MPs call for rail franchise reforms to improve services

6 Feb 17

MPs have called for significant reforms to the rail franchising system including how contracts are managed, following high-profile disputes on the Southern network.

Analysing how the Department for Transport has managed franchises since the system was reformed in 2012, after the failed procurement for the West Coast main line franchise, the transport select committee said the core policy objectives of franchising were not being met.

The current model fails to deliver for passengers, to drive industry efficiencies, promote competition, reduce the taxpayer subsidy, and transfer financial risk to the private sector, according to committee chair Louise Ellman.

“While franchising enabled passenger growth and service improvements when it was first rolled out, passenger satisfaction with the railways is falling,” she said. “Its core objectives are no longer being met, potential benefits are being lost and the passenger is suffering through higher fares and continued underperformance.”

In particular, MPs criticised the department’s use of a one-size-fits-all approach to managing franchises across England, and called on the government to consider transferring enforcement of rail deals to the sector’s economic regulator, the Office for Rail and Road.

Other proposed changes include making it easier for open access operators – who currently operate services outside franchise agreements – to bid for these deals, and for longer-term franchises to be considered.

Closer working between Network Rail and train operating companies, which has been suggested by transport secretary Chris Grayling, could also help address a fundamental flaw of the current system, according to the committee.

Ellman stated the DfT had failed to take responsibility for some of the failings in handling the Thameslink, Southern and Great Northern franchises. There has been widespread disruption on some routes due to industrial action by guards and drivers over plans to make drivers responsible for opening and closing train doors across the franchise. However, Southern rail announced a deal with train drivers’ union Aslef last week intended to end the dispute.

Ellman said the government had serious lessons to learn from the management of the franchise, which highlighted the lack of progress made since the botched West Coast franchise award.

“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 DfT should consider restructuring the franchise to realign the incentives and focus of the operator back to the passenger.”

A spokesman for the DfT said it was investing over £40bn to deliver the faster and more comfortable trains.

“Franchising has brought major investment to our railways and helped to create one of the safest and fastest growing networks in Europe,” he stated. “But we can make improvements and the transport secretary has been clear that it will take new ways of working, more investment and better collaboration across the industry to tackle the challenges ahead.”

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