Posted 19th February 2015 | 12 Comments

Labour victory could mean end of the line for franchises

LABOUR has said that franchised train operators will be approaching the end of the line if the party wins the election in May.

Shadow transport spokesman Michael Dugher labelled the present model as 'a disaster', and condemned the Rail Delivery Group because they "basically stitch up the running of the railways and they do it with our money".

Labour's transport plans include a public sector operator running trains as soon as possible, although Mr Dugher said he was not proposing a complete reversal with the restoration of British Rail.

He also pointed out, in a New Stateman interview, that Labour's policy had changed since 1997. The party had said recently that it would review the franchising system and allow a public sector operator to compete for franchises, but Mr Dugher said he would like to see the present structure 'in the bin'.

He explained: "'This is not like 1997, that whole deference to markets and the private sector, that's gone too. It's not going back to a 70s, 80s model of British Rail but I think you can do far more to make some really big changes and that's why I'm talking about a public sector operator.

"I'm going to be honest and proud about this: I want there to be more public control of the railways and we should just say it because, actually, that's what the public think as well.

"'We've talked about how the only people who have no voice at the moment in the running of the railways are the travelling public, the passengers themselves. What you have at the moment is something that's rather ironically named the Rail Delivery Group, which is basically Network Rail and the private companies, the TOCs and the freight and they get together and they stitch up the running of the railways and they do it with our money.

"Network Rail's on our books, there's huge taxpayer subsidies and investment going into the railways, but the industry want to stitch it up themselves and we're not having that any more."

His plans include the creation of a new strategic body to oversee the railways.

Michael Roberts, who is director general of the RDG, responded: "Britain's railway has been transformed into Europe's fastest-growing and safest network through a combination of private sector innovation, competitive tendering and government policy.

"Passengers rate Britain's railway more highly than do their counterparts on any other major network in the European Union and we are committed to do even better.

"Government plays a major role in rail through investment and setting out what it expects Network Rail and train companies to deliver. We will continue to work with government, passenger bodies, suppliers and other key stakeholders in delivering a better deal for passengers and taxpayers."

Reader Comments:

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

  • John Lewer, Newcastle

    Judi spot on, but leave freight well alone.

  • jak jay, petersfield

    Love the last few paragraphs by Michael Roberts who i suggest take a train from London's Waterloo anytime with 'Slow Wobbly Trains' or should i say that useless waste of Tax Payer's money:Net Work Rail hardly a day goes by without (yet another)'signalling problem' all you ever see is an army of orange suits walking around or standing by the tracks doing nothing.

  • Judi Rastall, Sutton on Sea

    In the five years before privatisation got under way, British Rail had established Sector Management of the railways which was strengthened by the Organising for Quality initiative. If that had been allowed to mature, we would now be in a much better place. That would be the model to return to.

  • david c smith, milton keynes

    Franchisinng is" neither fish nor fowl "and with it , the benefits of privatisation - enterprise, innovation and corresponding investment are largely lost through the imposition of control by franchise contract and by limited franchise duration.

    I would prefer "horses for courses", with those routes where effective competition is feasible given over to commercial open--access whilst those with natural captive markets ( many commuter,etc. ) being run as publicly owned consumer cooperatives with local directly elected managements.

    Any subsidies could be given as performance-related incentive payments rather then by fixed contracts.

  • Martin Hollands, Aylesbury

    Nervous about this idea, because it would mean that incumbent Franchisees, would have no incentive to maintain anything apart from basic investment to the end of the franchise, would probably chase every penny through litigation and would certainly reduce maintenance of roilling stock to the bare bones. Also out would go partnerships with NR and any other funding bodies.

    It would be the first step on the slippery slope to a return to the bad old days of poor performance, filthy trains and deterioration.

    This is what happens when people who don't understand the railways are given the opportunity to steer the way forward.

  • Tim, Devon

    I continue to advocate the Open Access system. Allow private railway operators to truly compete with each other. Standard fares would allow travel on any train but pre-booked discount fares would be completely unregulated. Access to the tracks would be decided by an imparial regulator looking at passenger benefit and promoting competition.
    Only routes that no-one wants to operate would need subsidy through concessions or franchises.

  • Steve Alston, Crewe

    For Thatcher and Major's view of competition, anyone could start up a train operating company on a route.

    The current flawed system where DfT and ORR choose who can and cannot compete is at odds with their plan, so this grey area of 'competition but... no it ain't' needs to end - it's either proper privatisation, not publicly funded, with competitors being welcomed onto the railway, or it's nationalisation with limited public funding.

    I would bet our railway could almost pay for itself without the private firms in the middle. BRs problem was too much bureaucracy in the middle which is where the (comparatively small) losses arose.

  • Matt, London

    What private sector innovation? Hiring bouncers to issue penalty fares at every opportunity doesn't count as innovation.

  • Torqueback, YORK

    Even the RMT website shows 51% against the railways going back into public hands. It's not a clear cut case and Mr Dugher is wrong to say the public thinks that way.

  • Melvyn Windebank, Canvey Island, Essex

    The success of London Overground shows how in London transferring London services to the Mayor and TFL can lead to far better services , trains and stations . While longer term fixing of the mish mash created by private railways competition which created lines without decent interchanges could be fixed.

    The real irony was that no sooner that we began this process with Network Southeast which had it survived planned to electrify many lines still not done it was swept away by the dogma of privitisation!

    There,share also issues around the supply of new trains where ROSCOs have not adopted the same formula as private bus companies in ordering trains to replace older stock like bus companies do . Hence the 1000 day famine of orders post privatisation.

    Ironically just as we are now getting alliances between Network Rail and TOCs there is a danger of upheaval by newly elected politicians !

  • Richard Porter, Maidenhead

    I agree that concessions are the best way forward. We need one shop front for the passenger railway which can be called "British Rail" and use the double arrow symbol. It should specify the services, own the stations, own or lease the rolling stock, agree timetables and collect the revenue. The operators can then bid for concessions. The operators will know what services they have to provide with what trains so there is little risk for them.
    The freight operators compete successfully over the whole network and should continue to do so. Network Rail therefore needs to remain separate from the operators but work with them.

  • Dave H, Glasgow

    There is a mid-way point which may deliver the best of both worlds - called a concession, and some franchises, are only franchises in name alone, being operated as a management contract, which sotto voce the TOC managers admit is a concession.

    DOR operation of East Coast was aligned with this model and generated better income for the Treasury than any of the franchises. Fares came directly to the Governmant whilst the nuts and bolts of running the trains specified was sorted out by the operator.

    We could drop the special company set up to divide the fares revenue (Rail Settlement Plan Ltd) and the inflated costs of tickets that have to income split to pay all TOC's on the route - the inflated prices are obvious - an all trains fare KGX-PBO costs nearly 100% more than a GVTL Only one GLC-LDS via Settle is another costing less than 50% of the All routes All ops, as is the GLC-NCL Cross Country Only fare.

    Concessions would enable the return of Open Jaw and other unified railway ticketing, and all income would go directly to the Government, who then pay the operators for the services they want, leaving the open access operations available for commercial opportunists to deliver beyond the core services that are agreed. This may of course include the concession operators if there is an opportunity that cannot fit the guaranteed payment contracts from Central Governmant - and others.