Memorandum by the Association of Train
Operating Companies (PRF 32)
PASSENGER RAIL FRANCHISING
The Association of Train Operating Companies
(ATOC) represents the 25 franchised train operating companies.
ATOC is pleased to submit this written evidence to the Transport
Sub Committee Inquiry into the draft policy statement on passenger
rail franchising issued by the Secretary of State for Transport
issued on 16 July 2001, and on the draft directions and guidance
to the SRA issued by the Secretary of State on 29 June 2001.
What Stephen Byers wants from the SRA on franchising
was made very clear in his statement made on 13 July 2001:
"The SRA should concentrate on improving
services for passengers within existing franchises, or by negotiating
short two year extensions".
He has also said that the SRA is required, as
its prime objective, to work within its statutory objective to
50 per cent growth in passenger kilometres
while at the same time securing improvements in punctuality and
standards on overcrowding;
a significant increase in freight's
share of the freight market by 2010.
These primary objectives and other objectives
set out in the draft guidance, are to be achieved within the budget
which is available. This budget is under greater pressure since
the publication of the 10 year plan.
This is a different agenda to that which was
presented to train operators 18 months ago. How different it is
will emerge more fully following the decision by Ministers on
the new franchise replacement and extension programme which is
expected shortly, and the SRA's strategic plan which is due to
be published in November.
The comments that ATOC has on the Governments
policy statements can only therefore be preliminary views
ATOC shares the view of Ministers that fresh
directions are needed given the changes to circumstances and the
slow progress that has been made on securing new franchises and
new investment. Below are a set of suggested supplementary directions
to the SRA which may be implicit in what the Secretary of State
has said, but which we suggest are worth expressing explicitly:
Train operators should be involved
more closely by the SRA in the development of strategies. Train
operators believe that they can make important contributions to
the development of strategies. This experience should be drawn
upon more fully than has been the case to date. In part this can
be done through the bidding process but there are earlier stages
in the development of plans where the involvement of train operators
would be helpful. A good example is the review of the allocation
of track capacity which is about to start.
There must be tighter project planning
of franchise extensions and replacements. When the refranchising
programme was initiated in June 2000, it was said that:
"Replacement of the shorter term franchises,
expiring in 2004, should be completed in 2001".
This did not happen. There are of course reasons
why this did not happen, many of them good reasons. But if we
are to achieve the targets and objectives by Ministers in a reasonable
timetable for the benefit of customers, the extension/replacement
programme must be more carefully planned.
The resources which are available
to meet the targets and objectives must be reviewed in the light
of events since the publication of the 10 year plan. Train operators
recognise that railways are competing for resources with other
Government priorities. We also recognise that the bold vision
in the 10 year plan for transport in general and rail in particular
was unprecedented. Significant additional calls on the finance
in the 10 year plan have however arisenextra money for
Railtrack, DDA, and significant additional safety requirementsand
there are also further interim reviews of Railtrack's finances
in the pipeline. The SRA's Strategic Plan must test the consistency
of targets and resources, and consider the inevitable trade-offs.
Train operators can help in this.
The SRA must work more closely with
the DTLR. It has been evident that the requirements of Ministers
have not always been met, and this has led to delays in decision
making. The most obvious case of this is the ECML bidding. There
are already signs that a closer relationship is being established,
and the publication of the two draft policy papers helps in this.
This must however be kept under continual review and where necessary
further instructions and guidance should be given.
There must be greater constancy of
purpose to attract the right amount of investment from the private
sector. The shift of policy over the past 18 months has been noted
above. If the private sector is to invest in rail in the broadest
sense (ie ranging from investing in the preparation of bids to
acquiring assets) there must be a core consistency of purpose.
Without this consistency, private investment will not be forthcoming.
ATOC looks to the translation of the Ministers Policy Statements
into the SRA's Strategic Plan and franchise replacement plans
to re-establish that consistency of purpose.
On a drafting point which is of considerable
importance, the passenger overcrowding standards set out in the
Instructions and Guidance is not the correct one. We believe that
in the attempt to simply the drafting of the standard which appears
in each train company's franchise agreement, important features
of the existing standard have been lost. We suggest instead that
the overcrowding standard references what is in the franchise
Finally, ATOC recognises that choices will need
to be made in the context of the SRA's strategic plan and government
expenditure plans. We urge that they are made quickly. This will
then provide the stable platform for planning and attracting private