Memorandum by Merseytravel (PRF 36)
PASSENGER RAIL FRANCHISING
Merseytravel is the operating name for Merseyside
Passenger Transport Authority and Passenger Transport Executive
which act together in planning and co-ordinating public transport
on Merseyside. The Authority is made up of elected members appointed
by the five Metropolitan Districts of Merseyside: Liverpool, Knowsley,
Sefton, St. Helens and Wirral. Merseytravel is responsible inter
alia for franchised bus and rail services, concessionary travel,
transport information, disability access and a range of other
functions, including the direct operation of the Mersey Ferries
and the Mersey Tunnels.
1.1 Merseytravel is a co-signatory with
the SRA in the Franchise Agreements covering the Arriva Trains
Merseyside franchise and that part of the First North Western
franchise which operates in Merseyside. Merseytravel has retained
revenue risk and the franchises operate locally on a managed cost
1.2 The Arriva Trains Merseyside network
(formerly Merseyrail Electrics) operates as a self-contained third-rail
electrified network centred on the Liverpool Underground "Loop
and Link" which was constructed in the 1970s. Arriva Trains
Merseyside operate the Northern and Wirral Lines of the Merseyrail
network. The network contains 66 stations and operates 3.7 million
train miles per annum, carrying 28.9 million passengers a year.
Despite poor operational performance, passengers were growing
at a rate of 6 per cent per annum before the Hatfield accident.
This trend reversed as a consequence of the accident and other
issues and only recently is showing some signs of re-establishing
1.3 The First North Western franchise operates
the Merseyrail City Line which provides the local services in
and out of Liverpool Lime Street to 26 stations on the Merseytravel
supported network and to cross-boundary destinations such as Wigan,
Preston, Manchester Victoria, Warrington Bank Quay, Warrington
Central and Manchester Airport. First North Western Merseytravel-supported
services carry 4.8 million passengers per annum. The City Line
has been subject to rapid growth in patronage but this has also
been affected by the post Hatfield downturn.
1.4 Monitoring indicates that pre Hatfield
growth peaking at 13 per cent per annum had been reached. This
was due in part to consistently good service performance by First
North Western in delivering Merseyside services and Merseytravel's
development policies covering frequent clockface service frequencies,
new services and investment in the line.
1.5 Two new stations at Wavertree Technology
Park and Lea Green opened recently funded by Merseytravel and
EU Objective One resources. The Merseyrail Northern, Wirral and
City Lines, despite the existence of two different operators are
marketed and branded as the Merseyrail network serving Merseyside
with local identity, fares and ticketing structures reflecting
1.6 Merseytravel is a funder of the network
through the two Franchise Agreements with Arriva Trains Merseyside
and First North Western but also has invested heavily in the modernisation,
enhancement and extension of the network. Before franchising Merseytravel
sponsored several third-rail electrification extensions (most
recently to Chester and Ellesmere Port) new stations, station
revitalisations, interchange and several park and ride developments.
Merseytravel has continued to invest through improvements specified
under the new franchises (CCTV, telephones and help points) and
also through directly funded station schemes. Recent schemes have
included new stations at Brunswick, Conway Park, Wavertree Technology
Park and Lea Green, station revitalisation and access improvements
at Kirkdale, Old Roan and Aintree interchange and park and ride
developments at Aintree, Maghull, St Helens Junction and Wallasey
1.7 Merseytravel has taken the view that,
despite the difficulties presented by the new railway structure,
the need to regenerate Merseyside and passenger needs should be
protected and enhanced. Merseytravel has therefore worked closely
with the rail industry and other partners to overcome these difficulties.
1.8 Merseytravel has promoted partnership
both within the railway industry and with outside parties such
as the five District Councils on Merseyside, adjacent Shire and
Unitary Authorities, regeneration agencies such as the Merseyside
Development Corporation, City Challenge and Regional Challenge
Initiatives, Single Regeneration Budget programmes and European
Regional Development Fund programmes.
1.9 Merseytravel also works closely with
partners in the region; examples are a study into the transport
linkages across the Mersey Belt (focusing in particular on linkages
between Liverpool and Manchester), the Transpennine Rail Group
which comprises PTEs, Shire Counties, Unitary Authorities, Railtrack,
three Train Operating Companies and the Peak District National
Park Authority. Merseytravel also works to develop close links
with unsupported train operators that run services in and out
of Merseyside: Virgin West Coast and Cross Country, Northern Spirit,
Central Trains and Wales and West. Merseytravel is party to various
groups such as West Coast 250 and Transpennine Rail Group.
1.10 There has been sustained fall in service
performance on Arriva Trains Merseyside over the two years. While
reliability has now recovered somewhat, punctuality is poor and
shows little sign of recovery. It is worth noting that a largely
self-contained single train operator should be able to operate
the levels of performance specified in the local Merseyrail Passengers
Charter: 99 per cent of scheduled trains run and 95 per cent of
trains running within five minutes of right time. The 1999-2000
results were 98.35 per cent and 90.62 per cent respectively and
in 2000-01 98.58 per cent and 87.26 per cent respectively.
1.11 Merseytravel has recently been designated
a Centre of Excellence for Integrated Public Transport and a Centre
of Excellence for Transport Planning. The Merseyside Local Transport
Plan (LTP) has the following four key objectives:
1. To ensure that transport supports sustainable
economic development and regeneration.
2. To moderate the upward trend in car use
and secure a shift to more sustainable forms of transport such
as walking, cycling and public transport.
3. To secure the most efficient and effective
use of the existing transport network.
4. To enhance the quality of life of those
who live, work in, and visit Merseyside.
1.12 The LTP contains proposals for:
(a) a multi-modal transport interchange at
Allerton serving Liverpool Airport (this project features in the
10-Year Plan for Transport);
(b) upgrade of five underground stations;
(c) remodelling of Liverpool Central Station;
(e) relocation of Moorfields underground
(f) upgrade of 25 stations;
(g) systemwide enhancements;
(h) expansion of park and ride as part of
a wider strategy;
(i) additional bus/rail interchange as part
of the Merseyside-wide interchange development strategy;
(k) new station at Carr Mill; and
(l) improved information.
1.13 An important mechanism for delivery
of the wider service and quality objectives in the Local Transport
Plan is the process of Franchise Replacement.
1.14 Both these franchises have been the
subject of franchise extension agreements that require commencement
of new franchises in February 2003 (Arriva Trains Merseyside)
and April 2004 (First North Western). Discussions have taken place
with the SRA and the DTLR (and previously the DETR) regarding
the transfer of powers to Merseytravel to progress the Merseyrail
Electrics franchise as a local franchise with Merseytravel as
the Franchising Authority. (See Section 3). The SRA propose that
First North Western will form part of the new Northern Franchise
created out of the First North Western and Northern Spirit operations
after implementation of Transpennine Express and other services
transferred to the Wales and the Borders franchise.
1.15 Any delay in the process of franchise
replacement or a change in the principles guiding the process
could therefore affect the delivery of the Merseyside LTP and
the Government 10-Year Plan.
2. GENERAL COMMENTS
2.1 Merseytravel believe that the investment
needed in rolling stock, infrastructure and service development
can only come through the mechanism of long-term stable franchises.
It is indeed folly in the extreme to place long-term objectives
in jeopardy because of short-term thinking.
2.2 Merseytravel has carefully considered
the Draft Directions and Guidance and the separate Draft Policy
on Franchising. The objectives and the content of the 10-Year
Plan and the principles behind the two statements are welcomed.
However, it is a concern that a short-term approach to franchising
will be to the detriment of investment and development of the
railway and that this will focus scarce financial resources on
the Inter-City and South East franchises this would be to the
detriment of the old Regional Railways services. The important
metropolitan PTE supported networks may well lose out on a value
for money basis, reflecting the lower revenue generation of these
services with short passenger journey length and lower levels
of fares, but ignoring their strategic commuter role and social,
environmental and economic benefits associated with the services.
2.3 The Statements contain various references
to PTE and PTA interests; the importance of which is underlined
in view of the recent difficult relationship with the SRA and
the funding difficulties now being experienced by the rail industry.
Despite the references by the previous Chairman of the SRA to
the nature of the relationship between PTEs and OPRAF in the first
round of franchising, the relationship at that time was open,
productive and focused and without the tensions suggested. PTA
members would not agree with this view regarding themselves, for
instance, the Merseyside franchise was bound to "end in tears"
and the Office of the Franchising Director was informed of that
view at that period in time, ie December 1996. The PTEs look forward
to the resumption of a similar relationship in the future. The
reference to formal consultation with the PTEs in the recently
issued press release for the Transpennine Express is a pointer
to the future in this respect. The foundation of this relationship
should be reflected in the Directions and Guidance and take into
account the statutory responsibilities of the PTE's. It is of
(a) despite the reference to LTPs and Regional
Transport Strategies, the LTPs may still be ignored by the SRA.
Although consistency must be achieved with Regional Planning and
Transport Strategies, these do not contain the local detail of
(b) there is no duty to consult and take
into account the views of the PTE/PTA in relation to any rail
matters affecting its area;
(c) there is no definition or advice on delegation
of powers to the PTE or to the extension of PTEs activity through
(d) the reference to national standards being
applied to PTE-funded services is a concern in view of the impact
of equalisation on PTE services which have higher standards (eg
allow less standing passengers) which have been important in the
past success of PTE strategies; and
(e) while PTE Public Service Requirements
appear to be protected, there are other references to best use
of capacity that may allow the SRA to overrule local interests
and undermine the PTE achievements of the past.
2.4 The reference to the need to take into
account the needs of the mobility-impaired and the Disability
Discrimination Act in all investment and franchise replacement
decisions is welcomed.
2.5 Despite the issue of various consultation
documents on the Code of Practice for the Mobility-Impaired by
the ORR and SRA, no clear guidance is given on the responsibility
for investment and a funding strategy to meet the considerable
expense involved in delivering the needs of the Mobility-Impaired
this is required as a matter of urgency in view of 2004 deadlines.
3. ARRIVA TRAINS
3.1 Merseytravel has been working for almost
two years on a proposal to fundamentally change the basis of operating
the rail franchise within the County of Merseyside in a way which
it believes will, to use the Sub-Committee's words:
ensure that rapid improvements in
the safety, punctuality, reliability, comfort and frequency of
services are achieved;
secure investment in additional network
capacity and other improvements to meet both the long and short-term
needs of the railways;
provide the framework for major infrastructure
enhancement projects to be taken forward;
transform the day-to-day management
of franchises and the way in which new and extended contracts
for passenger services are assessed and awarded; and
improve the poor state of industrial
relations in the railways.
Merseytravel believes that these objectives
can be secured by the transfer from the SRA of the franchising
powers in respect of Arriva Trains Merseyside.
3.2 The Arriva Trains Merseyside franchise
is unique among the 25 Train Operating Companies formed from the
break up and privatisation of British Rail. This is because it:
operates almost exclusively within
the boundaries of the County of Merseyside;
shares relatively little rail infrastructure
with other operators due to its third rail system power; and
provides a frequent level of serviceindeed
it is the most intensive rail system outside of London.
Similar networks elsewhere in the UKthe
London Underground, the Tyne & Wear Metro, the Manchester
Metrolink, and the Glasgow Undergroundare effectively under
local control rather than being subject to decisions of the SRA.
Frustration shown by rail commuters and Merseytravel is evident
because of the inability of the SRA to be seen to champion the
cause of the local rail travelling public.
The Need for Change
3.3 Because Arriva Trains Merseyside forms
part of an integrated local public transport network co-ordinated
by Merseytravelincluding buses, ferries, cycling and walking
as well as trainsmany users of the service look to Merseytravel
to put things right with the rail service. However, Merseytravel
currently has few genuine powers over the train operator to make
this happen; thus the feeling of abandonment by rail passengers.
3.4 Moreover, many of Arriva Trains Merseyside's
problems are the legacy of decades of under investment by British
Rail under previous Governments. The ambitious Merseyside LTP,
endorsed by the present Government in December 2000, envisages
bringing a cocktail of public and private sector funding into
the region's public transport network, with rail forming a central
component of this strategy. A more locally based system for controlling
the vital rail network would clearly be an advantage in delivering
the objectives of the LTP (ie local solutions for local problems).
3.5 Merseytravel also believes that a more
locally-based long-term franchising regime (with improved accountability
of the train operator, investment in the refurbishment of stations
and of the train fleet and a generally more stable and secure
employment framework for railway staff) could contribute to an
improvement in the industrial relations environment within Arriva
Trains Merseyside. It is imperative railway staff believe they
are at the heart of the system and their efforts are acknowledged
in what, in many instances, can be the most trying of circumstances.
The Discussions So Far
3.6 The strategy behind detaching the franchise
from the SRA was acknowledged by the SRA in both its Strategic
Map of 2000 and its Strategic Agenda of 2001. These public statements
reflected private discussions which had been taking place between
the SRA and Merseytravel for more than 18 months regarding the
possibility of Merseytravel assuming all of the SRA's powers with
respect to Arriva Trains Merseyside.
3.7 Agreement was reached in principle between
the SRA, Merseytravel, the Office of the Rail Regulator (ORR)
and officials at the Department for Transport, Local Government
and the Regions (DTLR) early in 2001 that the transfer should
take place, subject, of course, to Ministerial approval and ratification
by Parliament through a statutory process. Merseytravel would
thus become responsible for running the competition to select
the next private sector franchisee for Merseyrail Electrics, and
would enjoy the full range of powers over performance, investment
and consumer protection currently wielded by the SRA.
3.8 Under the proposed new arrangements,
ownership of the infrastructurestations, track and signallingwould
remain with Railtrack, but Merseytravel would in the future be
able to build more easily on the substantial work it has already
undertaken in generating investment in these assets, as exemplified
by the recent total modernisation of Old Roan, Kirkdale and Aintree
rail stations. Access to European Union Objective 1 funding through
Merseytravel could be important in this context.
3.9 With all parties agreed on the desirability
of the transfer of powers, the only remaining problem is a legal
technicality. Under the terms of the Railways Act 1993, and the
Transport Act 2000, the SRA remains the "operator of last
resort" where a franchised rail operator is for some reason
unable to continue to provide the contracted service. The SRA
is then expected to have the capability to run the service until
a new private sector operator can be chosen.
3.10 Merseytravel envisages taking on this
role so that, in the unlikely event of the new franchisee collapsing,
Merseytravel would operate the service until a further franchisee
could be appointed.
3.11 The problem is relieving the SRA of
its ultimate duty to become the operator of last resort without
a suitable legislative vehicle for such a change. The SRA has
received legal advice that if the new franchisee were to collapse,
and Merseytravel fail to commit to operate the service until a
new franchisee could be appointed, the responsibility and associated
residual costs for this could revert to the SRA.
3.12 In the absence of an opportunity to
extinguish these liabilities through a clause in a piece of primary
legislation, discussion has focussed on three possible remedies:
the indemnification of the SRA by
Merseytravel against a possible reneging on its obligations by
means of a suitable bond;
subjecting the Arriva Trains Merseyside
network to the closure procedures set out in the Railways Act
1993 and the Transport Act 2000, thereby removing it from the
control of the SRA only to reopen it immediately under the control
of Merseytravel (the option favoured by SRA officials but which
did not find favour with the DTLR because it would involve a high
profile publicity exercise and a public inquiry into the "closure"
and be likely to cause confusion and distress in the community);
the use of an Order under the Transport
and Works Act (favoured by the SRA's legal advisers but thought
to be a difficult process by many involved, and which would in
any case entail considerable time delays).
3.13 Recently, Merseytravel has proposed
to the SRA a fourth option:
proceeding with the indemnity plan
as an interim measure until an Order under the Transport and Works
Act can be progressed, with the Order including a clause to extinguish
the SRA's residual liabilities.
3.14 A further option has been suggested
to the SRA by Merseytravel. This seeks to go with the grain of
what was the SRA's preferred route (ie using the closure provisions
of the 1993 and 2000 Acts to extinguish its obligations). The
franchising powers would still be transferred in the way suggested
previously (closing it as an SRA network and reopening it as a
Merseytravel one) but in a way that would avoid a high profile
publicity exercise which might cause undue public distress.
3.15 This would be achieved by using Sections
49(4), 49(5) and 143 of the 1993 Railways Act which allow the
Secretary of State to exempt parts of the railway network from
the closure arrangements. In other words, the Secretary of State
is allowed to create conditions in which a section of railway
can be closed without the paraphernalia of notices in the press
and a public inquiry. These powers are exercised through a Statutory
Instrument approved by Parliament.
3.16 An Order of exactly this nature was
made on 8 May 2001 and laid before Parliament on 9 May 2001. This
resulted in Section 39 of the Railways Act 1993 (formal notification
of proposals to close railway facilities) not having effect with
respect to St. Pancras Station in London. This allowed certain
works to be completed.
3.17 It is understood by Merseytravel that
this procedure was used to facilitate the transfer of parts of
the network in and around St Pancras Station from Railtrack to
the Channel Tunnel Rail Link (CTRL) without the need for a public
inquiry. That the Government was prepared to act in this way reflected
the fact that nothing which could reasonably be described as a
"closure" was taking place. The network would continue
to function uninterrupted, but a change of ownership was necessary
to achieve the public policy goals of constructing the CTRL. There
was no need to run the risk of creating public alarm amongst the
users of St Pancras Station by publishing "closure"
3.18 There is a clear parallel with what
is proposed for Arriva Trains Merseyside. The transfer of the
franchising powers to Merseytravel will not cause the slightest
disruption to the quality of local services. Indeed, they will
in time be enhanced. The need identified by the SRA to declare
the network "closed" by them, only to reopen a moment
later under Merseytravel's control, is nothing more than a legal
nicety but one which the SRA has a duty to the taxpayer to respect.
3.19 There is an urgent need to resolve
the future of the Arriva Trains Merseyside franchise because the
contract of the current operatorArriva PLCis due
to expire no later than February 2003. In order to complete the
legislative, legal and contractual processes of transferring the
franchising powers, and then to run a competition for a new franchisee
to be in place by this date, a speedy decision on this matter
is now required.
A. Ensure that rapid improvements in the safety,
punctuality, reliability, comfort and frequency of services are
A.1 There appears to be a switch to short-term
franchise extensions rather than the proposed 20-25 year franchise
replacement model. An alternative seems to be franchise replacement
over a limited period of five years.
A.2 While the short-term franchise extensions
negotiated with First North Western and Arriva Trains Merseyside
have levered in increases in train-crew, engineering staff and
some additional rolling stock, the improvements in performance
have not yet materialised.
A.3 Franchise extension is costly and not
perceived as value for money as the incumbent operator and franchisee
has a strong negotiating position (eg recent renegotiations of
Arriva and First Group franchises). However, this may be difficult
to sustain when compared with the longer term benefits of 20 year
franchises that are seen as providing the time horizon and incentive
to invest and plan for staff, infrastructure and equipment requirements.
A.4 There is a clear problem in terms of
franchise extension on Arriva Trains Merseyside, First North Western
and Arriva Trains Northerncan these be extended again?
Is there money available to extend? Currently, the arrangements
in place give no provision for a further extension and therefore
the need for early progress is pressing.
A.5 A further concern in this short-term
approach is that it makes SRA (and PTE) contract management difficult
to enforce against a failing operator. In this circumstance it
is not in the interest of the SRA to destabilise the franchise
while on a short-term contract pending a yet to commence franchise
replacement process. This is particularly the case with Northern
Spirit where a strategy of planned cancellations is now in place.
A long-term franchise would allow more robust contract management
but also significantly reduce the likelihood of it being necessary.
A.6 Some of the core problems of the rail
industry relate to the passenger growth delivered in recent years
which has led to rolling stock shortages and shortfalls in capacity
in such locations as the West Coast Main Line, Leeds, Birmingham
and Manchester. It is not clear how franchise extensions and short-term
franchises can deliver the investment in capacity and rolling
stock necessary to meet the aims of the 10-Year Transport Plan
and Local Transport Plan strategies especially given the lead
times for delivering new rolling stock or major infrastructure
schemes. The lack of the time horizon and stable contractual arrangements
gives little or no incentive for franchise operators, franchisees,
Railtrack, Special Purpose Vehicles, ROSCOs, as well as the SRA
and PTEs to enter into long-term investments and development strategies.
A.7 Manchester is one of the key hubs in
the UK rail network with more daily movements than Leeds and Birmingham:
the lack of capacity in Greater Manchester constrains development
of West Coast Main Line services, North and South Transpennine
routes as well as regional and local services across the North
West, including those across the Mersey Belt to Liverpool. Certainty
and confidence is required to give the industry the incentive
and stability to address capacity solutions to last 50 to 100
A.8 The issue of rolling stock is a particular
concern in view of the growth in patronage across the UK on all
lines. Within the FNW area and in West Yorkshire, overcrowding
exists and is increasing and potential passengers are being lost
to the railway industry. There is therefore already a serious
rolling stock shortage in the North across the First North Western
and Northern Spirit franchises. This will be exacerbated by the
process of franchise migration whereby current rolling stock resources
are being reallocated to the proposed new franchises (Transpennine
Express, Northern and Wales and the Borders). This process is
proving less efficient in the development of rolling stock and
will exacerbate this shortage. Rolling stock shortage is already
a pressing matter and will deteriorate in the run up to franchise
replacement and needs urgent SRA action to address the problems.
The contribution of the railways of the North to the Government's
10-Year Plan and LTP strategies are already being damaged in this
respect. The franchise replacement process needs to be re-commenced
utilising a long-term view and the procurement of new rolling
stock. Additionally, the SRA seem to be favouring rolling stock
refurbishment rather than new build on financial grounds. This
is a major concern in view of the ageing fleet of Class 142, 150,
153, 156 and 158 diesel units. There is a need for a clear and
sustained rolling stock strategy backed by longer-term franchises
to address these issues and give manufacturers the confidence
and incentive to provide the plants and skilled staffing to deliver
rolling stock programmes.
A.9 Angel Trains, Arriva Trains Merseyside
and Merseytravel have been reviewing options for refurbishment
of the Class 507/508 rolling stock fleet on Merseyside, comprising
53 three car operational units plus 6 mothballed units. The refurbishment
comprises two elements: the first of which is an operational refit
which addresses life extension of the units (which were introduced
over the period 1978-1983). This element is of great urgency in
view of the rapid deterioration of the units arising from poor
maintenance over the past two years. This resulted in a performance
of less than 5,000 miles per casualty at one stage, although this
is now rising due to a locally implemented action plan as an interim
measure. This was due in no small way because of the involvement
of senior politicians and officers, as the general public were
demanding answers, alas to no avail, by the owners of the units
and the TOC operating the franchise. The second element is the
refurbishment of the interior of the carriages to improve the
passenger environment including installation of CCTV and customer
information displays. This work can commence subject to contract.
This proposal has now been put to the SRA with a funding proposal
involving Merseytravel sponsorship of the enhancement of the interior.
The proposal reflects the draft Directions and Guidance which
shifts the focus to refurbishment rather than new build. The continuous
delay of the transfer of the SRA obligations to Merseytravel is
a major obstacle to a stable and vibrant rail service for the
people of Merseyside.
B. Secure Investment in additional network
capacity and other improvements to meet both the long and short-term
needs of the railways and whether the sums allocated to rail investment
remain adequate in the light of events since the publication of
the Government's ten year plan for transport
B.1 The issue has, to a large extent, been
covered in the response to the first question.
B.2 There would now seem to be a serious
financial shortfall in the SRA Budget due in part to the ORR's
decisions on the Second Control Period and short-term franchise
extensions. This shortfall is having a major impact on the franchise
replacement process. It is a concern that the financial difficulties
are now driving the short-term approach in terms of franchise
extension and replacement which could well drive an inefficient
approach to franchise management, thereby compounding the original
B.3 The Regional Railways North East franchise
(incorporating the North Transpennine route and Transpennine Express
services) was one of the success stories of the old Regional Railways
network in part feeding off the success of Manchester International
B.4 A factor in the demise of the franchise
replacement process is the delays in preparation of costings by
Railtrack on infrastructure enhancements: this is in part due
to the failure of the SRA to make clear franchise specifications
at an early stage and the lack of funding of Railtrack to undertake
development work (eg Chiltern franchise delays). Means to prevent
this in the future with planned infrastructure programmes and
proper funding of development programmes is essential.
B.5 All these issues need to be addressed
properly in the forthcoming Strategic Agenda but without the funding
back-up no progress will be possible and no base for the 50 year
development of the railways can be laid.
B.6 Wider issues also need to be addressed,
including the staffing of the railway industry with sufficient
professional and experienced staff through training and education
programmes. The fact that major capacity enhancements as well
as smaller incremental schemes are delayed by a lack of signalling
design resources must be addressed and carried forward into a
review across the industry.
B.7 Bidders for franchises (and Railtrack)
have expended considerable resources so far for little or no return.
Private Sector and City interest is likely to be low in franchising
and investment via whatever mechanism is appropriate. This confidence
(in the face of the recession also) needs to be built up by a
franchise replacement and railway development strategy that engenders
C. Provide the framework for major infrastructure
enhancement projects to be taken forward now that Railtrack is
to focus on the maintenance and renewal of the existing network
C.1 It would appear that Railtrack are not
now able to finance and lead major infrastructure projects. The
lead in infrastructure enhancement and capacity relief now lies
with the SRA not Railtrack and is being addressed through SRA
sponsored capacity studies. While this gives the opportunities
for a strategic approach, it is important that the nationally-led
approach does not overlook local needs and focus valuable resources
unduly in the South-East where returns may be higher to the detriment
of other areas. There is a real danger that the financial constraints
imposed on the SRA may constrain the options addressed in these
capacity studies and adopt short-term minimalist capacity enhancements
and rerouting strategies which do little to address market need
and capacity requirement over a 50 year time horizon. It is a
particular concern such constraints may lose the opportunities
for Transpennine upgrade and Manchester Hub capacity enhancement
and the benefits to the national, regional and local rail networks
that these will deliver.
C.2 The Strategic Agenda highlighted new
mechanisms for investment such as Special Purpose Vehicles. It
is important that these are robust and proven to work with the
injection of private finance. This remains a concern, especially
in view of the lukewarm interest in the arrangements to date.
There is a further danger that the role of Railtrack is marginalised,
despite its focus as owner of the network with the experience
and understanding of the infrastructure and operational matters.
Railtrack in-house expertise needs to be built-up to provide a
full role in the operation, renewal and development of the UK
rail network. Maintaining and utilising Railtrack resources in
small infrastructure and station/property schemes is critical
also in delivering LTP schemes and programmes.
D. Transform the SRA's leadership of the
industry, its day-to-day management of franchises and the way
in which it assesses and awards new and extended contracts for
D.1 Merseytravel supported the creation
of the SRA and the extension of its remit including both the passenger
and freight railway. However, this lead role requires full involvement
of stakeholders. Despite the expansion of staffing levels, the
level of dialogue (with stakeholders in local authorities, PTEs
and regional agencies) has been disappointing, particularly in
the context of franchise replacement. The publication of the Strategic
Agenda offers a way forward on this matter without, hopefully,
the unproductive comments about PTEs and repeating the previous
constructive partnership between OPRAF and PTEs in delivering
the first round of franchising. In addition it is to be hoped
that the offer of format consultation on the Transpennine Express
franchise offers a new approach within the SRA. The PTEs are currently
working with the SRA on franchise management and development to
D.2 The Directions and Guidance rightly
emphasise the importance of contract management. This has been
weakened by the process of franchise extension and also, in the
North West, by the under-resourcing of the front-line franchise
contract management team. In the Arriva Trains Merseyside franchise,
the long-standing problems of capacity shortages and passenger
growth have not been resolved through the franchise agreement
and a strategy of planned cancellations is now in place.
D.3 The recent franchise replacement process
has been developed by encouraging bidders to put forward their
proposals in an unconstrained and deregulated fashion. The recent
change of emphasis is welcomed. It is to be hoped that this will
draw forth a more effective dialogue on cross-boundary franchises
than offered to Merseytravel and other PTE's to date.
D.4 The timing and structure of Transpennine
Express, Northern and Wales and the Borders franchises is now
uncertain: there are clear benefits from co-ordinating the franchise
replacement timescale on these, not least in the co-ordinated
restructuring of human, rolling stock and system matters so that
the risks of disruptions of the service to passengers are minimised.
It should be noted that the restructuring and splitting of franchises
may require greater human and rolling stock resources to manage
and run services and these must be provided as part of the implementation
plan for the franchise in a timely and carefully planned manner.
D.5 There is now a gap opening between the
10 Year Transport Plan targets and the reality on the ground in
terms of meeting passenger growth targets: the SRA will need to
identify measures to fill the gap: additional rolling stock deployed
on lines short of capacity, such as in West Yorkshire, Greater
Manchester and on the Merseyrail City Lines may contribute considerably
to this, allied to funding of basic performance improvements on
Arriva Trains Merseyside services.
E. Improve the poor state of industrial relations
in the railways
E.1 Merseytravel does not feel able to comment
on this national question.