Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Memorandum by the Greater Manchester Passenger Transport Authority and Executive (RI 22)

INTRODUCTION AND SUMMARY

  1.  Greater Manchester Passenger Transport Authority (GMPTA) and the Greater Manchester Passenger Transport Executive (GMPTE) welcome this opportunity to present joint evidence to the Sub-committee's Inquiry into "Rail Investment: Renewal, Maintenance and Development of the National Rail Network".

  2.  Evidence is presented separately by the Passenger Transport Executive Group on behalf of all Passenger Transport Executives. That evidence is endorsed as adequately representing our general position but it was considered important to provide additional evidence based specifically on the situation Greater Manchester.

  3.  Our evidence is based on our experiences as co-signatories to two existing franchises, First North Western and Northern Spirit and our responsibility to develop the local rail network in accordance with the policy of GMPTA.

RAILTRACK'S PERFORMANCE

  4.  GMPTE/A have experienced difficulty in working with Railtrack to jointly develop the local rail network. This particularly relates to uncertainty over what Railtrack will fund and in particular, the interpretation of the phrase "modern equivalent" replacement. This lack of clarity has made it very difficult to commit public money to schemes in a way which would enhance investment in the local railway system.

  5.  Our objective was to develop joint schemes with Railtrack and the Train Operating Companies, primarily to improve passenger facilities at stations. There was general concern about investing public money in a privately owned asset but it was considered that if a transparent funding agreement could be achieved that this would enable funds to be released without concern.

  6.  Unfortunately, the lack of any clear definition of what constitutes the modern equivalent form in terms of replacing an existing asset has meant that each scheme has presented a new negotiating opportunity. This has made it very difficult to develop a rolling programme of jointly funded improvements and perhaps has prevented the significant benefits which could have been achieved by pooling resources.

  7.  To some extent, this situation has been exacerbated by the erratic implementation of the Station Regeneration Programme (SRP) in this area. This seems to have arisen from difficulties with contractors and concern about budget provision. Railtrack are now focused on completing the programme by the end of this financial year to meet the Rail Regulator's directive. GMPTE/A's strategy was to use the Railtrack SRP work as a base on which it would be possible at the same time to implement the franchise agreement commitments of the TOCs and, if necessary, enhance these works with PTA funds to significantly improve facilities at all stations. Unfortunately, this has not been possible and there are concerns that undertaking work in a fragmented fashion will increase the overall cost of comprehensively improving stations.

  8.  Without a clear understanding of Railtrack's responsibilities and commitments it will always be difficult to successfully implement partnership funding of railway schemes.

  9.  GMPTE/A have concerns about the impact of Railtrack schemes in the future for local rail services. This in particular relates to the Manchester South element of the West Coast Main Line upgrade works. Together with First North Western, the predominant local train operator, we have expressed our concern that the eventual scheme will not provide enough capacity to accommodate local services specified in the existing Passenger Service Requirement (PSR) or give scope for a reasonable expansion of services other than those on the West Coast Main Line.

  10.  It is for this reason that GMPTE is joining with the Shadow Strategic Rail Authority (SSRA) and Railtrack to undertake a study into the capacity needs of the Greater Manchester Rail Network which is intended to inform Railtrack's 2001 Network Management Statement. The lesson for the future would seem to be that major schemes must be developed on an inclusive basis by Railtrack and not focus on the needs of the major funder to the detriment of other parties. To some extent, the needs and funding strategy of longer-term franchises such as Virgin Trains have dictated Railtrack's priorities and hopefully the franchise replacement process currently being implemented by the SSRA will address this by extending franchise terms up to 20 years.

ADEQUACY OF RAIL REGULATOR'S OVERSIGHT

  11.  The Rail Regulator appears to be implementing adequate measures to effectively oversee and incentivise Railtrack in regard to investment and performance. We would suggest that the format of Railtrack's Network Management Statement should become more relevant to reporting progress against the Rail Regulator's targets.

THE ROLE OF THE SSRA

  12.  It is our view that a mechanism must be established to encourage outside funding partners to invest in the improvement of the railway network. It is accepted that Railtrack has a clear mechanism for investing in the "commercial" schemes but without a better arrangement for encouraging outside investment it is difficult to envisage how investment in the "social" railway will be facilitated in sufficient volumes to meet the need to upgrade what is essentially a Victorian railway.

  13.  GMPTA/E have been developing a number of schemes with Railtrack to improve passenger facilities at stations and in some cases build entirely new stations. In each case development of the scheme has been lengthy, confusing and with original estimates being grossly exceeded and unnecessary delays and complications introduced. Our view is that PTE/As and local authorities should be positively encouraged to work as funding partners with the railway industry to achieve the aspirations contained in Local Transport Plans. It should be remembered that funds available to these bodies are not ring fenced for rail schemes and there is a risk that if it continues to be difficult or represent poor value for money to invest in rail infrastructure improvement, this money can be used on other means of improving public transport provision.

  14.  Simplification of the investment process and developing a means of ensuring that Railtrack presents an attractive and cost effective route to invest in improving public transport, should be high priorities for the SSRA to ensure that local funds can be directed into improving the local rail network.

  15.  Experience as co-signatories to two existing franchises has shown the pitfalls of expecting train operators to invest in a rail network which is essentially performing a social need and where there is little additional revenue to reward investment. The tendency has been for the TOC to pay lip service to their franchise plan commitments and use the admittedly loose wording of the franchise agreement to do the bare minimum to meet their obligations.

  16.  It is suggested that franchise agreements be more specific in terms of outputs or that franchisees be committed to contribute a specific sum of money to a scheme which is being developed by the SSRA or PTA/Es. To some extent, the current difficulties have arisen from the poor returns on capital investment which can be had in a short-term franchise and the failure to recognise that where subsidy is the predominant source of funding the TOC will have little incentive to improve or maintain passenger facility quality. With hindsight, it was inappropriate to give the TOC the responsibility to invest in such systems as passenger information provision which would last a lot longer than the franchise and perhaps would have been a more appropriate responsibility of Railtrack.

CONCLUSION

  17.  We trust that the evidence provided is helpful and that it will aid your Inquiry and lead to an improvement in reviewing, maintaining and developing the rail network.

June 2000


 
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