House of Commons briefing paper - franchises

[wintonian]

Just stumbled across this fairly detaild paper from December (updated 2nd Jan) entitled "Railways: passenger franchises " which I thought might be of interest.

Introduction

Since privatisation in the mid-1990s, there have been two types of passenger rail service on the UK rail network: open access operators (i.e. those that bid for ‘slots’ – specific parts of the overall National Rail timetable – to operate their own passenger services) and franchisees (i.e. those who operate a contracted service on a particular part of the rail network under licence from the government and the regulator). By far the majority of services are franchises.

Franchising involves the government setting out a specification for what it would like a franchise to do over a set period (level of service, upgrades, performance etc.). Companies then bid for the right to operate a franchise to that specification. The government picks whichever company it thinks will deliver the best overall package for the franchise and give the best value for money. Franchise agreements include details of the performance standards that franchisees must meet and arrangements for the termination of a franchise in the case of failure to meet these standards.

Over recent years there have been attempts to reform the franchising system. Most recently, in October 2012, the Coalition Government announced a further review of the franchising process following the uncovering of mistakes in how the Department evaluated and assessed the West Coast franchise bids. The Laidlaw inquiry into the West Coast let was published on 6 December; the Brown inquiry into franchising more generally will be published early in 2013. The Secretary of State will appear before the Transport Committee on 7 January to explain how the Government intends to implement the recommendations of the Laidlaw Report.

 

[Xenophon PCDGS]

I will be interested to see the wording that will be used by the Minister on 7th January when appearing before that Transport Committee.

 

[Morgsie]

It is comprehensive because it is brings a lot of information together in one document.

When is the Brown Report into Franchising published?

 

[wintonian]

Just glancing through, the subsidy pppkm (pence per passenger km) is quite interesting with the Wales & west franchise receiving 12 pppkm in 11/12, rather dwarfing the 2nd highest figure of 5 pppkm received by TPE and Crosscountrys 0.2 pppkm - the only long distance TOC to recive a net subsidy.

 

[kieron]

Just glancing through, the subsidy pppkm (pence per passenger km) is quite interesting with the Wales & west franchise receiving 12 pppkm in 11/12, rather dwarfing the 2nd highest figure of 5 pppkm received by TPE and Crosscountrys 0.2 pppkm - the only long distance TOC to recive a net subsidy.

Isn't TPE supposed supposed to be a long distance franchise?

Those figures only tell part of the story, in part because Network Rail receives a larger subsidy than any TOC. The DfT has a table which attempts to split up that subsidy between the TOCs here. It only lists franchises the DfT is currently responsible for, so doesn't list ATW (neither document mentions London Overground, Merseyrail or Scotrail). Only Thameslink/Great Northern is a net contributor on that basis.

I haven't found any figures to show how much UK tax each TOC pays, though.

 

[Gareth Marston]

Isn't TPE supposed supposed to be a long distance franchise?

Those figures only tell part of the story, in part because Network Rail receives a larger subsidy than any TOC. The DfT has a table which attempts to split up that subsidy between the TOCs here. It only lists franchises the DfT is currently responsible for, so doesn't list ATW (neither document mentions London Overground, Merseyrail or Scotrail). Only Thameslink/Great Northern is a net contributor on that basis.

I haven't found any figures to show how much UK tax each TOC pays, though.

Its meaningless looking at subsidy per kM traveled without the underlying NR costs for each TOC and you wont find them.

 

[Ze Random One]

Its meaningless looking at subsidy per kM traveled without the underlying NR costs for each TOC and you wont find them.

And how do you split up the cost-per-TOC? You can do that on the basis of track and station access charges, which are already an expense on a TOC's balance sheet, and therefore included as part of the overall subsidy/premium figure.

The access charges are supposed to reflect the actual cost of the steady-state maintenance of the existing infrastructure, and attempts to do so by estimating the resources consumed by the vehicles passing over the infastructure (be it loaded hoppers, passenger carriages, EMUs ...), incorporating maintenance and electricity costs. As I understood it, NR recoups 106% of it's day-to-day maintenance costs through TACs, which is significantly above many other EU infracos.

Other than that how can you really split out NR's costs as a per-TOC rate?
For example, look at the West Coast line between Oxenholme and Lancaster:


You could split up the costs between Virgin, TPE, Northern and the various FOCs according to how many trains they run.

But then, perhaps you could have afforded a lighter maintenance regime if all of the goods services were swapped for passenger?
So is it fair that the passenger TOCs get lumbered with the full cost of a freight artery?

What about the electrification? At present only Virgin and the FOCs use it - so should Northern and TPE have to pay anything towards them? What about if TPE would like to be electric in the future, but isn't now -- should they pay for the OHL upkeep now?

If only Northern and the FOCs used the route, it could be maintained to a 75mph standard rather than 125mph. Should Virgin and TPE split the difference in the maintenance costs between a 75 and 125mph railway? How do you even determine, REALISTICALLY, what proportion of any costs are down to the high speed capability?

And as for those pesky FOCs, well their presence demands a large amount of largely redundant infrastructure to be kept available, for example loops with 40mph turnouts, just to handle a few trains a day. So they should pay the full cost of the loops, right? Except when you consider if the passenger service was more sedate, like Amtrak's, the loops would not be required in any case, so perhaps the loops are there to accommodate the high-speed passenger service on the line, and the passenger TOCs should pay?

And as to how you might start splitting the cost of signallers, p'way men, back office...

Then, finally, do you mean operating subsidy, alone, or are you also including investment and expansion? What about invest-to-save projects, where a expenditure is made now to make things cheaper long term?

 

[Xenophon PCDGS]

I will be interested to see the wording that will be used by the Minister on 7th January when appearing before that Transport Committee.

I have not been able to keep in touch with matters.

Does anyone know what was said yesterday at that meeting of the Transport Committee ?

 

[wintonian]

I have not been able to keep in touch with matters.

Does anyone know what was said yesterday at that meeting of the Transport Committee ?

Watch it if you like.

and here's all the evidence that's been submitted and such like, which should keep people busy for a while.

 

[Xenophon PCDGS]

Watch it if you like.

and here's all the evidence that's been submitted and such like, which should keep people busy for a while.

Thank you for the link to the visual and audial summations of the meeting, which I have spent an hour of my breakfast time watching this morning.

 

[wintonian]

Thank you for the link to the visual and audial summations of the meeting, which I have spent an hour of my breakfast time watching this morning.

Well what did he say?

I haven't watched it yet and it might be useful if someone who has provides us with the key points, particularly for those who don't have an hour to waste, and no there won't be a test afterwards.

 

[LNW-GW Joint]

Watch it if you like.

and here's all the evidence that's been submitted and such like, which should keep people busy for a while.

That's another hour I won't get back.
Brown report to be published this week is about all the new information presented.

 

[Xenophon PCDGS]

That's another hour I won't get back.
Brown report to be published this week is about all the new information presented.

Indeed, the Brown report this week will be the one to consider. Did you note that Graham Stringer has not changed overmuch since his days at Manchester City Council..