Rail 876: The long slow death of franchises

The death throes of franchising are not a pretty sight. That the present model is dead was effectively confirmed by Keith Williams, who is undertaking the rail review, in his Bradshaw address when he said: ‘Put bluntly franchising cannot continue in the way that it is today. It is no longer delivering clear benefits for either taxpayers or farepayers’.

The main problem is what to do with those coming up for renewal or extension. For a couple of years the favoured response has been to extend franchises with the existing holder retaining the contract. There has been the odd exception, such as with South West Trains where the government did not like what Stagecoach was offering and the contract was given to a partnership of First and MTR with very mixed results as the new franchisee has found it difficult to cope with the constraints on a very crowded railway.

Elsewhere, it has been a pattern of direct awards which, frankly, go completely against the whole fundamental concept behind franchising which is supposed to create competition at the point when they are let, rather than, as with the original idea behind privatisation, on the tracks. So if there is no competition when the contracts are let, and open access has proved to be a non-event, isn’t it time that the government – via Keith Williams – recognised that there is no point trying to stimulate competition in the rail industry?

There are three franchise lettings which are in the offing and it seems, according to Whitehall gossip, that all of them are in trouble and likely to result in direct award. Astonishingly, Govia, which has recently been fined £5m by the Office of Road and Rail for failing to keep passengers informed during last May’s timetable chaos, is set to get another extension to its Thameslink Southern and Great Northern contract.

A new operator was supposed to be chosen by now and ready to take over in June when the present deal runs out, but now it seems an extension through a direct award is the most likely outcome. The shortlist was in fact drawn up two years ago but the problems with the franchise, in particular the sporadic industrial action, now apparently ended, together with the timetable chaos and the consequent inability to run as many trains as originally scheduled through the central section of Thameslink means the contract is seen as something of a poisoned chalice.

The new contract for East Midlands is not due to run out until two months later, in August, but also needs urgently letting because there is a government commitment to introduce new trains on the Midland Mainline in 2022. These cannot be ordered until the new franchisee is selected but again the deadline is now likely to be breached and the delay may well mean passengers on the line will have to put up with old rolling stock for longer than originally planned.

Thirdly, there is the absurd West Coast partnership, the most complex franchise arrangement ever offered on the railway. The partnership which will also oversee the introduction of HS2 services from 2026 was due to begin this September after a shortlist had been drawn up nearly two years ago but has now been put back by at least a year which meant that Virgin received an extra year on the current West Coast deal. Given the uncertainty over HS2 – watch this space if there is a hard right winger elected to replace Mrs May – letting the franchise may well be a risk too far.

The Department is urgently trying to let at least one of these contracts before the start of Purdah caused by the local elections which starts on April 12. This means that major government contracts are not supposed to be let during this period because of the risk that they may influence voters. However, there are also some in the Department who feel that none of the franchises should be let given the potential changes which might result from the Williams review.

The future of franchising may well be affected by what is happening in one of Chris Grayling’s previous parishes. On the day I am writing this, it was announced by his excellent successor as prisons minister, Rory Stewart, that HMP Birmingham is to be taken permanently back in house because the private company running it, G4S, has been unable to improve the prison which has been marred by riots, extensive drug abuse and violence.

Another bit of Grayling’s past life came back to haunt him last month when it was announced that his part privatisation of the probation service is to be reversed because it has failed utterly. Not only has the service deteriorated, but taking back the contracts will result in a massive extra bill for the taxpayer and the proportion of prisoners recalled to prison have skyrocketed. This was revealed in an utterly damning report from the chief inspector of probation, Dame Glenys Stacey, who said: ‘In practice these companies have understandably focused on meeting contractual requirements and targets’. She went on to argue that trying to create a commercial relationship in the probation service was wholly inappropriate. Perhaps, we might see the same argument made about the railways which are a natural monopoly requiring state subsidy. That would suggest, however, the Williams was a very brave man.

 

 

My only ever agreement with President Trump

 

My battle to expose the hype around driverless cars continues and I have spoken in several debates recently, including one  Milton Keynes of all places, on the issue. For those of you new to the debate, I wrote a book a year ago entitled Driverless cars: on a road to nowhere which was prompted by the fact that there was a growing assumption that these cars would soon be dominating our roads.

I was rather worried to hear Keith Williams, who is conducting the rail review, mentioned driverless cars in a talk he gave at Transport Focus though he does not, thankfully, seem to have swallowed the notion that they have relevance as potential rivals to the railways.

The more I research this topic – and thank you to all the readers who send me links of relevant articles – the more I am convinced that this is a con being perpetrated by the car and tech companies, albeit for different reasons. The tech companies have lots of capital which they have no idea how to spend while the car companies are terrified that one of their rivals will develop a successful model first. In fact, they should rest easy as for reasons too long to state here, the whole concept is fundamentally flawed – just to give one example, how would two driverless cars cope with meeting each other on a single track road, of which there many both in urban and rural areas.

The worst aspect of this, however, is that politicians have been taken in hook, line and sinker. The search for the Holy Grail of driverless cars is now sucking up nearly all the money available for transport research and Philip Hammond has said publicly he expects to see them on UK roads by 2021. Moreover, the European Union (which we may or may not have left by the time you read these words), has been completely bamboozled into thinking they are imminent and inevitable as it has published a consultation document that suggests that Europe must prepare immediately for the arrival driverless cars. The consultation paper says ‘Fully autonomous vehicles are just around the corner’ and the European Commission is hell bent on making Europe a ‘world leader’ for automated and connected mobility, because of the claimed enormous benefits.

This is very worrying stuff for the rail industry as policy makers will start arguing that investing in railways is a waste of money given that soon we will all be able to travel around the continent being driven automatically. There are those in the rail industry who have been sucked in such as the past boss of Network Rail, Mark Carne, whom I challenged to a debate on the issue. Sadly he never came back to me and he is now history.

But the good news is that The Donald agrees with me. According to the Axios website, Trump hates driverless cars. They cite at least four sources and report that ‘In conversations on Air Force One and in the White House, Trump has acted out scenes of self-driving cars veering out of control and crashing into walls’, adding that he does not think they will ever work. This is important because while most of the money pouring into the industry is from private sources, the federal government will set out the regulations and the legislation required to allow these vehicles onto the road. If the President is antagonistic, he may well prevent legislation from being passed and his lack of enthusiasm may put a damper on ministers here, who have shown remarkably little understanding of the difficulties. So for once in my life, High Five, Donald.

 

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