Railnews 194

News

p1

Main lead v2

HEAD:  

DfT reveals
major rethink 
on franchises

SUMMARY:  Most franchises now on hold until after next election

PIC: 2013-02-08 (107).JPG

QUOTE with pic: “This programme is a major step, providing long-term certainty to the market.”—Transport secretary Patrick McLoughlin

THE DEPARTMENT FOR TRANSPORT has almost completely rewritten the franchising programme, in a drastic and far-reaching response to last year's collapse of the West Coast competition and the following Brown Review.

Seven long-term franchise renewals have been pushed back until after the next general election in 2015 by extensions of the present contracts, although the competition is starting now for East Coast, with Thameslink and Essex Thameside to follow.

Virgin West Coast now continues from November 2014 until April 2017, but the DfT has given priority to returning the state-run East Coast contract to the private sector before the next election, with a new franchise expected to start in February 2015.

Industry leaders said the new programme would restore confidence, but Labour described the delays as 'staggering', while the TUC said the East Coast decision 'defied all logic'.

The extensions are still subject to  negotiation, but the DfT is now preparing to convert some franchises to management contracts from the outset. (Changes in detail and analysis: Business, page 13)

The DfT also revealed that its own company Directly Operated Railways is standing by to take over if any of the negotiations fail.

Transport secretary Patrick McLoughlin said: “This programme is a major step in delivering tangible improvements to services, providing long-term certainty to the market. Above all, in future franchise competitions we are placing passengers in the driving seat by ensuring that their views are taken into account.”

The transport secretary is also creating a new Franchise Advisory Panel, which will be headed by Eurostar chairman and franchising review author Richard Brown, who added: " It is clear to me that this announcement represents an opportunity for Government to seek competitive and innovative proposals from the existing operating companies and potential new market entrants.

“The clarity around the franchise programme will also allow fresh energy to be brought to the urgent task of developing closer partnerships with Network Rail to drive out costs from the industry."

Network Rail chief executive David Higgins agreed, saying: "Our goal is to work with the rest of the industry to provide a safer and more efficient railway which addresses the underlying issues of capacity and performance. The clarity provided is welcome in helping us achieve that goal."

FirstGroup chief executive Tim O'Toole welcomed the move, saying: "The publication of the timetable is an important development for the industry, enabling the private sector to continue to provide effective and efficient passenger rail services with further improvements.”

ATOC chief executive Michael Roberts said: "The Government has rightly recognised the crucial role the private sector has played, and will continue to play, in delivering a booming railway.”

Go-Ahead Group chief executive David Brown added: "The programme announced today will help restore confidence. It is also positive news that the Government intends to restart the Thameslink franchise bid process in September this year to ensure the timely delivery of the Thameslink programme."

However, the plans received a much cooler reception elsewhere. Labour’s shadow transport secretary Maria Eagle said: “The full scale of the chaos caused by the Government’s rail franchising fiasco has now been revealed with almost every contract delayed by up to a staggering fifty months. Ministers have still not come clean about the full extent of the losses facing taxpayers as a result of this scandal, despite many industry experts putting the likely cost at well over £100 million.

“It is completely wrong to focus obsessively on an unnecessary privatisation of East Coast, instead of prioritising getting the stalled franchise programme back on track. Ministers must be very careful not to mislead the public as they make their case for this misguided sell-off. It is simply wrong to suggest that planned public investment in the East Coast Main Line by Network Rail and the taxpayer-funded order for new InterCity trains would not be happening without this privatisation. The truth is that the current operator has returned £640 million to taxpayers and reinvested a further £40 million, profit that in future will be shared with shareholders rather than benefiting passengers.”
Unions were also critical. 

TUC general secretary and chair of the Action for Rail campaign Frances O’Grady said: “This decision defies all logic. This is privatisation for privatisation’s sake, as ministers steadfastly ignore what is best for the rail industry and the people who work on it and use it,” while Bob Crow of the RMT said: “The proposed reprivatisation of the East Coast, after the public sector rescued the service following two private failures, proves conclusively that the political class have learnt absolutely nothing when it comes to our railways. This is a politically inspired wrecking move designed to flog off this publicly owned intercity route before the next election, regardless of the consequences.” 

ENDS

© Railnews Ltd 2013