Posted 8th August 2011 | 4 Comments

Franchise rethink gets welcome from train operators

The present First Capital Connect franchise will now end in September 2013, almost three years early

The present First Capital Connect franchise will now end in September 2013, almost three years early

A REVISED franchise timetable announced by the transport secretary has been welcomed by the Association of Train Operating Companies, but the largest rail union has condemned the new plans as a 'rip-off'.

Philip Hammond has reduced the length of the First Capital Connect franchise, and extended others. He has also accepted that East Coast cannot now return to private sector operation before the end of 2013.

The transport secretary said the changes were being made to provide 'clarity to the market'.

He explained: "In producing this timetable, I have had regard to the impact on bidders and  their sub-contractors of trying to compete for too many franchises at once, and the likely reduction in value for money to the taxpayer that would result. "

Mr Hammond's new timetable means that Great Western and Thameslink (currently First Capital Connect) have been brought forward (by 35 months and 18 months respectively), the next Northern and TransPennine Express can now have a simultaneous start date of April 2014, while two other franchises (East Coast and Greater Anglia) have been extended.

In at least one case, Mr Hammond's hand has been forced: FirstGroup has already announced that it will surrender the Great Western franchise in 2013. The group therefore avoids paying more than £800 million in premiums which would have been due in the last three years of the original contract.

Three franchise replacements – West Coast, South Eastern and Essex Thameside (currently c2c) – remain unchanged. However, talks are continuing over whether Virgin Trains should continue to operate West Coast between March 2012 – its original expiry date – and December, with the Department for Transport's own operator Directly Operated Railways poised to step in to fill the gap if necessary.

ATOC, which has been calling for less restrictive franchises, welcomed Mr Hammond's announcement.

The Association's chief executive Michael Roberts said: “The next few years present a chance to improve fundamentally how the railways are run.  On the right terms, longer and less prescriptive franchises would give train companies more opportunity to invest in improvements, respond more quickly to passengers’ needs and reduce costs.

“We welcome the government’s commitment to a horses for courses approach to franchising. The secretary of state rightly recognises the scale of work ahead to translate principle into practice – his announcement will allow the government and bidders alike to plan how best to respond."

However, the RMT union dubbed the transport secretary's plans a 'rail franchise rip-off', particularly as the next round of franchises are expected to last longer.

The union's general secretary Bob Crow said: "Today’s announcement will have the train operators laughing all the way to the bank. These new fifteen year franchises are nothing less than a licence to print money for the same companies who have jacked up fares and ripped off hundreds of millions of pounds in profits and subsidies since privatisation.

“It’s a disgrace that the public sector, who have bailed out the East Coast line when the private company Nat Ex threw back the keys, are only seen as a stop gap when things go wrong rather than a long-term, safer and cheaper option.

“This government have learnt nothing from the costly failure of rail privatisation and are determined, through this programme, to continue to reward those same operators who have robbed the taxpayer blind.” 

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • steve doole, Isleworth, UK

    The biggest issue now appears to be peak time capacity.
    Re-franchising is largely a sideshow, and DfT and ToCs are going to be well distracted for a few years by it.
    The prime competition for Railways are cars, and DfT seems to avoid addressing more progressive policies.
    Bob Crow makes good points too.

  • SS, Hants

    First are not pulling out early, they are just taking the original contract end date and not the 3 year extension. First also have the upper hand in that they OWN 5 or 6 HST sets and will be under no obligation to hand them over to the next franchisee. People say they take all the money they can but they bought extra sets with there own cash to run additional services and are constantly fighting the Dft for extra units to relieve overcrowding.
    You will find it is the dft's overmanagement cause more of the problems than the franchisee, every change has to go through the dft

  • Geoff Steel, Northampton, United Kingdom

    I agree with Bob Crow that Privatisation of the rail industry has been a complete disaster costing the country billions. Train operators are happy when they are taking the subsidies but when premium payments become due they just appear to be able to walk away without any penalty leaving the us ( the tax payers) to pick up the tab. However, I place the blame for this squarely at the DfT door for this debacle. It is extremely frustrating but what can be done as there is no appetite among any of the main stream politicians to bring the whole industry back under one umbrella.

  • Lee, Manchester, England

    I don't normally agree with Bob Crowe but on this occaision I think he has a point. First should not be allowed to rebid for the Great Western franchise after pulling out early to avoid paying back a substantial amount. bringing the Northern and Transpennine franchises to a conclusion at the same time may look good to a politician, however it effectively allows one operator to bid for and win both franchises, which in the north, would constitute a monopoly. What happened to multiple operators providing the best value for money through competetive charging. I suspect that only applied to the government franchises and not to the services the rail user will be paying for.