The remainder of the reconstituted Rail Group is to be restyled as the Rail Executive. Its immediate task will be to develop a framework agreement between the DfT and Network Rail, which has now been reclassified as a part of central government activity, after the decision to include its funding requirements in the national debt.
A new approach to recruitment is planned for a team of 150 people, with an appropriate reward and development structure to attract staff and reduce the current dependency on consultants.
There is a further element in the governance structure, with the establishment of a Franchise Advisory Panel, chaired by Richard Brown (who remains a non-executive director of the DfT) and formed by leading figures from the rail industry and financial institutions. This group provides the opportunity for an overview of issues that emerge as part of the franchising and Direct Awards programme.
Other organisations are involved in the award of franchises, concessions and licences to allow the operation of rail services.
Transport Scotland has responsibility for the ScotRail and Caledonian Sleeper franchises, while the Welsh Government oversees operations in Wales and the Borders.
The Liverpool City Region Combined Authority continues to have responsibility for the 25-year Merseyrail concession, and Transport for London is the contract awarding body for London Overground, Crossrail and the Docklands Light Railway.
The Office of Rail Regulation licenses the operation of open access and charter services, by the approval of Track Access Agreements. This sector embraces Heathrow Express, Hull Trains, Grand Central and formerly Wrexham & Shropshire operations. There are a number of outstanding applications from Alliance Rail (owned by Deutsche Bahn) for operations on both East and West Coast routes.
Govia improvement plans for combined TSGN franchise
In respect of DfT franchising activity, two recent awards have been made as a result of the implementation of new processes.
The first is the combined Thameslink, Southern & Great Northern (TSGN) contract. Govia, the existing Southern operator, has been chosen as the future operator, replacing FirstGroup, which has run the current Thameslink and Great Northern services (branded as First Capital Connect, FCC) since April 2006.
Govia is a joint venture between the UK based Go-Ahead Group (65%) and Keolis (35%) a partially owned subsidiary of French national operator SNCF. It also operates the London Midland and Southeastern franchises.
A seven-year contract has been awarded, starting on September 14, with a progressive amalgamation of operations. Initially only FCC services will transfer to new ownership, followed by a small number of Southeastern trains that operate on Thameslink routes on December 21 2014, with the Southern network being integrated from July 26 2015.
Revenue forecasting is problematic, given the disruption to services as the Thameslink infrastructure upgrade is commissioned. To remove this complication, the DfT has opted for a management contract that commits Govia to operate the franchise at an agreed price of £8.9 billion. With revenue expected to be in excess of £12bn, there will be a healthy surplus for the Government.
Analysts expect that the successful bidder will generate some £250 million in profit, provided it is able to deliver productivity improvements included in the bid. The level of profit could erode significantly if service quality benchmarks and reduced operating costs are not delivered. That represents real risk.
Despite the commitment to making productivity improvements that reflect the expectations of the McNulty Rail Value for Money study, Govia has made some ground-breaking customer service commitments.
Both First Capital Connect and Southern have had relatively
poor National Passenger Survey results.
The former recorded an overall satisfaction figure of 79%, which fell to 43% when passengers rated performance at times of service disruption, during which time only 16% considered the availability of staff adequate. Southern had scores of 76% for overall satisfaction, 39% for dealing with delays, and a higher (if still disappointing) 36% for staff availability.
Govia’s response is a commitment to staff 100 of the busier stations on a first to last train basis, with 20,000 days of customer service training for frontline staff and investment in new information systems at stations. Community Rail Partnerships will be supported, with £1m per annum provided for improved facilities promoted by local interests, and a very welcome initiative to offer work experience and mentoring for young people in the area served by the franchise.
There will be a return to the use of Thameslink to describe the services, but the Southern and Gatwick Express brands will be retained. Dedicated airport services return, with new rolling stock provided that reflects airline passenger requirements - 108 vehicles will be constructed to replace the ageing Class 442 formations by the end of 2016.
The principal fleet change is the introduction between 2016 and 2018 of Class 700 trainsets to operate core services using the through route that will link Cambridge, Bedford and Peterborough with Brighton and towns in the South East. These are fixed formation trains, made up of 60 eight-car and 55 12-car units being built by Siemens in Germany.
Great Northern inner suburban services that operate to/from Moorgate will also receive new trains built to the latest metro specification, with 150 vehicles being provided to replace the 40-year-old Class 313 dual-voltage sets by 2018.
There is a current volume of 237 million annual journeys for the combined business, generating receipts of £1.3bn per annum and employing 6,500 people. There will be a significant increase in capacity as a result of enhanced infrastructure through central London, where the operation of 24 trains per hour will provide 10,000 additional peak-hour seats.
Interestingly, what was originally expected was the operation of 12 trains from each of the Midland & GN lines. But the timetable is now to be based on 16 services to/from Midland destinations and eight GN operations, with the result that a number of trains will continue to terminate at King’s Cross.
c2c franchise to remain with National Express
A new 15-year contract for Essex Thameside (the London, Tilbury and Southend lines that are operated under the c2c brand name) has been awarded to current franchise holder National Express.
The contract will commence in September. This will mean continuity of operation since 2000, when National Express acquired Prism Rail, which secured the franchise in 1996.
The structure of the proposed contract follows a more standard approach, with the risk of delivering the business plan taken by the franchise holder. It is emphasised that the passenger benefit contained within the bid has been the decisive factor in awarding the contract, although there are some demanding revenue targets. This results in forecast premium payments of £1.5bn over the term of the franchise, which is protected by a Parent Company Guarantee.
