HS2

26.04.17

DfT to introduce new risk transfer mechanism on selected franchises

The government has claimed that plans to introduce a new risk transfer mechanism, the Forecast Revenue Mechanism (FRM), on selected franchises will help ensure that franchising remains attractive to bidders while securing a good deal for taxpayers.

Responding to the transport select committee’s report into rail franchising that was released at the start of February, the DfT has stated that the FRM will offer protection against shortfalls in revenue relative to the winning bidder’s bid revenue line, whist also ensuring that operators share revenue with the government when its franchises outperform forecasts.

The report states: “By applying FRM on franchises where traditional risk transfer mechanisms would otherwise generate unsustainably large PCS requirements, the government can ensure that healthy competition is maintained for its franchises.

“More broadly the government is committed to ensuring that passenger services are delivered in a way that is commercially sustainable and meets the needs of passengers and taxpayers and will set out its longer-term strategic approach to franchising in the forthcoming Rail Strategy.”

In addition, the government also said that though there were no plans to strip GTR of the TSGN franchise due to the uncertainty that it would cause, it was “closely monitoring” the franchise, and reiterated that the department were unlikely to let a contract of its size again.  

It added that it also fully agrees with the committee, and the Competition and Markets Authority (CMA), that there need to be important reforms to create a fair, level playing field between open access and franchised operators.

DfT also defended its franchising model which the committee had previously criticised, saying that it had been successful in implementing a number of fundamental reforms that had supported the successful award of 13 franchises in a little over three years.

The government stated: “While the government rejects the committee’s premise that franchising is no longer fit for purpose, we do welcome a number of the report’s recommendations, several of which reflect workstreams already underway at the DfT.  

“This illustrates the government’s ongoing commitment to continuous improvement in the franchising process, with particular focus on efficiency, accountability, innovation and driving value for money for passenger and taxpayer alike.”

Have you got a story to tell? Would you like to become an RTM columnist? If so, click here 

Comments

Andrew Gwilt   27/04/2017 at 08:18

And this is why foreign rail companies such as-Abellio, Trenitalia, MTR Hong Kong and DB (Deutsche Bahn-DB Arriva & DB Schenker) and other foreign rail companies have taken over the railways in the UK. Please bring back British Rail.

The Truth   06/05/2017 at 10:14

EXPOSE THE CONSPIRACY! GOD AND THE DEVIL ARE BACKWARDS!! DON'T LET GUILT-FEELINGS, FEAR AND OTHER KINDS OF EMOTIONAL MANIPULATION RULE YOUR CHOICES IN LIFE!! http://joyofsatan.org/ http://exposingchristianity.org/ https://exposingthelieofislam.wordpress.com/ http://www.666blacksun.net/

Add your comment

 

rail technology magazine tv

more videos >

latest rail news

Ep.12 Diversity, inclusion & gender balance, Adeline Ginn MBE

05/06/2020Ep.12 Diversity, inclusion & gender balance, Adeline Ginn MBE

Adeline Ginn MBE, Founder & Chair of Women in Rail, joined host Ailsa Cowen for episode 12 of Rail Technology Magazine’s podcast, Track T... more >
Electric railway now running through historic Severn Tunnel

05/06/2020Electric railway now running through historic Severn Tunnel

On Friday (June 5th) Network Rail announced they have successfully completed the electrification of the Severn Tunnel, bringing London and south ... more >
Multi-million-pound investment for Cumbria Coast Line coastal viaduct

05/06/2020Multi-million-pound investment for Cumbria Coast Line coastal viaduct

A major investment to improve a crucial costal viaduct will start next month to make journeys faster and more reliable for Cumbrian Coast line pa... more >

editor's comment

23/01/2018Out with the old...

Despite a few disappointing policy announcements, especially for the electrification aficionados amongst us, 2017 was, like Darren Caplan writes on page 20, a year generally marked by positive news for the rail industry. We polished off the iconic Ordsall Chord (p32), hit some solid milestones on Thameslink (p40), progressed on ambitious rolling stock orders (p16), and finally started moving forward on HS2 (p14) ‒ paving the way for a New Ye... read more >

last word

Encouraging youngsters to be safe on the railway

Encouraging youngsters to be safe on the railway

This summer, Arriva Group's CrossCountry and the Scout Association joined to launch a new partnership to promote rail safety among young people. Chris Leech MBE, business community manager at the... more > more last word articles >

'the sleepers' daily blog

Maximising efficiency requires investment in data, but it’s rewards for rail could be extensive

14/11/2019Maximising efficiency requires investment in data, but it’s rewards for rail could be extensive

Rail Technology Magazine’s Matt Roberts explains the significant role data can play within the future development of the rail industry. Standing as a cornerstone of the UK transport network, the rail industry is forever striving to innovate and maximise efficiency in all aspects of its work. Data is just one such way of achievi... more >
read more blog posts from 'the sleeper' >

comment

The challenge of completing Crossrail

05/07/2019The challenge of completing Crossrail

With a new plan now in place to deliver Crossrail, Hedley Ayres, National Audit Office manager, major projects and programmes, takes a look at ho... more >
Preparing the industry to deliver trains for the future

04/07/2019Preparing the industry to deliver trains for the future

The move to decarbonise the rail network involves shifting to cleaner modes of traction by 2050. David Clarke, technical director at the Railway ... more >
Sunshine future beckons for South Wales Railways, says 10:10 Climate Action’s Leo Murray

02/07/2019Sunshine future beckons for South Wales Railways, says 10:10 Climate Action’s Leo Murray

Smart electrification is the way to boost clean energy resources, argues Leo Murray, director at 10:10 Climate Action. Contractors are clear... more >
Ambition doesn’t have to be expensive, says Midland Connect's Maria Machancoses

02/07/2019Ambition doesn’t have to be expensive, says Midland Connect's Maria Machancoses

The TCR Midlands conference is only days away and tickets are going fast for the sector event of the year at the Vox Conference Centre in Birming... more >

rail industry focus

View all News

interviews

Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

24/06/2019Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

Andrew Haines, the Chief Executive of Network Rail, has told the Today programme on Radio 4's BBC’s flagship news programme that he wo... more >