Great Western Coffee Shop

Passengers paying the price for broken model of rail franchising

27 April 2018
The Public Accounts Committee report says Government’s management of two of its most important franchises 'completely inadequate'.

Read the report summary
https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/689/68903.htm

Read the report conclusions and recommendations
https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/689/68905.htm

Read the full report: Rail franchising in the UK
https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/689/68902.htm

Management of two most important franchises "completely inadequate".
We are deeply concerned that the Department for Transport's management of two of its most important franchises has been completely inadequate and could be indicative of wider weaknesses in its contract management capability.

Passengers on the Thameslink, Southern and Great Northern franchise have suffered an appalling level of delays and cancellations since the franchise started in 2014. At one point, less than two thirds of trains arrived on time.

This totally unacceptable state of affairs which caused misery for passengers was due to a catalogue of failures by the Department, Network Rail and the operator, Govia Thameslink.

Department ambivalent about risk of industrial action:
The Department was too ambitious about what could be achieved, and it overlooked the poor condition of the infrastructure of the rail network. The Department was also ambivalent about the risk of industrial action and neglected to engage constructively with rail unions.

The Department failed to see, or chose not to see, the perfect storm of an ambitious upgrade programme coupled with plans to increase driver controlled operation of trains.

While there has been some improvement recently and there are signs that Network Rail and Govia Thameslink are now working together more effectively, we remain sceptical that this will address the serious and deep-rooted problems we have identified.

Department failed to learn from previous east coast franchise failures:
On the East Coast franchise, the Department has failed to learn the lessons from previous failures of the franchise, and has again allowed the operator to promise more than it could deliver. The Department will have to put in place new arrangements for running train services.

We are concerned that the Department could terminate its contract with VTEC yet still give the operator the opportunity to run the franchise again in the future.

The issues we have found with the East Coast and TSGN, and the small pool of potential bidders in the market, highlight the broken model of franchising.

Chair's comments
Comment from Committee Chair, Meg Hillier MP:

"The operation of the Thameslink, Southern and Great Northern franchise has been a multi-faceted shambles causing untold misery for passengers.

Meanwhile, the East Coast franchise has failed for a third time because of wildly inaccurate passenger growth forecasts.

In both cases the Government appears to have seen its task as simply to contract out the service, with wholly inadequate consideration given to passengers’ best interests and behaviour.

This imbalance cannot continue. The franchising model is broken and passengers are paying the price.

If taxpayers are to have any faith in Government’s ability to deliver an effective passenger rail network then it must conduct and act on a thorough review before any further franchises are awarded.

At its heart should be new measures to embed the protection of passengers’ interests at a contractual level – and to ensure taxpayers’ interests are properly protected should franchisee performance break down.

Govia Thameslink’s new train timetables kick in next month. This will be a critical test for the operator and we will be watching closely."

Now then, it will be interesting to see the Secretary for State for Transport's response to all of that... :P

Q124  Chair: I still maintain that, given you knew there was going to be a risk of industrial action, engagement with the people who run the trains—through their trade unions; that would be the most appropriate route—would have been a good idea. In retrospect, do you wish you had had better engagement at an earlier stage? Who is going to take that—Mr Wilkinson or Ms Kelly?

Peter Wilkinson: I wish we did have better engagement. We have tried to reach out, but that has not been readily accepted. I think we would all like a better dialogue with the trade unions. They play a vital role in this industry.   

Peter Wilkinson should not go to a public meeting and say he is going to have a punch up with the unions and how he would break greedy train drivers before lying about how much train drivers get paid and how many days a week they work. Or do the DFT think that is constructive engagement.

Just seen this might be of some interest
https://www.ft.com/video/f473c61c-5167-40f0-8d1c-db556d74d668.

(link fixed in quote)

Michael Portillo argues in that video that the franchise model generally works and explains that, whilst it is pretend capitalism, there is market competition, not for the passenger but in the awarding of franchises. He intimates that this is a good thing.

Well, if its so good Michael why hasn't there been competition for a new franchise on Greater Western since 2006? That franchise was awarded for seven years with an option for a further three, an option FirstGroup declined. Its now 12 years since that seven year award of the Greater Western franchise to FirstGroup, and a new franchise may not be awarded until 2022.

If we are to have the pretend capitalism of franchising then the franchise award periods need to be stuck to. Not continuous direct awards. And no, I don't by the excuse that infrastructure upgrades and new rolling stock introduction should prevent franchise competitions. Upgrades and new rolling stock orders are the ideal time to tender. Bidders can show in their tenders what they are prepared to offer customers with the shiny new kit.

And if we are to continue the franchise model then we should permit UK state run companies to bid. It needn't be central government that bids, it could be consortia of local authorities, devolved parliaments or regional bodies. It's grossly unjust that profit from Great Britain's railways is allowed to go to foreign governments but not our own.

I think you are confused, TOC's invest hardly any money, typically a few million for paint, uniforms, ticket machines, franchising bids, etc. They certainly don't invest in new rolling stock (although I am sure someone will tell me of an exception), leasing companies invest in rolling stock and the TOC then rents them from said companies. With the current setup it makes no difference whether the TOC is a pubic or private company they both have to rent the trains from the leasing company.

I think you are confused, TOC's invest hardly any money, typically a few million for paint, uniforms, ticket machines, franchising bids, etc. They certainly don't invest in new rolling stock (although I am sure someone will tell me of an exception), leasing companies invest in rolling stock and the TOC then rents them from said companies. With the current setup it makes no difference whether the TOC is a pubic or private company they both have to rent the trains from the leasing company.