Posted 20th September 2019 | 2 Comments

Grant Shapps wants rail fares paid to independent body

Analysis
Sim Harris

TRANSPORT secretary Grant Shapps has come under fire from opposition politicians and unions for saying that franchised operators should be ‘paid when they run trains on time’.

He was being interviewed in the wake of an ORR announcement yesterday that a new punctuality measurement will no longer allow trains to be five or ten minutes late at their final destinations and yet still be considered ‘on time’. Instead, the margin for lateness will be just 60 seconds.

As reaction came in, there was some confusion over whether he was suggesting that franchise-holders should be deprived of payments when they do not meet performance targets, or that they should get bonuses for being punctual.

Mr Shapps was asked on Sky News whether giving franchises incentives to be punctual meant that they could lose their contracts for poor performance, or if bonuses were a possibility for on-time working.

He answered: ‘If you don’t run trains on time, don’t pay them. If you do, then do pay them. So it’s a pretty straightforward thing. What’s happening at the moment ... is they’re paid even when they don’t run trains on time and that is one of the reasons why we’ve ended up with a very dysfunctional system. It’s too fragmented.

‘It’s not working and people who take the train every day, as I’ve done for years, know that that’s the problem. So we can turn that all around by, I think, following these ideas that Keith Williams has and reward when they do the right thing and don’t reward them when they don’t do the right thing.’

In case you are wondering how those franchises which pay premiums to the DfT can be said to be ‘paid’ by the government at all, Mr Shapps had his answer ready. Not for the first time, the devil really was in the detail:

‘At the moment, a train company collects the fares and, as I’ve already mentioned, it doesn’t actually particularly matter, they’ll collect it whether the train runs on time or not. So, that we want to change. What I want to see happen instead is a new national body to collect all the fares themselves and then the train operating companies incentivised in the way that I said.’

If it could be done, it implies a huge change in the way that franchises are structured. Mr Shapps appears to be saying that all fares revenue would go to his new ‘national body’ and that each TOC would later receive their full share of the pot only if their trains had been sufficiently punctual.

Labour shadow transport secretary Andy McDonald responded: ‘The Conservatives have been forced to acknowledge that private train companies prioritise profits over delivering reliable and affordable services, but paying train companies extra for running services on time is absurd.

‘Nurses, teachers and police officers aren’t paid extra money to turn up on time to work. They do it because it’s their job and they care about the public. So why should private train companies be treated any differently?

‘That the transport secretary believes train companies aren't being paid enough to incentivise them to run trains on time demonstrates how broken privatisation is.’

(As a matter of record, what Mr Shapps had actually said was: ‘If you don’t run trains on time, don’t pay them. If you do, then do pay them,’ without mentioning additional payments.)

But in any case the RMT was also deeply critical.

General secretary Mick Cash said: ‘When even hard line Tories start openly admitting that private train companies are putting profits top of their priorities you know that the days of this rail racketeering are well and truly numbered.’

Although most of the attention has been directed at the alleged possibility of TOCs receiving bonuses for running on time (which, just to emphasise, Mr Shapps did not seem to be saying), the real bombshell was surely the creation of a new ‘Railway Revenue Authority’ which would act as a clearing house for all fares revenue, and which would only pass it on in full if each TOC had done a good job.

One further problem not discussed in Mr Shapps’ interview was Delay Attribution. At the moment, operators are already quite sensitive, with reason, about being blamed for delays which have been caused by Network Rail problems, or third party incidents such as trespassers or lineside fires. If they have to bid a temporary farewell to their fares after the money has been earned and collected, the idea of being penalised for a signal failure or a fallen tree will surely tighten the tensions of Delay Attribution even further.

Neither was anything said about the cost of maintaining a ‘Railway Revenue Authority’. Who would pay for that? The taxpayer or the TOCs?

How the whole idea of incoming fares being temporarily confiscated would sit with the directors and shareholders of each franchise-owning group remains to be seen, but the Department for Transport has had enough problems in recent years attracting bidders at all. Taking charge of all their fares revenue might be seen as the final straw – and we all know what happens to the camel then.

Reader Comments:

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

  • david c smith, Bletchley

    Is all this, especially the possible lack of "independence"of the Williams investigation, yet another move in the creeping takeover of decision making by DfT, under governments of both colours?

    A prominent writer on the modern railway scene coined the phrase " pretend privatisation".

  • Chris Jones-Bridger, Buckley Flintshire

    When the West Coast franchise was relet the minister alluded that the DfT was already privy to the forthcoming conclusions of the pending 'independent' Williams review. Can we take it that this rather muddled statement is further evidence of where Williams is taking the industry? If so then it seems the contract model that GTR is operating under where DfT, or it's nominated fares body, takes the revenue and the contract holder runs the trains subject to a performance related contract is the way forward? A whole minefield then opens regarding fares. In order to maximise revenue TOC's have aggressively marketed advance & other promotional fares where they solely benefit from the booty. This has been a key driver in driving up passenger numbers. Where does the incentive lie if all the cash goes to a central collection point? Time for convene another panel of accountants & lawyers to resolve the contractual haggling!

    Perhaps as Sim Harris analysis highlights it is time that Mr Shapps had a crash course in understanding the industry's Delay Attribution process. While the TOC's are the viable sign to the passenger of a delay they can be equally the victim of another industry players problem or a third party incident not of the industry's making.

    It's all fine Mr Shapps bringing his experience as a passenger but as Transport Secretary an understanding of the complex contractual matrix that is the reality of the privatised industry would would be more helpful. Simplifying it would be seen as a major achievement.

    The new punctuality measure will certainly generate some lurid headlines. Hopefully it will concentrate the TOC's & NR to concentrate on absolute punctuality. However being realistic this will not be achievable. Let the industry be honest where it has failed but as third party incidents can cause considerable disruption then let us hope that the reported statistics accurately reflect the facts.

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