It is some time since I posed the Wolmar Question, ‘what is franchising for?’ but recent events suggest the time is ripe for the question to be posed again. First there was the Compeition Commission report into train leasing which backfired badly on the Department for Transport which initiated it and then there was the revelation of the incredibly complex arrangements First Capital Connect and Southeastern over new trains and the Blackfriars closure which will effectively mean that passengers are transferred from one Train Operating Company to another during the course of their journey!
If transport were higher up the political agenda and the national media understood it, then the Competition Commission report would have gone down as one of the scandals adding to Gordon Brown’s woes (as would, of course, the collapse of the London Underground Public Private Partnership since his handling of it demonstrated all the failings which he has exhibited since moving into No 10). Instead it has been largely ignored but the criticism of the Department by the Commission could hardly be more damning.
In particular, what started out as an investigation into train leasing highlighted the fact that it was the franchising arrangements themselves and the short term approach they engender which restricted the workings of the market, something lots of us have been saying for years. The franchising system,in other words, does not encourage investment in rolling stock and keeps the price of that stock higher than it needs to be by introducing risk – particularly of stock being mothballed – which is entirely down to the short franchise lengths and departmental interference in determining what rolling stock should be used for particular franchises.
The deal between First Capital Connect, Southeastern and the Department highlights another failing of the franchising system, its complexity and its inflexibility in relation to changed circumstances. The arrangement thrashed out by lengthy tripartite negotiations is so complex and its results so crazy that it would be funny if it were not for the fact that these type of negotiations cost the taxpayer millions of pounds. The problem caused by the planned closure of the three bay platforms starting in March next year while a major station refurbishment is carried out but the Thameslink services (run by First Capital Connect) will continue running. The government promised that Blackfriars passengers using the nearly 100 trains per day would still be able to use the station.
However, with the bay platforms out of commission, the trains would have to run on beyond Blackfriars and most will turn round at Kentish Town. That means Southeastern have to run through FCC territory and that would require some sort of special arrangements. There was, though, the added problem that Southeastern does not have any rolling stock which can run on the overhead electrification that is used north of Farringdon where the DC third rail system ends.
The solution, as even Hugh Clancy, FCC’s commercial director admitted to me, is rather complicated. Southern, which happens to be owned by the same company, Govia, which owns Southeastern although this is not relevant to the story, is obtaining 23 377s with dual voltage capability and will sublease them, at cost, to FCC. Then, when they run on south of Blackfriars, they will be temporarily hired out to Southeastern, as will FCC crews driving the trains. In other words, Govia will be hiring trains out to FCC which in turn will hire them back to Govia for part of the journey. Neat, isn’t it?
There is, of course, some good news in this since it is the beginning of the Thameslink improvement scheme. There will be a much higher frequency of trains on the Thameslink route through central Lodnon and some new coaches rather than the ghastly 319s but this episode shows the problems in having split the railway into small sections. The railway is, as I never tire of stressing, an integrated whole and functions much betters as one. The creation of artifical barriers between various parts adds cost and complexity and leads to what economists call ‘sub-optimal’ results.
It is strange that one of the arguments against vertical intergration put forward in the 2004 review of the rail industry was the supposed difficulty of one company running on another’s tracks. Yet, now the Department is happy to broker deals involving trains passing from one operator to another in the middle of the journey, a far more complex arrangements.
None of this, by the way, should be taken as a criticism of the operators concerned who seem to have done their best, in trying circumstances, to sort out a very complex situation. But the fact remains that this complexity makes train operation more difficult, adds to cost and reduces the accountabilty of the private companies. Worse, it involves the department in the kind of micromanagement which is stifling the industry.
It is all too apparent, now that the Department for Transport’s model of franchising has had a couple of years to bed in, that it represents the worst of all worlds, a tightly specified arrangement that allows little freedom for the private sector, does not give value for money and offers the passenger few benefits.
Yet unfortunately, it is all too obvious that franchising is here to stay. The Department has forced Newcastle’s Metro, which has a fantastic record of punctuality, to be franchised in return for the investment it needs to upgrade the system. So is there any sensible way forward within the ideological blinkers of the Department of Transport?
Clearly longer term franchises which allowed investment and more flexibility for the private sector would make sense, but when Alistair Morton the Treasury stopped them precisely because it reckoned invesment would get out of control. Another option would be to create larger franchises – say re-create Southern Railway or even Network SouthEast – to give private operators more flexibility. First, though, the main priority which I hope the Tories will take up, is to transfer rail responsibilties from the Department to a railways agency to end the micromanagement by ministers and civil servants.
Channel fire means Eurostar success becomes a problem
When there are scenes of thousands of passengers clamouring to find out information following an event like the Channel Tunnel fire, it is easy to criticise Eurostar for failing to deal with the unexpected circumstances. Certainly, Eurostar did make mistakes, by not putting out information quickly enough and not being clear about precisely what it was doing. But whereas in 1996 when there last fire happened
Passengers not always right!
My item about train managers being forced to stick to rules that were unfair