MPs on the Transport Committee say there are serious shortcomings
in the Department for Transport’s capability and capacity to
manage rail franchising.
In a report published today, The Future of Rail: Rail
franchising, the 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.
Chair of the Committee, 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.”
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.
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.”
The Future of Rail: Rail franchising is one of five inter-related
inquiries. 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.
