06.02.17
MPs float longer-term deals as solution to broken franchising model
MPs have raised serious concerns about the UK’s current rail franchising model, arguing that it is unsustainable in the long term without lasting changes.
A report by the Transport Select Committee into rail franchising, one of an ongoing series of reports into the future of rail, has found that the existing model is failing to deliver for passengers, drive improvements in the industry or transfer financial risk to the private sector since it was initiated in 1992.
The committee once again slammed “serious shortcomings” in the DfT’s capacity to manage rail franchising and has urged the department to commission an independent review of its franchising functions, including the possibility of transferring its contract enforcement powers to the ORR.
“While franchising enabled passenger growth and service improvements when it was first rolled out, passenger satisfaction with the railways is falling,” commented Louise Ellman MP, chair of the committee.
“Its core objectives are no longer being met, potential benefits are being lost and the passenger is suffering through higher fares and continued underperformance.
“Our report explores why the current model is no longer fit for purpose. But this will not be solved overnight. There is no one-size-fits all approach and the government should work with other agencies to introduce steady, strategic reform to secure improvement.”
The committee said that the government could consider several steps to restructure franchises and the current bidding process, such as by allowing open access to operators on certain routes and by considering longer-term franchises, as the current model “reduces the incentive of operators to both invest and drive down cost”.
MPs also suggested streamlining operational alignment between Network Rail and TOCs, arguing that the relationship between the two is “not as co-ordinated as it should be”, leading to higher fares and poorer performance – although this is already being explored under fresh plans.
But the greatest criticism fell on DfT, as the committee said that the department has “failed to take responsibility” for some of the shortcomings in handling its contract with Govia Thameslink Railway (GTR), which oversees the major TSGN franchise.
The news comes not long after the committee urged the DfT to stop “ducking” away from the issues of the contract, although the department claims it is unable to act while it still addressing GTR’s claims of force majeure.
In today’s report, the Transport Select Committee claimed that the government has “serious lessons to learn” from its management of the TSGN franchise, saying that a change of policy on performance reporting will help hold “serially underperforming” operators like GTR to account.
“If GTR is officially found to be in breach of contract – and the committee is still pushing ministers for an answer on this – the DfT should consider restructuring the franchise to realign the incentives and focus of the operator back to the passenger,” Ellman concluded.
Despite the committee’s criticisms, the Rail Delivery Group defended the franchising model, arguing that it has allowed companies to turn Britain’s railway into “a success story”, doubling passenger numbers and making it the safest railway in Europe.
“Passengers and taxpayers have benefitted from the franchising system where rail companies bring new ideas and innovation to Britain’s railway,” said Paul Plummer, chief executive of the RDG.
“Under franchising the railway has gone from costing taxpayers £2bn a year in terms of day-to-day costs to now contributing £200m, money which helps to fund the major rail upgrades making journeys more comfortable and reliable.”
The Transport Select Committee is still completing its inquiry into the future of rail as it is currently continuing to take evidence on the issue of rail safety. Its final inquiry into finance and governance in rail is expected to be completed this year.
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