The government is poised to announce a sweeping overhaul of Britain’s railways that is expected to see franchises replaced with more flexible longer contracts and the creation of an overarching body in charge of the network.
Grant Shapps, transport secretary, said on Wednesday as he announced the nationalisation of the Northern franchise that proposed legislation to be published soon would deliver a “model for the 21st century”.
It is expected to recommend the scrapping of the franchise system after years of chaos on the lines. Two franchises have been nationalised since June 2018, others are in deep trouble and numerous infrastructure improvements have been delayed.
The proposals will incorporate the final report of a 16-month independent review into the rail industry. Keith Williams, the former British Airways chief executive who led the review, said in a speech last July that the current franchise system had “had its day” and called for “revolution, not evolution”.
The publication of the white paper, as the proposed government legislation is known, is said to be planned for early February, although the timing could slip given ministers are grappling with problems at several franchises — notably whether to nationalise South Western Railway.
David Sidebottom, director at passenger lobby group Transport Focus, said it was clear from a consumer viewpoint that the core product — a punctual reliable railway — was “not being delivered sufficiently”.
Northern’s nationalisation, which was flagged several weeks ago, is on the face of it politically embarrassing for the Conservative government. Ministers were scathing about Labour’s manifesto promise to take the entire system into state control over a long period.
However, Mr Shapps told the BBC on Wednesday he did not take an “ideological point of view” about the issue of who controlled the trains: much more important was the question of whether trains arrived on time, “to the minute”, he said.
The transport secretary claimed that privatisation had been an overall success, with companies held back mostly by network capacity constraints.
The biggest change in the proposals is likely to be the scrapping of franchises in favour of a management contract model, with private companies given concessions of 15 to 20 years, longer than the standard franchising period of seven to 10 years.
Mr Williams is expected to recommend a model similar to how London Overground is run by Transport for London, under which the state controller takes the risk of rising or falling revenue. The concession operator would be paid a set amount which could rise or fall depending on factors such as operational performance, ticketless travel and customer satisfaction.
This model has been deemed largely successful both on London Overground and Merseyrail in Liverpool. In these cases, TfL and MerseyTravel respectively, set fares and timetables and grant long concessions to a single operator.
Simpler concession contracts could create a more flexible system that is more responsive to changing circumstances, rail experts said. The problem with the current franchising system, which is underpinned by revenue projections, is that changing contractual commitments requires complex negotiations.
On Tuesday, a national survey by Transport Focus highlighted that the networks which scored the highest passenger satisfaction were largely those not run on franchise contracts. These included Heathrow Express, Grand Central, Hull Trains which are run as open-access operators, and Merseyrail, which is a concession model.
Mr Shapps told the BBC the new body in charge of the railways would be “what the media call a ‘Fat Controller’ who everyone knows is in charge and who holds the lever”.
Industry figures said they believed Mr Williams would recommend the agency should be established by Christmas and it would include the central functions of Network Rail, the government body which owns and runs the infrastructure, and some of the statutory elements of the Rail Delivery Group, the membership organisation that brings together the companies that run the railways.
Andrew Haines, chief executive of Network Rail, is considered one likely candidate to run the new body.
Ed Thomas, head of transport at advisory group KPMG, said the rail system had “too many actors with separate agendas and ideas”. “Williams has got to simplify the process so there is first, a clear strategy and then, when contracts are commissioned, all the actors are aligned to deliver to one single plan,” he said.
Mr Thomas noted that this was part of the difficulties Northern had faced. “Delivering the new Northern franchise relied upon ambitious plans from the operator around introducing new rolling stock and changes [to] the timetable being aligned to Network Rail’s plans to upgrade the infrastructure. That was always going to be hard to deliver without an overall guiding mind.”
In his written ministerial statement announcing Northern’s nationalisation, Mr Shapps said it was clear that the current model was struggling to deliver even though privatisation had led to rapid growth in the railways.
Rail experts noted that the current system had worked well in terms of increasing the market from where it was at privatisation, which followed the break-up of British Rail in 1994. Twice as many people are travelling now than 20 years ago and around 25 per cent more trains are on the network.
Mr Sidebottom of Transport Focus said he was hopeful there would be meaningful change to the current system after years of misery for passengers. “Passengers need to be at the heart of the railway system. They deserve a better deal than they’ve had,” he said.
The post Shapps goes full steam ahead with rail overhaul plan appeared first on Financial Times.