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Rail Franchising Reform

Volume 521: debated on Wednesday 19 January 2011

I am today launching two publications on rail franchising. The first sets out the Government’s current thinking on franchising, taking account of the results of the July 2010 consultation, “Reforming Rail Franchising”. That consultation proposed a variety of policy changes. It made clear our determination to deliver a railway that takes greater account of passenger needs; provides value for taxpayer investment; and delivers the right incentives for operators.

Since the close of the “Reforming Rail Franchising” consultation in October 2010, the Department has carefully considered the full range of responses, and has discussed the ideas in more detail with industry representatives.

We are now publishing the results of that analysis. Key principles emerging from that work include:

(i) the specifics of each franchise will be decided on a case-by-case basis, with bidders having a greater role in helping Government define the specification;

(ii) we will set demanding outcomes for operators to deliver but we will give them more flexibility to decide how best to achieve those outcomes, giving greater space to operators to plan and run their services in a more commercial manner;

(iii) longer franchises should expand the opportunity for operators to invest in improvements as well as enabling them to strengthen their working relationships with Network Rail and other key stakeholders.

We also believe that it is vital that the cost of running the railways comes down.

The second publication is a public consultation for the new InterCity West Coast (ICWC) franchise. A notice was placed in the Official Journal of the European Union (OJEU) last week at which time a formal accreditation process for bidders also started.

Our overall aim for the new franchise is to take as a starting point the much enhanced operations of recent years and improve these still further, while delivering value for money and meeting affordability requirements.

The ICWC franchise will build on the new timetable that was introduced in December 2008 and made possible by the £9 billion of public funds invested in infrastructure enhancement on the west coast main line. This upgrade has shortened journey times and enabled more trains to be run. It has also delivered a more regular service timetable to Birmingham and Manchester.

Bidders for the franchise will be required to make proposals for the most advantageous deployment of the four additional 11-car Pendolino trains that will be available to them. These new trains will enable the new franchise operator to offer more capacity, more frequent trains and shorter journey times to various locations.

The new operator will need to consider how best to improve the performance and reliability of long distance services and the quality of service received by passengers across the franchise. They will be expected to put forward ideas for improving the passenger experience on board trains, providing better service information for passengers, and investing in station facilities.

The new ICWC franchise will begin operation on Sunday 1 April 2012. The franchise is proposed to last for a term of at least 14 years, aligned to the possible introduction of services on High Speed 2. Provisions will be included in the contract to allow for an earlier termination in the event of persistent under-performance by the operator.

The consultation document highlights the key requirements that the Department is considering including within the invitation to tender (ITT), for example, proposals to provide operators more flexibility and encourage investment. Responses to the consultation will inform the development of the ITT which we expect to publish in summer 2011, with the franchise awarded in late 2011.

Over the coming weeks the Department will carry out extensive discussions with local stakeholders, via a series of meetings.

The consultation will run until the 21 April 2011. Copies of the consultation document have been placed in the House Library and are available on the Department for Transport website.

A notice was placed in the Official Journal of the European Union (OJEU) last week in relation to the Greater Anglia franchise and a formal accreditation process for bidders has begun. This will be a short-term contract lasting from February 2012 to at least the summer of 2013.

Letting this contract will enable us to include appropriate recommendations from the rail value for money study being led by Sir Roy McNulty in a new long-term franchise starting in 2013.

We will not be conducting a public consultation on this contract as the services that are being offered will be largely the same as those in operation today. However, there will be a full public consultation on the long term franchise before it is let.