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Author Topic: Passengers Paying the Price for Broken Model of Rail Franchising  (Read 500 times)
SandTEngineer
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« on: April 27, 2018, 09:50:29 am »

Oh dear, some internal criticism of a certain government department Roll Eyes

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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... Tongue
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eXPassenger
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« Reply #1 on: April 27, 2018, 10:05:28 am »

Now then, it will be interesting to see the Secretary for State for Transport's response to all of that... Tongue
Probably cancel all the electrification and run new bimodes.
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SandTEngineer
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« Reply #2 on: April 27, 2018, 10:26:47 am »

I haven't got through all of it yet but this bit caught my eye.....

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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.   

That from a guy that previously was cited elsewhere as having done this:

Quote
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.
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Western Pathfinder
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« Reply #3 on: April 27, 2018, 12:58:28 pm »

Just seen this might be of some interest
Rhttps://www.ft.com/video/f473c61c-5167-40f0-8d1c-db556d74d668.
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bradshaw
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« Reply #4 on: April 27, 2018, 02:58:51 pm »


This link to a Twitter conversation makes interesting reading

https://twitter.com/liliangreenwood/status/989784659172249600?s=21

I watched the PAC broadcast and was very disappointed by the questioning. I seemed to me not to be an in-depth analysis. It lacked a heavy weight, knowledgable person to  get the information out.
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Western Pathfinder
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« Reply #5 on: April 27, 2018, 03:50:17 pm »

Nigel @Rail seems to be on top of most of this ,he usually makes a great deal of sense on twitter.
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bignosemac
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« Reply #6 on: April 27, 2018, 04:19:56 pm »

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.

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Western Pathfinder
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« Reply #7 on: April 27, 2018, 05:00:37 pm »

Thank you for fixing the link I had not noticed it wasn't working BNM.
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devonexpress
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« Reply #8 on: April 28, 2018, 07:34:23 pm »

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.



The reason for the direct award and the infrastructure issues make complete sense, Is it not better to have a company with 20 years experience of running trains on the Great Western Railway route, rather than a new company taking over, not having a clue and things being worse than what they could have been? For example we could have had things as bad as TSGN. I fail to make any sense of your methodology with state companies running the franchise, for example East Coast, whilst it was a competent service what investment did it receive during that time? Only 1 extra HST wow what a massive difference! The whole idea for the franchise system is for private companies to provide the investment to save the government money, quite frankly I believe the railways should be fully privatized back into the big four this would allow for investment to be made as and when needed, rather than the current cry for investment for years before anything is done.
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ray951
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« Reply #9 on: April 28, 2018, 08:43:58 pm »

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.
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ellendune
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« Reply #10 on: April 28, 2018, 09:30:45 pm »

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.

Not quite as simple as that.

They may lease trains rather than buy them, but they commit to pay the lease costs for the duration of the franchise.  They also take on a large financial risk - as Virgin East Coast have found to their cost.

You could argue how much of that risk is transferred and how much has been created artificially by the franchising model but the long and short of it is that Stagecoach/Virgin are significantly out of pocket. 
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devonexpress
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« Reply #11 on: April 30, 2018, 02:48:51 pm »

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.

TOC's still have to provide a case for new rolling stock, aka. Class 800 on the Devon/Cornwall route. If you look at all the franchises West Coast(New trains), TSGN(Mainly new trains on key routes), South Western(New Trains replacing newish trains).. I could go on, if it wasn't for the TOC's making the case, we'd still have a lot of historic rolling stock being modified to modern standards.  Also in relation to the Hull Trains franchise I believe they have financed it themselves!
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bignosemac
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« Reply #12 on: April 30, 2018, 06:12:37 pm »

Small pedantic point.

Hull Trains isn't a franchise. They are an open access operator. But yes, they are free of the DfT shackles and able to lease whatever rolling stock they like. It's still leased stock though. Their order of five Class 802 bi-modes is financed and owned by rolling stock company (RoSCo) Angel Trains.
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