Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


Further memorandum by the Rail Passengers Council (PRF 17A)

PASSENGER RAIL FRANCHISING

  The Rail Passengers Council welcomes the opportunity to offer supplementary evidence to the Sub-Committee following placement of Railtrack PLC into Railway Administration. The Rail Passengers Council offers the following comments on the issues the Sub-Committee wishes to consider.

THE IMPACT OF RAILTRACK PLC BEING PLACED IN RAILWAY ADMINISTRATION ON THE GOVERNMENT'S FRANCHISING POLICY

  Railtrack PLC's placement into Railway Administration brings with it an opportunity to restructure the rail industry. Railway investment relies on long-term stable relationships between the various parties involved. The RPC believes that long-term franchises still offer the best opportunity to ensure this stability. Staff recruitment, station improvements, information systems and ticketing initiatives, for example, should be done in the context of long-term commitments to the industry.

  It is possible that long-term franchise replacement will be delayed as the new structure is put in place. However, if the new structure works, this may ultimately bring passenger benefit. The Government's franchising policy allows short-term extensions of franchises where this is suitable and suggests that immediate improvements can be introduced, such as new rolling stock or station improvements. Railtrack PLC's placement into Railway Administration should not affect this policy. However, passengers' patience will wear thin if short-term delays impede modernisation or if short-term improvements fail to materialise.

THE FINANCIAL STRUCTURE OF RAILTRACK'S SUCCESSOR

  The idea of a company limited by guarantee with board and other members is a positive proposal and a useful starting point. The previous industry structure failed to oversee the outsourcing of key functions effectively. A re-mixed balance of contracted and in-house delivery should aim to strengthen the monitoring and control of standards. The development of more integrated zonal approach could help TOCs and freight companies become more involved in the handling of contracted functions.

  Investment in the infrastructre can be broken down into:

    (a)  Maintenance and renewal

    (b)  Small to medium scale enhancements

    (c)  Large scale enhancements.

  The new structure must ensure that mechanisms exist to ensure the delivery of all three types of project. Maintenance and renewal will be the core activity of any body into which Railtrack's core business is transferred. Special Purpose Vehicles, supported by public investment where necessary, may be a way forward for delivering large-scale projects. However, small to medium scale projects which can deliver great benefit for comparatively little cost must not lose out.

  Railtrack's successor must ensure that the maximum value for money is obtained from public support for, and investment in, the railways. Government, passengers and taxpayers must be assured that the money they put into the railways purchases clearly defined, broadly agreed outputs. It must be ensured that, for example, a broken window can be replaced immediately, with minimum bureaucracy and at a realistic cost.

  The RPC Network has always placed great emphasis on ensuring that rail property is preserved for future rail use. The SRA's Property Advisory Group ("PAG") is a step forward in this respect and has shown that some of the property which, at the time of privatisation, was not considered core to the functioning of the railway could in fact serve a transport function. Railtrack PLC's property is considered to be separate from Railtrack Group's property, which in turn is not considered to be core to the function of the railway. It is vital that this asset split is carefully scrutinised. Railtrack's successor must ensure rational and socially responsible use of its extensive property, possibly scrutinised via an expanded PAG.

THE RELATIONSHIP OF RAILTRACK'S SUCCESSOR TO THE TRAIN OPERATING COMPANIES, THE RAILWAY REGULATORY BODIES, AND THE SRA

  Any new industry structure must build on the notion of National Rail. Long-term stable relationships based on common goals must be a defining feature of any new system. There should be a contractual responsibility to co-operate with other parts of the rail industry, to co-ordinate operations (eg connections and engineering work), to share information fully and to consult effectively. This should include robust joint contingency plans and joint practice of them to reduce the effects of disruption to the passenger.

  If the Company Limited by Guarantee (CLG) model is followed through, with train operators, passenger groups and others as members of that company, then "membership" should be a real function. This should involve joint analysis, sharing and pooling of resources, increased sharing of information and plans and better co-ordination of activities. The notion of "membership" of the rail network should be nurtured.

  The industry has been severely handicapped by the depletion of its engineering skills base. The SRA should be obliged to prepare a strategic plan for the training, recruitment and retention of sufficient specialists to meet the foreseeable needs of the system. This should take account of the likely increased demand and competition for critical skills internationally as increased investment flows into the rail industry both at home, in accordance with the 10-Year Plan, and abroad as others begin to address the need for sustainable transport solutions.

  It is important that the new industry structure should reflect the continuing modernisation of government in the UK and the emerging priorities and needs of regional strategy. Ways must be found to accommodate the views of Britain's regions as reflected in the devolved arrangements for Scotland and Wales, the Regional Assemblies and Agencies in England (especially given their new responsibilities for Regional Transport Strategies, together with those of the Passenger Transport Authorities, Local Authorities and, of course, passengers and potential passengers whose interests are represented by the Rail Passengers Committees.

  Rail can help secure the Government's broader policies, including sustainable development and economic and social inclusiveness and the Secretary of State's targets for the SRA should be clearly underpinned by the policy objectives they are supposed to deliver. Creating a successor body to Railtrack highlights an opportunity and need for the SRA to fulfil its functions under the Transport Act 2000. It is the SRA's duty to promote the use of the network, secure its development and contribute to the development of integrated transport. The SRA must be encouraged to bring vision, direction and leadership to the rail industry and should develop a clear and open framework to appraise and inform the prioritisation of its investment and operational policies. Taking account of local needs through consultation with stakeholders at a regional level, the SRA's annual plan should encompass the infrastructure enhancement programme previously embodied in Railtrack's Network Management Statement. Railtrack's successor should therefore carry out elements of the SRA's Plan, for example as party to Special Purpose Vehicles.

  The need for the continued existence of two regulatory bodies exercising large-scale long-term control over the economic elements of the industry is questionable. The "money go round" that characterises this system is difficult to understand, drains money out at each level, blunts accountability and makes small-scale projects extremely difficult to get off the ground. It has not been possible to get the whole industry focussed on the same long-term objectives and incentives which has led to disastrous consequences for passengers.

  The atmosphere of low-trust regulation based on the avoidance of monopoly abuse must be changed and replaced with dialogue about the priorities for investment, development, resources and strategy. The industry has slid into paralysis following the exposure of its fundamentally flawed economic and commercial architecture since Hatfield. While there might be an on-going need for an industry "referee" to settle timetable or access disputes, there appears to be no need for a separate economic regulator.

THE ALLOCATION OF RISK BETWEEN THE NEW COMPANY AND THE GOVERNMENT

  The higher cost of maintaining the network revealed by Hatfield must be faced. Private-sector borrowing and continued passenger confidence in the system can be built only on long-term government commitments. The case for rail, in the context of the government's social, economic and environmental policies, must be made and won. As a result, a re-assessment of the 10-Year Plan Transport Plan should find increased funding for the railways.


 
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