Rail franchising model ‘no longer fit for purpose’ says Transport Committee

A new report published by the Transport Committee suggests there are serious shortcomings in the Department for Transport’s capability and capacity to manage rail franchising in the UK.

On the 05 February 2017, the Transport Select Committee published a new report calling for significant reform of rail franchising in the UK.

The Transport Committee report – one of five inter-related inquiries in the Future of Rail series – recommends the Department of Transport (DfT) should commission an independent review of its franchising functions, including the possibility of transferring enforcement powers to the ORR (Office of Rail and Road).

Committee recommends independent review of DfT rail franchising functions

Although the committee of MPs state they are encouraged by progress made since 2012, they believe core policy objectives of franchising are not being met. According to the Committee, 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.

In conclusion, the report believes that without changes to the current model, it will be difficult to see how franchising is sustainable in long term.

Commenting on the report, Chair of the Committee, Louise Ellman MP, said: “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.”

Rail Delivery Group chief executive Paul Plummer also commented on the franchising report: “Passengers and taxpayers have benefitted from the franchising system where rail companies bring new ideas and innovation to Britain’s railway. Under franchising the railway has gone from costing taxpayers £2billion a year in terms of day-to-day costs to now contributing £200million, money which helps to fund the major rail upgrades making journeys more comfortable and reliable.

“Under franchising rail companies have worked together to transform Britain’s railway into a success story, doubling the number of passengers and creating the safest railway in Europe.”

The Committee report also highlights that the DfT failed to take responsibility for some of the failings in handling the Thameslink, Southern and Great Northern franchise.