independent Brown review was clear that franchising is the best way to secure services for passengers. It provided a sensible approach to strengthen a process that has contributed significantly to the success of our railways.
“Since the review was published, the Department has worked hard to implement its recommendations. Good progress has been made and we are on course to deliver a franchising programme that promotes a thriving rail industry and secures the best deal for passengers and taxpayers.“
However, some critics – including the rail unions – have been less confident about the franchising timetable, following the confirmation of an extension to the c2c franchise which was announced in May with just ten days to spare. And although discussions have been taking place over the First Great Western franchise, so far no agreement has been reached about the terms of a proposed extension which would take the present contract on to 2016. It is known that the Department's own operating division Directly Operated Railways is standing in the wings and has been applying for Safety Cases as a contingency measure.
First Great Western is only one of a number of franchises about which uncertainty continues, although the government has remained firm about its intention to return the presently state-run East Coast franchise to the private sector in February 2015, three months before the next General Election.
Meanwhile ATOC has published a report which claims that franchising has delivered increasingly good value since the first contracts began in 1996.
It includes a compilation of data carried out by KPMG, which suggests that train operators are now paying four times as much to the state as they were 15 years ago.
Passenger figures have risen dramatically in the same period – from 801 million in 1996 to 1,500 million in 2012-13 – although industry observers are divided about the underlying causes.
ATOC chief executive Michael Roberts said: "The railway has been transformed in the past 20 years. Unprecedented growth in passenger journey numbers is creating a virtuous circle by generating record levels of revenue to pay for better services in turn encouraging greater rail use.
"Government commitment to significant investment in rail and competition among train companies to win and run franchises have driven improvements, as operators are incentivised to attract more passengers and contain costs. Rail franchising is a partnership between the public and private sectors that is delivering for passengers, taxpayers and the country."
The comparison is complicated by the fact that the track access charges regime has changed as well, with significant amounts of government support now being paid directly to Network Rail. The resulting fall in direct track access charges means that premiums due from operators have been increased – or TOC subsidies reduced.
Reader Comments:
Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.
Tim, Devon
The reason EastCoast are making a "profit" is because they are paying lower premiums than the private operators did. The fact that it's publicly owned doesn't have anything to do with it.
Steve Alston, Crewe
After the two Cinderella incidents where operators ran away from the ball when the payments were due (GNER & NXEC), and a third, thwarted attempt to have an 'eat the meal then run off when the bill is due' franchise (FGWC).... the government should keep the big ones for itself.
For smaller or regional express local franchises, where the PTEs do not want to run them, the government could offer them to private operators.
The current government seems transfixed with hitting benefit scroungers where it hurts. This should include capping the sponging rail franchise operators sailing out on their state funded yachts.
Simon Adams, London
The Tories are determined to privatise East Coast when there is compelling evidence and profits to keep it with DOR.
Bring forward the election please to oust these megalomanic loons.
Melvyn Windebank, Canvey Island, Essex
Why do I get a feeling of De Ja Vous whereby a General Election is approaching and franchise that takes priority in being sold off is the one the Government directly runs at a profit and despite two failed private predecessors they think a third might go down a treat !
jak jaye, leamington spa
Franchising back on track? you cannot be serious,the TOCs are milking the taxpayer of millions each year,and as for 'notwork fail' its time for them to be called to account for the daily 'signalling problems' that litter the national rail website's service disruptions,rail privatisation is and has been an utter disaster,which is about to repeated over the Royal Mail.
Noam Bleicher, OXFORD
The 'lowest subsidy' Dutch auction system is already in place and resulted in the squalid, cramped, low-rent Cross Country franchise. It's certainly cheap to run long-distance trains with short-formed trains, no luggage space and no proper catering, but it does not meet the requirements of the travelling public nor the wider UK economy they are participating in. Quality and 'fitness for purpose' measures need taking into account as well.
Roger Capel, Sheffield
All sorted --- so wait for the shuffling & stuttering in a few months when the awkward questions start --- like why class 350/4 is being delivered to TPE, Ardwick in neutral base grey ---
Rob Horwood, auckland
Yet more gobbledegook.
What's a "virtuous circle",Mr Roberts?
Philip Russell, Carlisle
I feel the truth is whatever ATOC of ministers want to spin, we dont really know if franchising is back on track as apart from East Coast, the government has simply delayed the whole process for several years and little more.
Leslie burge, leicester
All franchising does is take money out of the railways and into shareholders pockets.This money could and should be re-invested in the railways.
DOR is the way to go.
Tim`, Devon
Time to move to an open access system. Let train companies truely compete against each other. They can all bid for access to the tracks at certain times and any lines that need subsidy will be reverse auctions, ie lowest subsidy bid wins. This could bring in some real investment from the outside. At the moment all the major projects are being funded by the government in one way or another. The DfT is running everything and so no-one will invest when they might not have any customers.