03.05.17
Franchising structure a barrier to sustained rail investment, report warns
The franchising system in its current state is becoming increasingly vulnerable to economic slowdown, a report released today has argued.
Produced by Credo Business Consulting for a new transport think tank established by the Campaign for Better Transport called Tracks, the findings stated that though the franchising model looks successful, cracks are beginning to show in its structure.
The research concluded that franchising in its current state is actually a barrier to sustained long-term investment in the industry, especially with trains and stations. Credo also found that a relatively small number of bidders are facing increased risk when bidding and running franchises.
Wider concerns were raised with regards to the complex ticketing system that customers are faced with, as well as confusing fare structures and outdated ticketing technology.
A number of recommendations are raised in the report. Firstly, the government was instructed to set out a clear strategy for what the role of the railway was post-Brexit, economically and financially.
On top of that, Credo called on Whitehall to conduct a “fundamental and bold review of fares” to make the system more relevant and passenger-friendly for modern working patterns.
In response, Stephen Joseph, chief executive of the Campaign for better Transport, said: “This report shows the challenges facing rail franchising, especially if there is a slowdown in rail use or in the wider economy.
“It also sets out some coherent proposals for ways forward, including the need for a clear rail strategy linked to the wider economy and for fares reform. We hope that the next government, if it continues with rail franchising, takes note of this and finds this research useful."
The report also argued that a fairer financial structure should be implemented that ensured no franchise is “too big to fail”. Another suggestion that was tabled was moving away from the current model towards smaller, different models that accommodate for the rail differences in urban and rural areas.
Partner at Credo Business Consulting and the author of the report, Matt Lovering, said: “The success of franchising has been one of the key factors in the dramatic increase in rail usage over the last 20 years.
“But this growth has significantly increased the social and economic importance of the railway, making it essential that the network continues to evolve and offer attractive services to all customers.”
However, the current franchising model carries significant risks and limitations which may hinder this process going into the future, Lovering added.
“We hope that the model will evolve in a way which builds on the successes of the last 20 years but creates more flexibility to meet the needs of different customer segments and respond to the economic, social and technology changes which are anticipated in the years ahead,” he stated.
But the Rail Delivery Group maintained that franchising has had a positive impact on British rail and the economy.
“Franchising has helped to transform the finances of Britain’s railway, meaning there is more money to support investment in improvements to make journeys better and local economies stronger, now and for the long term,” its spokesman stated.
“The whole rail industry is focussed on delivering the successful railway Britain will need as it exits the European Union. This includes working with governments and other authorities to evolve the franchising process so that it continues to deliver for passengers and taxpayers.”
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