Engineering
The Select Committee Rail 2020 report stresses that, while this is broadly in line with traffic growth, since railways generally expect economies of density, a less than proportionate growth in costs would be expected even in the absence of pressure from tendering leading to greater efficiency.
Brown does certainly recognise that cost efficiency is an important aim of franchising post McNulty, and endorses the encouragement of alliances, the charging to franchisees of a greater share of infrastructure costs and the removal of protection for franchisees against changes in infrastructure costs as ways of achieving this.
an intermediate break point involve too much risk to be sensible. There are two issues that get too little coverage. The first is
how, in an era of less tight specification and possibly smaller franchises, to ensure that timetables are achieved which collectively provide an attractive network of services and efficient use of capacity where services of different franchises connect or overlap. Dealing with the inefficiencies of the then timetable was one reason why franchises became more highly specified in the first place, although one may question how effectively the DfT has dealt with the problem. This would appear to be an area in which Network Rail – supervised by ORR - needs to play a more positive part in future. Secondly, far from achieving a reduction in costs, according
to McNulty, in the period since franchising started, train operating costs have increased by £1.7 billion in 2009/10 prices.
The major increase in train operating costs occurred in the years immediately following Hatfield, when many franchises were placed on management contracts and tightening specifications arguably also drove up costs. But whether seven to 10 year franchises will enable train operators to play a major role in procurement of rolling stock, without underwriting from DfT, is doubtful, as is whether they give adequate incentive to tackle staff costs, in particular where these may involve confrontation with trade unions. For the franchising authority to take revenue risk so that bidders were essentially competing on cost may also focus train operators’ attention more on cost reduction, although it is accepted that for inter city services this would require establishment of a new body to plan and market them (it is hard to see the DfT playing this role) and the effectiveness of such a solution is open to doubt.
In short, then, with few exceptions the report provides a comprehensive and balanced review of the issues, but on many of them, including in particular franchise length, the evidence to reach a final conclusion is still missing.
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www.hwilliams.co.uk FEBRUARY 2013 PAGE 49
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