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


Memorandum by Railfuture (Railway Development Society) (PRF 51)

FRANCHISING AND THE ROLE OF THE SRA

  1.  The SRA must act strategically. It must give leadership in formulating the long-term future structure of the industry. It should undertake or commission the necessary research and planning, and help to progress proposals from the industry, local and regional authorities and private developers, to enable the railways to meet the objectives of the government's 10-year transport plan.

  2.  The SRA must address the need for more capacity, promote integration not only within the railways but also with other transport modes, and address issues of energy efficiency, sustainable development etc. It should promote best practice in planning and operations, and identify centres of excellence to guide all TOCs, local and regional planning authorities, scheme promoters and developers.

  3.  The government should set policy and leave the SRA as much flexibility as possible to implement it.

  4.  Franchising policy must at all times have regard to the need to provide for and encourage long-term investment planning by franchisees. Too long franchises risk fossilising the system and protecting failed operators, but too short franchises render innovation difficult and serious investment impossible.

  5.  The number and extent of franchises needs to be reviewed, and reduced to perhaps as few as a third of the present number (see point seven under Railtrack). Other fundamental problems of the franchising system, such as "lame ducks" and the transfer period, may also need addressing. Franchisees need to address all aspects of their operation (urban, interurban, rural, long and short distance), not concentrate exclusively on the more commercial or mass-market elements.

  6.  The SRA should be encouraged to include measures in franchise specifications which will encourage the integration of the rail network and the presentation of a single face to the user. This applies especially in the field of fares and ticketing. Innovation in discounted fares (Apex etc) is welcome, but walk-on fares must conform to a simple, common, easily understood, systemwide structure.

  7.  Performance regimes must strike a realistic balance between safety and performance. Monitoring should be people-focussed, not train-focussed, taking account of intermediate arrival times and lost connections. This implies more thorough survey work.

THE FUTURE OF RAILTRACK

  1.  The interests of (current) shareholders must not be permitted to take precedence over the public interest of the users of the railways, and the community as ultimate stakeholder. Landholdings with operational value (existing or potential) must not be disposed of to recompense shareholders.

  2.  A distinction ought to be made between different groups of shareholders. Railtrack staff who took up share options surely deserve proper compensation. At the other extreme are the large corporate shareholders who could reasonably have been expected to foresee the collapse had they taken more interest in the company beyond its role simply as an investment vehicle. In between are other individual investors and groups such as ourselves, most of whom took a stake because they believed in the railways—and indeed regularly attended AGMs. These probably have smaller stakes than the staff, but still deserve a fair settlement. In law however, this distinction may be difficult to recognise.

  3.  The government cannot avoid being underwriter and ultimate guarantor of the railways. "Allocation of risk" is therefore largely an academic question.

  4.  A comprehensive review of the structure of the industry cannot happen unless the issue of Railtrack and the issue of franchising policy are tackled simultaneously. That opportunity now exists and must be grasped. Such a review must also cover regulatory bodies (SRA, ORR) and safety bodies, as well as the level of access charges.

  5.  A key recommendation of the Cullen Inquiry report is that a new public, executive body be set up to take over (inter alia) the functions of Rail Safety Ltd. Such a body could be in a position to take on other operational responsibilities from Railtrack, as suggested by Rayner Marshall and Bell in a recent paper on rail safety.

  6.  The government should consider vesting the ownership of the network (and operational land) in the state in the form of the SRA, in the manner that the road network is owned. This might be a trade-off for underwriting a more generous settlement for shareholders.

  7.  There appear to be two options for reintegrating the infrastructure maintenance function of Railtrack with the train operations. One is a not-for-profit trust on which the train operators (and other stakeholders) are represented. This is perhaps the "least change" options, but might produce a rather unwieldy board given the large number of operators etc. The alternative is that franchisees take over (gradually) the responsibility for maintaining infrastructure on designated parts of the network. This offers better "vertical integration" but presupposes a considerable reduction in the number of operating units to something like the old regions, and control functions such as pathing, timetable planning, signalling etc becoming the responsibility of the new body mentioned in five above. Special arrangements may be appropriate to certain local networks such as Merseyrail, and safeguards needed for Cross-country and freight.

  8.  Stakeholder representation on any non-for-profit trust should include non-statutory users' bodies, such as RDS Railfuture.


 
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