Go-Ahead welcomes rail franchise review recommendations

UK rail operator Go-Ahead today welcomed the key recommendations set out in the Government’s review of rail franchising carried out by Richard Brown, Chairman of Eurostar.

The report, published today, sets out Mr Brown’s recommendations on how best to get the rail franchising programme back on course.

David Brown, Group Chief Executive of Go-Ahead said:

“The report acknowledges the improvements that rail privatisation has delivered for passengers and we welcome the key recommendations set out in the review. We trust the review will be the catalyst which enables the franchising timetable to resume as soon as possible for the benefit of the taxpayer, passengers and employees.

“We now look forward to the Department for Transport setting out the way forward on the Thameslink franchise, for which Go-Ahead and its partner Keolis were shortlisted to bid last year. We also welcome the announcement by the Secretary of State that he intends to set out a clear programme for future franchise competitions in the Spring.”

The key recommendations in the review are set out below. The document is available at:

Summary of key recommendations:

• The bidding process is not fundamentally flawed, but there is significant scope to improve it further.
• The Department’s organisation and franchising capability urgently needs to be strengthened, as the Laidlaw Inquiry and NAO reports have shown.
• Franchise term should be determined by the circumstances and size of each individual franchise. This should usually consist of a 7 to 10 year initial term with pre-contracted continuation, subject to agreed franchise criteria being met, for further terms of 3 to 5 years giving eventual terms of up to 15 years, but with intermediate break points. There may be circumstances where shorter or longer terms are appropriate, but a franchise term should not be less than 5 years.
• Franchisees should be responsible for risks they can manage and should not be expected to take external macroeconomic, or exogenous, revenue risk.
• Capital requirements should be set at a level to create financial robustness, deter default and protect Government up to a reasonable limit for loss of premium or increase in support in the event of any default.
• Evaluation should assess the financial robustness and deliverability of bids. The Department should describe the criteria it will use for this assessment.
• Bids should also be explicitly scored on their proposals for improving service quality for passengers and their approach to management.
• In the same way that franchises allow train services to be managed by organisations close to the markets and communities served, so the specification and oversight of franchises should be managed by authorities that are closest to their communities and local economies.
• Improved flexibility and change mechanisms should be built into each Invitation to Tender (ITT) and Franchise Agreement, with a greater focus on outcomes in franchise specification to give bidders more flexibility to bid more resource efficient timetables and to facilitate Government-initiated changes(e.g. new electrification schemes).
• Franchise management capability is as important as the franchise letting process, and should be staffed by commercially experienced individuals able to develop a partnership relationship with franchisees, in order to deliver continuing value for taxpayers and improve service to passengers.
• The franchising programme should be restarted. In restructuring the programme, the Department will need to be mindful of what it and the market can resource, and seek to avoid ‘bunching’ franchises, which increases the vulnerability of the programme to peaks and troughs in the economic cycle.