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Rail franchising needs significant reform, says Transport Committee

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Rail franchising needs significant reform, says Transport Committee

05 February 2017

MPs on the Transport Committee say there are serious shortcomings in the Department for Transport's capability and capacity to manage rail franchising.

 

Rail franchising report

In its report, the Transport Committee recommends the Department should commission an independent review of its franchising functions, including the possibility of transferring enforcement powers to the ORR (Office of Rail and Road).

While MPs are encouraged by progress made since 2012, the core policy objectives of franchising are not being met. The current model fails to deliver for passengers, to drive industry efficiencies, promote competition, reduce the taxpayer subsidy or transfer financial risk to the private sector.

The report examines why and concludes that without changes to the current model, it is difficult to see how franchising is sustainable in long term.

"Passenger satisfaction with the railways is falling"

Chair of the Committee, Louise Ellman MP, commented:

"While franchising enabled passenger growth and service improvements when it was first rolled out, passenger satisfaction with the railways is falling. 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 Department should take steps to restructure franchises and the bidding process. Open access operators, already operating successfully, could provide opportunities for new entrants to the franchise market. Longer term franchises should be considered, but only where the existing operator has delivered on performance. Streamlining operational alignment between Network Rail and train operating companies will address a fundamental flaw of the current system. These are improvements that must be made if franchising is to deliver for the passenger over the longer term."

Thameslink, Southern and Great Northern

MPs also say the Department for Transport has failed to take responsibility for some of the failings in handling the Thameslink, Southern and Great Northern franchise.

Louise Ellman MP, added:

"The Government has serious lessons to learn from the management of the TSGN franchise. This highlights the lack of progress by the Department since the overhaul of franchising that followed the failed re-let of the West Coast franchise in 2012.

Our Committee exposed serious deficiencies in the Department's monitoring and enforcement of this franchise which has already led to a change of policy on performance reporting. This can only help to hold serially underperforming operators like GTR to proper 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 Department for Transport should consider restructuring the franchise to realign the incentives and focus of the operator back to the passenger."

Background

Rail franchising is one of five inter-related inquiries in the Future of Rail series. Reports on rail technology and the rail passenger experience were published in 2016. The Committee is currently taking evidence on rail safety. The final inquiry on rail governance and finance will be completed in 2017.

Further information

Image: PA

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