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.
PLC BEING PLACED
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 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
(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.
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
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
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.