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DfT willing to accept only two ‘genuine’ bids for franchises

Lord Berkeley, who sits on RTM’s editorial board, had asked the department what the minimum number of bids for rail franchises should be to create the “necessary competitive tension to ensure value for money for the travelling public, and in particular whether they consider that three bids is sufficient for that purpose”.

In response, transport minister Lord Ahmad of Wimbledon, said: “Whilst the Department for Transport prefer to have three bids for each franchise competition, as was the established practice under the previous government, we are prepared to accept that on occasion, we may only have two genuine bidders.”

The reference to the two “genuine” bidders comes after First Group and Stagecoach were the only companies shortlisted last month to run the next South Western franchise.

This news came shortly before the Public Accounts Committee (PAC) released its ‘Reform of the rail franchising programme’ report, which claimed the DfT had made relatively “poor progress” in building up its franchise management capability since the collapse of the Intercity West Coast competition in 2012.

The influential group of MPs also noted that the number of bids the DfT receives for franchise competitions has reduced, on average from four to three since the restart of the franchising programme in 2013. And while the department acknowledges the risk that some of the nine transport companies that currently run rail franchises may drop out of the market, it was unclear about how it plans to retain their interest.

PAC has recommended the DfT should develop alternatives to its current commercial approach so it is well placed to deliver value for money if market interest falls to a level where intense competition cannot be guaranteed.

At the time, Meg Hillier MP, chair of the PAC, said: “We are particularly concerned about the effects of declining competition within the programme.

“Our report states that by its own measure, the department requires at least three bids per competition to increase the likelihood of receiving high-quality bids. Yet it was announced that only two companies will compete to run the South Western franchise from June next year.”

(Image: c. Philip Toscano/PA Wire)


John   04/03/2016 at 12:11

Sounds like its already been carved up between First Group and Stagecoach. It's outrageous that these two rotten outfits continue to prosper at the expense of the taxpayer and the fare paying customers!

Andrew G   04/03/2016 at 12:36

Not just the South Western Franchise that First Group and Stagecoach are competing with to take over South West Trains unless Stagecoach does win then it will remain as South West Trains but also the Greater Anglia Franchise that Abellio are competing with First Group and National Express to take over from Abellio Greater Anglia unless Abellio does win the franchise then it will remain as Abellio Greater Anglia from October 2016 for a 9 year franchise which will last up to September 2025.

Jak Jaye   04/03/2016 at 13:07

All just modern robber barons

Sonning Cutting   05/03/2016 at 08:27

I don't know what planet some of your correspondents are from but as a regular user of and an observer of operations in S E England I would say that SW Trains and GWR are the two best run operations. When one considers how busy the railways now are, through out the day, an hour or two at Reading or Basingstoke in particular will soon demonstrate to all the moaning minnies what a competent job these two companies provide. And above all they keep their trains clean!

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