Louise Ellman
The franchise system is “creaking at the edges” senior MP Norman Baker said today (Monday) after a damning Parliamentary report condemned it as a mess.
But the Prime Minister rejected suggestions that the renationalisation of the entire network is now inevitable, after National Express Group said it may default on its flagship East Coast inter-city rail service later this year.
The government will take over the running of the line until it can be re-franchised.
The Commons Transport Committee concluded in its report on rail fares and franchises that the system “remains a mess where private operators can abandon their obligations when times get tough”.
The MPs say the fare increases, staff cuts and service reductions seen this year are “unacceptable practices which the Government must take steps to prevent”.
They condemn fare prices of more than 11 per cent on some routes when inflation is close to zero, and welcome Transport Secretary Lord Adonis’ decision to honour his promise to close the loophole – the fares basket – that made them possible.
Committee chairwoman Louise Ellman said: “Many more franchises may be struggling to meet their financial obligations, without our knowledge.
“More failures in the franchise system will cost a lot of public money and we are deeply concerned about the impact this could have on the funding for other transport projects.”
Gordon Brown’s official spokesman, when asked by reporters whether renationalisation of the entire network, if slowly, was inevitable, said: “I would not characterise it in those terms.
“There is an issue with one of the franchise providers and we have taken action to ensure continuity to services.”
The Department for Transport and Lord Adonis have been saying that no other train operator has defaulted on its franchise and no other company has sought to renegotiate its franchise, the spokesman added.
Mr Baker, Liberal Democrat transport spokesman, said: “There is a strong case for longer franchises to secure investment from train companies and end the bureaucratic costs of changing operators every few years.
“In order to have longer franchises there has to be a robust system to take account of the ups and downs in the economy – the present system doesn’t do that.
“There should be more sharing of risk and more sharing of profits. We need a thorough review of the franchise system because it is creaking at the edges.”
Reader Comments:
Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.
Sam, you are exactly right. Private companies only do a good job when they are in competition. Natural monopolies should be publicly owned for the good of the population.
Jack, Sydney, Australia
Tom, Leeds "Public bodies are inefficient and money wasting, just because of the fact they are public bodies."
That requires some explanation, otherwise it's just unproven dogma. On the other hand, it's easy to explain exactly why private bodies put in charge of a monopoly service on a line are inefficient and money wasting.
If they were subjected to real competition, yes, they would be efficient and economical: their profit motive would lead them to cut fares and increase quality to keep ahead of competitors. But as we all know, in the case of most train operators, they don't face any such competition.
In the absence of competition their profit incentive is instead best served by incessantly pleading poverty to force additional subsidy out of the government, while cutting staff, cutting wages, cutting service levels, and increasing fares - oh, and making unrealistic promises to get the franchises in the first place.
Is that better or worse than public sector inefficiency? Well, the public certainly seem to think it's worse - and so do these MPs.
Sam, London
All this talk of bringing the rail industry back ino public ownership is stupid. Public bodies are inefficient and money wasting, just because of the fact they are public bodies. Since privatisation we have more, modern, quicker and nicer trains. Yes there are problem with the industry, that is obvious. But it just needs a more firm hand from the government.
Tom, Leeds
All three main parties have their noses pressed up hard against reality and yet are pretending it doesn't exist. Rail privatisation has been an utter fiasco. When will they admit this? It is a child misconceived under the Tories and badly parented by Labour, resulting in a delinquent, retarded transport system.
We desperately need a new form of ownership, yet they are doing the political equivalent of putting their fingers in their ears and going "La, la, la,la..." to block out what the electorate are saying.
Robert C, London, UK
I find it unbelievable that in 12 years Labour has failed to re-nationalise the TOC's. TOC's profits come from higher fares and there's no competitive element to keep fares down. There has been more investment since privatisation but passengers have paid for that.
Simon, London, UK
Why is it that the franchises are set up so that the franchisee can make a wedge in the first years and as soon as they have to start paying back they
start bleeting.This all while the so called good times were going on while we were all being encouraged to borrow ever more to keep it all going without ever a care as to. how it was going to be payed back .Sounds like network rail doesn't it.
leslie burge, leicester, england