Rail 495: The franchise merry-go-round

So the merry go round continues. FirstGroup is awarded the Scotrail franchise although it was not deemed good enough to run Anglia where First Great Eastern built up a good reputation. However, the reverse applies to National Express, now booted out of the Scottish franchise. Virtually every franchise that has been relet has gone to a new incumbent, but as the process is anything but transparent, we have no idea why. The levels of unsuccessful bids are not published, nor are the criteria on which decisions are made.

This is shocking given that public money is involved. There is no reason why, in order to increase competition, outline terms of failed bids should not be made public. Not only would this give a good idea of how close the competition was, but it would also ensure that companies making particularly expensive offers would be shamed publicly.

In his rail review announcement on 15 July, Alistair Darling said that in future past performance would be taken into account when making franchise allocations. But this was not applied to the Scotrail franchise as the process had virtually run its course by the time of the announcement.

All this merry go round is utterly pointless and greatly disruptive. There are huge costs incurred by every bidder, let alone the management time that is wasted when it could be devoted to improving the service. Chris Garnett of GNER reckons that he has had to be concerned with the franchise renewal process in some way or other for most of the past five years and even now no one quite knows what is going to happen to the East Coast franchise.

(As an aside, is it not time for the rail industry to get rid of the old West Coast and East Coast names? Since the West Coast is nowhere near the sea until north of Manchester and the East Coast does so run alongside it until north of Newcastle, it is no wonder that rail passengers are utterly confused by these appellations. Indeed, before I started covering transport, I had no idea where these lines meant, but I did know where Liverpool and Newcastle were.)

In fact, we all know that money is, of course, the principal determining factor, but here too the situation is opaque except for one clear fact: franchises are getting more expensive. The annual subsidy for the Scotrail franchise, for example, last year was £268.4m, the most expensive franchise in the country. Because of complicated changes relating to the regulator’s review of track access charges, it is not possible to give a comparable figure – though the headline amount First will receive is £191m, in fact this represents about £20m extra because of reduced track access costs. For this, there will be £40m of investment over the seven year term of the franchise, some 200 extra revenue inspectors and leasing for 29 new trains, as well as to cover the overall increase in costs in the industry. And far from reducing over time, the old franchises did, the costs are inflation proofed. Other franchises, particularly South West Trains, have soared in costs on renewal, something which angered the Treasury enormously and, indeed, helped to prompt the rail review.

Which brings me back to my old, oft repeated but never answered question of what are franchises for? The thinking behind handing over the running of trains to the private sector is that government is not good at these sorts of tasks and therefore it is better that they be carried out privately. There is some merit in that argument. Governments on the whole are not good at running things and therefore it may well be better for them to be provided privately as long as the contracts are drawn up well.

But the railways could well be an exception to this general rule. Are the passengers of South Eastern suffering because their trains are now being run by a shell company set up specially by the SRA to take over from Connex? And is the taxpayer likely to pay more than if services were being run by First or National Express?

Indeed, the craziest franchise process currently being undertaken is that for what will become the Integrated Kent Franchise once domestic services are able to use the Channel Tunnel Rail Link, due to be completed by 2006/7. No timetable has been determined for that franchise and the variables are such that no company can really put in a sensible bid. Orders for the new trains to be used on the high speed line have yet to be placed. Nevertheless, the SRA seems determined to proceed with the franchise despite all the uncertainties, just because it is embarrassed that South Eastern trains has currently.

Look, too, at the mess of the CrossCountry franchise. As Insider ably analysed in the last issue of Rail, in allowing the private sector to make many of the key decisions over timetabling and specification of equipment, the public purse has ended up with a huge bill that now is, apparently, not ‘value for money’.

The private companies have not, therefore, delivered on the key measure which is cost. There is a good reason for that. In an indiscreet moment, a train operating company managing director – I will spare his blushes by not naming him – who had got what looked like a particularly generous deal in a recent franchise contract, explained that getting the money off the SRA was like taking candy off a 5 year old: ‘They are crap at negotiation and it was easy to get a good deal. They don’t seem to know what they are doing’. This may be one explanation of why the SRA is being abolished, but will it get any better when it is the department – or a new rail agency – handing out the baubles? Not according to my candy snatcher pal: ‘The government does not know what it wants and does not understand the industry, and that has really been the problem for the SRA’.

Even the Future of Rail while stressing that franchises should stay, is pretty lukewarm about their achievements. They have apparently ‘helped to identify costs’ but it seems in practice they have just increased them. The paper says, quite untruthfully, that the SRA has begun to ‘increase efficiency in the train companies through a robust and competitive franchising regime. This is beginning to reduce costs…’

Effectively, the franchising process has allowed a handful of companies to pull the wool over the eyes of the government. Their chief executives even meet informally, separately from the Association of Train Operating Companies, as the owners’ group and while I am sure they do not discuss detailed bids, it would be very surprising if the overall framework were not discussed at those gatherings. The only reason for the franchising process seems to be that the government fears the alternative is worse. But could it be?

Cycle trouble

In their franchise commitment for Scotrail, First have promised secure cycle parking at every station. That is to be welcomed, but let’s hope they do better than First Great Western have done at Didcot. There, because of high demand, the company installed new stands but these are of the ‘butterfly’ design, basically little loops of metal to which you are supposed to slot in and attach the front wheel.

However, cyclists at Didcot have still been using the railings and virtually any other bit of space available to attach a bike rather than the butterfly stands. Why? Because they are worse than useful. They tend to buckle the front wheel and, worse, enable thieves to steel the rest of the bike quite easily. The industry standard is the simple Sheffield stand, a rectangular loop of hard steel to which it is easy and secure to attach a bike.

Had First troubled to ask any cycling organisation, it would have been told that. Indeed, Sustrans even provide advice on best practice on their website at http://www.sustrans.org.uk/downloads/989C05_CYCLE%20PARKING_2.pdf which the company could have consulted. When I wrote to First pointing this out, I was told that the butterfly stand are much cheaper. The head of rail estates, Linda Burlison, wrote: ‘If we had provided a similar capacity of Sheffield stands, we would have been three times over budget’ So, the message is as long as we are providing something, even if it is rubbish and unusable, that is OK.

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