Peer review: Professor Paul Salveson
MBE FCILT, Transport analyst
Mike Jones has written an extremely useful overview of the current position in UK rail franchising. It’s a rapidly-changing scene, and the appointment of Peter Wilkinson as MD of the new ‘Office of Rail Passenger Services’ promises a continuation of many of the new - and quite radical - approaches to franchising that Mike outlines.
A central feature is the emphasis on ‘passenger benefits’. This is no longer just a nice added extra that carries, literally, no weight in the franchise evaluation. In fact, it now carries significant weighting, and could be the deciding factor in selecting future franchisees (Northern and TransPennine Express, for example).
It isn’t just direct, quantifiable passenger benefits that feature in the new franchising environment. Much more emphasis is being given to maximising the wider social and economic benefits that rail can bring, reflected in a requirement to address staff training and apprenticeship issues in some of the new franchises.
As Mike points out, the new ScotRail franchise includes a requirement that the successful bidder will spend £500,000 on ‘community rail’ development. This poses a big challenge to the community rail movement in Scotland to ‘up its game’ and make good use of (Scottish) taxpayers’ money. It is to be hoped that the Invitation To Tender for the Northern franchise, due later this year, will include similar requirements that mark a step change in community rail’s contribution not only to rail, but also to the communities served by Northern Rail.
Mike doesn’t raise the fundamental question as to whether franchising is the best possible approach to delivering passenger rail services. It is merely one way, and opponents would say it is not the most cost-effective.
I would probably agree with him that going back to a monolithic BR would not be the right solution, and it is clear that none of the main political parties (Labour included) is advocating such a step. Labour’s approach of allowing ‘publicly owned’ bodies to bid is a classic fudge that satisfies nobody. But implicit in Labour’s policy is that franchising in much the same form will continue.
The key issue is not the prohibition on ‘publicly owned’ bodies, but barriers to entry. There is nothing to stop a co-op or mutual bidding now, apart from finding the £12 million to put a convincing bid together, quite apart from additional costs if you win.
So if we are stuck with franchising, the new approach being adopted by both the Department for Transport and Transport Scotland is without doubt the best. It takes us beyond a narrow focus on the financial bottom line, although we are still stuck with the short-termism and ludicrously high barriers to entry for new players. A good practical way round this could be established players forming joint ventures with co-ops or mutuals, which would bring a new dimension - and different expertise - to the bidding process.
An additional issue is the export of profits generated by foreign-owned train companies back to their parent (state-owned) organisations. Does the value-added brought to franchising by companies such as Arriva, Abellio and Keolis overcome these concerns? That’s an open question. But it does look as though we are stuck with the current system, suitably and positively amended by the new brooms at the DfT, for some time to come.
