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The first passenger train franchises, South West Trains, Great Western and LTS Rail were awarded on 19 and 20 December 1995 and the first two privatised services started operating on Sunday 4 February 1996. Others are expected to follow soon.
The regulatory background to the franchising of the passenger train operating companies is set out in Part I of the paper. The Railways Act 1993 provides the legal framework and separated responsibility for the track and the train services. The Franchising Director is responsible for securing the provision of railway passenger services by entering into franchise agreements. Each of the 25 train operating companies is gradually being offered for sale as a separate franchise. The Rail Regulator also has a significant role to play in deciding the legal and economic background in which a franchisee will operate. He licenses the operators, decides the track access charges and determines the competitive background.
A franchise is the right to run specified services within a specified area for a specified period of time, in return for the right to charge fares and, where appropriate, to receive support from the Franchising Director. The rights and obligations are specified in a franchise agreement between the Franchising Director and the train operator. Each franchise will be negotiated individually with the Franchising Director. Franchisees will earn revenue primarily from fares and from subsidy.
Part II of the paper sets out chronologically what has happened to the franchising process from the announcement in December 1994 of the pre-qualification bids for the first eight companies to the award of the first three franchises in December 1995.
(See related documents for full text.)
Railnews Archive ::: 1996-02-06 HoC-001
related documents
Rail passenger franchises (House of Commons Library)
Rail passenger franchises (House of Commons Library)