Further memorandum by Greater Manchester
Passenger Transport Authority and Executive (PRF 27A)
Greater Manchester Passenger Transport Authority
(GMPTA) is responsible for specifying and developing the local
rail network in the Greater Manchester area through the Greater
Manchester Passenger Transport Executive (GMPTE).
This joint GMPTA and GMPTE submission follows
the 14 September letter in response to the Transport Sub-Committee's
original call for evidence on Passenger Rail Franchising.
The four issues raised in your request for comments
on additional terms of reference are dealt with in the following
paragraphs. The further opportunity to participate in your Inquiry
into Passenger Rail Franchising is appreciated.
2. THE IMPACT
PLC BEING PLACED
We feel that it is unlikely that the recent
events will make any significant difference to the basis upon
which the Strategic Rail Authority (SRA) has been pursuing the
franchising policy on behalf of the Government. However, there
is a concern that it may increase the requirement for subsidy
to underpin new franchises.
This opinion is based on the SRA assumption,
promulgated in recent discussions regarding the Trans-Pennine
Express (TPE) franchise, that over the next five years Railtrack
(or its successor) cannot be looked to as a source of funding
for infrastructure improvements. Furthermore, the SRA had advised
that, as Railtrack's workload had absorbed all its current financial
and physical resources, it would be unlikely that bidders for
TPE could even have schemes costed before making bids. This approach
by the SRA was apparent prior to Railtrack being placed into Railway
Administration; matters are not understood to have changed significantly
as a result of the announcement.
However, the announcement, and its associated
lack of clarity on the nature and structure of Railtrack's successor,
has injected considerable uncertainty into the future of railway
infrastructure projects. This could have two significant implications.
Firstly, the uncertainty is likely to encourage
bidders to develop submissions which demand higher levels of subsidy,
so as to cover any additional risk which they may perceive to
arise from unknown factors relating to the future division of
responsibility for investment. Secondly, it is unlikely that bidders
will make any firm commitment to improvements until they fully
understand how the new railway industry structure will operate,
especially in the context of the value for the franchise for which
they are bidding.
It is anticipated that these circumstances could
result in the suspension of the franchising process until the
current uncertainties in the railway industry have been resolved,
as potential bidders may feel unable to develop credible bids
until assurances on the fundamental rail industry structure and
charging regime are in place.
3. THE FINANCIAL
From the perspective of GMPTA/E, the fundamental
requirement is for clarification of the successor company's role
and responsibilities. Once this central issue has been clarified,
greater consideration can be given to additional concerns. If
the future company is to be solely an organisation to maintain
and operate the network, then the track access charge regime could
be retained with some modification. We believe that, if this modification
is undertaken competently, there should be no element of risk,
which cannot be adequately allowed for within the track access
However, if Railtrack is to be involved in major
infrastructure schemes it is recommended that there should be
a separate financial agreement tailored to each individual scheme,
involving all parties who have a funding interest.
4. THE RELATIONSHIP
It will be imperative for Railtarck's successor
to be properly accountable to the stakeholders in the railway
industry. Furthermore, we are keen to stress the importance of
the inclusion of Passenger Transport Executives (PTEs).
PTEs, as co-signatories to certain franchise
agreements, have a contractual relationship with train operating
companies (TOCs). There is an absence of any such formal contract
between PTEs and Railtrack, resulting in the PTEs being forced
to bring pressure to bear on Railtrack indirectly through the
This arrangement has not always achieved the
results required by the PTEs as TOCs have sometimes been reluctant
to act on behalf of the PTEs when it has not served their wider
interests. In addition, it has been apparent that the TOC/Railtrack
contracts have been drafted in a way, which tends to favour Railtrack.
This has not facilitated achievement of PTE objectives via TOCs.
It is therefore essential, if the PTEs are to
successfully implement the objectives of Local Transport Plans
that this current inefficient arrangement is replaced by a direct
formal relationship with Railtrack.
This should include a series of binding commitments
and recognise the essential role of PTEs in developing the local
rail network and acting on behalf of the travelling public. PTEs
should be able to apply direct pressure on Railtrack's successor
to enforce maintenance regimes and secure passenger facility improvements.
5. THE ALLOCATION
As stated above, risk depends on the extent
of operations which Railtrack's successor will be expected to
undertake and the overlying responsibilities it will bear.
Clearly, the operation of a safe railway is
the most basic requirement which could be made of the new company.
Within this could be the requirement to ensure a regime of adequate
maintenance and competent operation. Subject to the company being
suitably well-managed, there should be minimal risk attached to
this; contingencies for factors such as adverse weather conditions
should be able to be estimated and incorporated into the track
access charges. This would avoid excessive additional costs in
the order of those following Hatfield, which resulted from poor
It is recommended that the Government should
only take risk in regard to major infrastructure improvement projects.
Indeed, in the present environment, it is difficult to see how
future major schemes will be undertaken at an affordable cost
or at all, without the Government providing such guarantees for