Flexible franchises
Debate on the length of rail franchises has been raging almost since the railways were first privatised. Now the coalition government has launched a major consultation with a view to finding out what the industry thinks about franchises. Peter Plisner has been looking through the consultation document
E
ven before the general election changed the colour of the government, it was clear that something needed to be done to address the issue of the length that a
rail franchise should be. There had been concerns that short contracts did nothing to encourage improvement in the railways, while longer franchises could give too much power to Tocs. Party manifestos were full of ideas about dealing with issues and there wasn’t much surprise when the new coalition government published a major consultation on reforming rail franchising. Transport minister Theresa Villiers made
it clear that the consultation would provide industry partners with the opportunity to comment on the government’s approach to rail franchising, and whether bidders for longer franchises would be able to offer investment in improvements to trains and services. The consultation, she said, would also allow the industry to set out its proposals for improving the efficiency and value-for-money of rail franchises, for both taxpayers and fare payers. But for those bidding for the Greater Anglia and Essex Thameside franchises
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it wasn’t such good news. The re-letting of those franchises, which had begun in January, was cancelled. It’s also expected that there will be changes to the procurement timescales for the previously published InterCity East Coast franchise. In the forward to the consultation
document, published at the end of July, Villiers restated the coalition pledge to put the railways at the heart of the new government’s transport policy. She said: ‘As well as our ambitious plans to build a new high speed network, we fully understand the importance of improving the existing railway.’ Ministers believe that the existing
system of rail franchising has become ‘too prescriptive’ at the point of bidding and ‘lacks flexibility’ once operational. Many feel that the government currently
exercises more control over the railways than in the days of British Rail. But with cuts in government spending on their way, reforming the franchising system may allow ministers to lever more funding out of the private sector. According to the document, lengthening contracts could also make it easier to establish ‘successful long-term working relationships’ between train
operators and Network Rail. Villiers also says: ‘We also need to move away from a system that sees Whitehall specifying highly detailed and prescriptive inputs in franchises. Instead, we want to see a stronger focus on the quality of outcomes for passengers, giving more flexibility to the professionals who run our railways to apply innovation and enterprise in working out the best way to deliver those outcomes.’ Ministers also admit that there needs
to be a more ‘qualitative approach’ to assessment of franchise bids, one which judges the quality of the overall package of proposals they contain to invest in the railways, improve services and grow passenger numbers, rather than focusing solely on the binary question around the level of subsidy or the level of premium payments to be paid. The consultation document makes it
clear that the new government plans to move away from the model used in recent years, which has placed a strong emphasis on efforts by central government to predict demand on the railways and centrally plan how that should be addressed. Ministers admit that they’re not convinced that it’s the best way to run a railway. The document states: ‘We want to see a move away from detailed micromanagement and specification of service inputs to an approach which focuses on outcomes for passengers and gives the private sector more freedom to determine the best way to deliver them.’ As part of the consultation, ministers
have identified a series of what’s termed ‘guiding principles and objectives’, which they believe should be central to any reform. They include a determination that any
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