Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence

Memorandum by Save Our Railways (IT 58)



  Overall the White Paper is to be welcomed as it provides a good framework for integrated transport. However, it lacks the mechanisms necessary to achieve many of its goals. It is also essential that legislation is brought forward as soon as possible to enact those parts of the White Paper that require it.

  In order to provide focus for the policy the Government should adopt a target for a reduction in CO2 emissions from the transport sector. The Government should also adopt a national traffic reduction target consistent with that target.

  We support the White Paper's proposals on transport taxation and in particular the Government's decision to allow local authorities to spend income derived from new transport charges on local transport. We urge the Government to set a timetable for the early introduction and implementation of legislation on the new revenue streams. We would like to see the Government reinstate earlier proposals to extend private non-residential (PNR) parking charges to include food superstores and leisure complexes. New PNR charges should be levied on a national basis to ensure their widespread implementation.


  We welcome the Government's commitment to a Strategic Rail Authority. However, the text of the Government's proposals leaves much still to be defined. The nature of the SRA will, to a great extent, determine the nature of the railway in the decade ahead. Our evidence therefore focuses on the importance of creating a powerful, proactive and dynamic Rail Authority.

2.1 The Strategic Rail Authority: the scale of the task ahead

  The rail privatisation era has been characterised by confusion, conflict and profiteering. Although the public strongly supports rail in principle they are highly dissatisfied with the fragmented, expensive and often poorly performing rail network that is currently available to them. Present provision falls well short of the public's aspiration for a quality, affordable and easy to use public transport network. The SRA has a big job ahead of it if public confidence is to be restored in the railways. Given rail's importance to the Government's desire to tackle road congestion, the SRA's role is also pivotal to the success of the Government's wider transport strategy.

  That is why we need an SRA which is at the heart of the railway, able to reintegrate the network and push forward its expansion. It needs to be far more than a development of the existing reactive regulatory bodies. These bodies facilitated privatisation and then failed to ensure that the privatised railway delivered a cost-effective, quality railway. We need a break with the past. We need an SRA that is proactive, dynamic and imaginative. We need an SRA that is seen by the public as being "in charge" of the railway.

  The key challenges the SRA faces are:

    —  maximising investment;

    —  reintegrating the network;

    —  promoting rail's role within a "seamless" public transport system;

    —  driving up performance;

    —  opening up the network to all; and

    —  the expansion of services and the network as rapidly as possible.

  If the SRA is to be a "fresh start" then it will need to have a Board and senior officials that reflect that intention. The SRA Board should include people with rail industry experience, academics and user representatives.

  Directors could also be given responsibility for the key areas of the SRA's work. There would then be a clear focus for the industry, the public and the politicians on which individual was responsible for pushing through programmes for expanding the network, opening up the network, improving integration and so on.

2.2 The SRA and Railtrack

  Railtrack has been widely, and rightly, criticised for: under investment in maintenance and renewals; lack of responsiveness to operator's needs; and a shortage of ambition for the network.

  If the railways are to develop then the infrastructure needs to be well maintained and subject to a realistic long-term strategy for its development. It also needs to be well managed so an ambitious but reliable network of services can be operated.

Maintaining and improving the network

  We welcome the Government's proposal that the question of targets for growth in rail traffic should be addressed by a new Commission for Integrated Transport.

  The Government proposes that the SRA shall be, "under a duty to formulate and keep under review a strategy for the operation of the development of railways in Britain".

  We propose that this strategy include an independent assessment of the condition of the network and the consequent spending requirement on maintenance and renewal. Without such an independent assessment it is not possible to know whether or not Railtrack is complying with its fundamental duty to maintain the network at modern equivalent asset value. In the current absence of any such independent evaluation we rely on the views of the Health and Safety Executive, ASLEF and the train operators which all point to under-investment in maintenance and renewals.

  The strategy should also include a network development plan. Currently there are many major routes for which there is no long-term strategy. These important arteries include the Midland Main Line, the Great Western Main Line, the North Wales Main Line, the Scottish internal main lines, and the Trans-Pennine routes. All these key regional main lines should be electrified and overhauled with line speeds increased. It cannot all be done at once but the SRA needs to draw up an ambitious but manageable programme for tackling these vital projects.

Expanding the network

  Since privatisation, the programme of line and station reopenings instituted by British Rail, in collaboration with local authorities, has largely ground to a halt. This is mainly due to Railtrack's lack of ambition for the network and consequent massive increase in the costs of reopening projects.

  Neither the White Paper nor the rail policy paper address the line and station reopenings issue. We believe that this is a mistake. We want to see the SRA responsible for a "Beeching into reverse" programme which would give every town in the country, with a population of 23,000 or more, access to the rail network. All these towns are either near to the existing network, or are served by lines which are either "freight-only" or disused but intact. This relatively low-cost programme would bring rail services back to towns like Ebbw Vale, Dunstable and Corby. It would be a fitting symbol of the ambition of the SRA; it could capture the public imagination; and of course give access to the rail network to tens of thousands of people.

  We welcome the proposed rail investment funds—the infrastructure investment fund and the rail passenger partnership scheme. However we question the reasoning behind the remit of the infrastructure investment fund. That remit currently suggests that the fund will, "support strategic investment projects aimed at addressing capacity constraints at key infrastructure `pinch points' on the existing rail networks". There is a grave danger that Railtrack will see this fund as substituting for parts of their existing investment budget. If there is a "pinch point" on the network then this means that there is significant traffic. This will be generating income for Railtrack which in turn should be used to generate the investment funds to tackle that pinch point.

  The Deputy Prime Minster has suggested that the budget for the Funds will be £100 million. There is speculation in the railway press that most of this budget has already been allocated: two-thirds for the Channel Tunnel Rail Link and some for freight grants. This leaves around £30 million. Given the high cost of major infrastructure projects, one or two "pinch point" schemes could easily soak up the remaining budget.

  It is essential to the SRA's credibility that new rail investment funds should be genuinely additional, and that the sums involved are significant and meaningful. We also propose that the remit of the infrastructure investment fund is changed so that it is devoted primarily to pump priming line and station reopenings. It could also be retitled, the "Network Expansion Fund".

Calling Railtrack to account

  We strongly disagree with the proposals to make Railtrack primarily responsible to the Regulator rather than the SRA. If the SRA is to be seen to be in charge of the railway, and if its strategy for the network is to have force and credibility, then the SRA, rather than ORR, needs to be in charge of Railtrack. The Regulator's failure, so far, to enforce Railtrack's duty to maintain the network at modern equivalent asset value should also be taken into account.

  A more appropriate role for a Regulator would be to supervise the relationship between Railtrack and the SRA in order to ensure fair play.

  We do however welcome the proposal that some subsidy should be routed direct of Railtrack rather than via the operators, and that the SRA should have responsibility for the national timetable.

  The combination of these two measures would have major advantages:

    —  In future, payment to Railtrack would be dependent on their ability to deliver the timetable drawn up to the SRA. That timetable would be based on the plans put forward by operators (which would be subject to consultation with user groups and local authorities) The SRA's task would be to produce an integrated, realistic and ambitious national timetable. Railtrack's job would be to provide the capacity necessary to deliver that timetable. Payments to Railtrack would, for the first time, be directly related to their ability to manage the network efficiently and deliver agreed enhancements to capacity.

    —  Subsidies paid direct to Railtrack would substitute for trace access payments by operators. If as as consequence track access charges are reduced then it becomes cheaper for operators to run trains—a major incentive for operators to provide more services.

    —  With direct payment of subsidy to Railtrack it would then be practical to acquire a public stake in the company. That stake would be a way of guaranteeing that Railtrack fulfils its duties—renewing and expanding the network in return for the subsidy it receives from the taxpayer.

2.3 The SRA and franchising

Towards quality contracts

  We welcome the Government's intention that the SRA will have the "opportunity to specify service levels and passenger benefits which fully reflect our integrated transport policy."

  We share the view of Transport Select Committee, and the Government, that the "SQUIRE" system (already successfully employed by some PTAs) shows the advantages of moving from OPRAF-style franchising to higher specification contracts.

  If we are to continue with the policy of franchising rail services then we need to move to "quality contracts" which contain exacting standards designed to guarantee high quality services for passengers.

  We believe that one of the primary reasons for the failure of privatisation was the way in which services were franchised. By and large protection for service standards in the contracts has been both weak and poorly enforced. letting the contracts, by and large, to the lowest cost tenderer has compounded those basic errors.

  We should learn from the example of the commercial franchising industry (in areas such as retailing and fast food) where franchise contracts ensure uniformly high standards. These principles should be extended to rail, but contain scope for operators to innovate and develop their business, where their plans are of demonstrable net benefit to the travelling public.

  In practical terms that means that "quality contracts" should specify:

    —  minimum service levels at least equal to those currently provided and preferably better;

    —  strict limits on overcrowding;

    —  enforceable standards for cleanliness, facilities at stations, information provision, station staffing, wages and conditions for staff;

    —  a requirement to co-operate with other operators to provide integrated and seamless regional public transport networks within a national network; and

    —  active participation in regional and national fares structures.

  This should not mean that operators are expected merely to fulfil the requirements of a rigid and inflexible central plan. The quality contracts would ensure an integrated, expanding, high quality rail network. Within that framework operators would be free to use their insight and drive to further to improve services.

  Quality contracting should also be based on value for money, rather than lowest cost. The lowest bid should not automatically win. Tenders need to be both realistic and ambitious. In evaluating tenders, value for money and quality should be the key criteria.

Franchise Extensions

  We welcome the Government's rejection of the Connex bid for a franchise extension for South Central. We believe that until the SRA has been created it would be premature to grant any franchise extensions. Given its wide powers and remit the SRA would be able to consider franchise extensions within the context of wider but closely related issues of infrastructure and rolling stock development. Franchise extensions on current terms would also preclude the benefits of quality contracting for the franchises concerned.

  For example GNER is currently pressing for a franchise extension for the East Coast Main Line. If that extension were to be granted now it would effectively prevent the SRA from bringing that route within a `quality contract' regime. It would also hinder the SRA in its task of developing the network. In particular the opportunity to extend the benefits of high speed electrification into Scotland would be lost.

The role of the public sector

  We welcome the Government's intention to retain BR's ability to operate services. However we contend that BR should be more than `an operator of last resort'. In the initial round of franchising BR was banned from bidding because they would have won many of the contracts and thus would have undermined the rationale behind privatisation. But if the public sector can provide a higher level of service at less cost to the taxpayer it's difficult to see why they shouldn't be allowed to do so.

  We therefore recommend that the public sector should be allowed to compete with the private sector to provide rail services.

Franchise areas

  It is widely considered that dividing the network up into 25 franchises resulted in fragmentation and the loss of economies of scale. Consolidation is now taking place as large combines group together the franchises they control. These groupings are logical to the corporations involved but have little geographical logic for the travelling public. With many of the franchises elapsing at the same time there is the opportunity to create new, larger and geographically logical franchise areas. For example most of Network South East could be put back together again in the early years of the next Century. A coherent regional network for the north could be established by creating a new operating region out of the current Merseyrail, Northern Spirit and North West Trains franchises. All these options should be considered by the SRA.

Enforcing existing franchise contracts

  We strongly support the Government's proposals to strengthen the sanctions available to the SRA when train operators fail to meet their commitments.

  However, we would go further and propose that the SRA should seek to should examine ways of improving conditions for passengers by renegotiating existing contracts. For example licences for franchisees could be changed to give them a new duty to co-operate, rather than compete, with other operators. Unprotected fares, such as SuperSavers and Cheap Day Returns, could be given protection, and protection for services could be stepped up by revising the Passenger Service Requirements.

  There is also a case for giving RUCCs responsibilities for contract enforcement in order to give rail travellers more direct influence over the operation of the services they use. Section 2.8 explores this proposal more fully.

Dealing with unviable franchises

  An issue the Government fails to address is the long-term unprofitability of a number of the franchises. These franchises tended to be those let late on the franchising process when speculative interest in rail privatisation was at its height. At that time a number of bids were accepted for franchises which are widely considered to be unviable: the reduction in subsidy over the seven years of franchise being too great. This has obvious and serious implications for rail users as the franchise contracts allow for significant fare increases, service reductions and low performance standards. Some of the holders of these franchises have, or will, attempt to sell on the franchise to one of the large transport combines. North West Trains has already been sold by its original owners to First Group. MTL (operators of the Northern Spirit and Merseyrail franchises) are currently looking for a buyer. However, the experience of North West Trains suggests that the large combines will not be prepared to cross-subsidise weak franchises from profits generated elsewhere within their business. First Group Executive Chairman, Trevor Smallwood, has described the NWT franchise as of "no value" (source: Rail 26 August 1998); reliability of the service has collapsed with significant sections of the network suffering a cancellation rate as high as one in every 20 trains; station and cleaning staff have been cut back; major service cuts are being planned for the 1999 Summer timetable; and unprotected fares like Cheap Day Returns are being increased by more than three times the inflation rate. The Greater Manchester PTA has described the service as "diabolical" and is threatening to withdraw payments to the company.

  The experience of North West Trains should be taken as a warning of what we can expect on other parts of the network as subsidies for fundamentally unviable franchises are reduced year-on-year. It also shows that its the franchise contracts that to a large extent will determine the service the passenger receives, which company is running that contract is a secondary issue.

  It is for this reason that we propose that the SRA should be prepared to terminate fundamentally unviable franchises and either return the operation to the BRB or relet on the basis of quality contracts with the public sector allowed to bid.

  Higher quality contracts which are let on a viable basis will almost certainly require more subsidy than was previously budgeted for by OPRAF. We therefore welcome the Government's decision to review whether fines levied against rail companies should be recycled back into the industry rather than lost to the Treasury. If the SRA could retain the fines it levied, this money could then be used to help fund any additional costs attributable to the introduction of viable, higher quality contracts.

2.4 The SRA and Local and Regional services

  We are disappointed that both the White Paper and the rail proposals fail to fully address the potential for local and regional authorities to take more control over local rail services. We believe that in the eighties it was local authorities, and particularly PTEs, that spearheaded the revival in local rail services. The achievement of both the West and South Yorkshire PTAs in nearly doubling the use of their local rail networks is a powerful reminder of their success.

  Different levels of local and regional government may be appropriate in different regions:

    —  There is considerable scope for creating a number of new PTAs (East Midlands, South Wales, South Hampshire, Lothian, Avon have often been suggested) or extending the regions covered by existing PTEs;

    —  In Scotland and Wales the assemblies need overall power over their national networks although there is a good case to be made for a second tier of PTEs;

    —  Giving the London Authority more powers over London's local rail services will be crucial if the Mayor is to tackle the Capital's transport crisis effectively;

    —  In other areas of the country powers over local rail services could be delegated to County level, or to joint boards covering a number of Counties and/or unitary authorities.

2.5 The SRA and Fares

  According to a survey by the Union Bank of Switzerland, Britain now has the most expensive rail fares on the planet. We probably also have the most complicated fares structure in the world.

  If we are to attract more passengers then the fares structure has to be a key issue.

  Given its role in refranchising there is a strong case to be made for a root and branch review of rail fares. The aim if which should be to make rail fares more affordable and to create integrated regional and national fares structures which are both coherent and attractive to potential rail users.

  Among the ideas the SRA could consider would be:

    —  more regional multi-modal Travelcard schemes;

    —  getting an appropriate balance between book-ahead and walk-on fares on long distance routes;

    —  increasing the discount levels on the existing railcards (currently a third off);

    —  introducing a national discount railcard;

    —  introducing Dutch-style "strippenkaarts" which can be used on local public transport services throughout the country.

2.6 The SRA and competition

  We welcome the proposal that the SRA should contain head-to-head competition on the network within a longer term policy framework to ensure continuing safeguard against erosion of a properly integrated rail network.

  We believe that existing competition, and the threat of the extension of competition is already having a detrimental effect for passengers. Rail companies should not be competing with each other—rail already has more than enough competition to deal with in taking on the plane and the car.

2.7 Opening up the network to all

  Fourteen per cent of the population have some degree of disability, yet too many stations and trains are difficult to use. In addition many people are deterred from using rail by the fear of crime. Recent research by the British Transport Police showed that only 40 per cent of passengers and 22 per cent of staff felt safe on stations at night while 61 per cent of passengers felt safe on trains at night compared with 31 per cent of staff.

  By excluding such a large proportion of the population from the rail network, rail operators are missing out an enormous market. The network needs to be opened up to all members of society. At present there are "islands" of good practice but no sense of a coherent plan for opening up the network as a whole. Pushing forward a network plan for opening up the rail system for all, should be a key role for the SRA.

  We therefore advocate that the SRA should be given a rolling programme of target dates for progressively increasing the percentage of stations and interchanges which are both accessible and meet "safe station" criteria for eliminating both crime and the fear of crime.

2.8 Creating a seamless network

  We advocate a stronger role for the SRA in reintegrating the rail network.

  Recent research by Transport 2000 ("Blueprint for Quality Public Transport", 1997) shows how important it is to develop a "seamless" and integrated public transport network if people who have a choice are to be attracted back to public transport. Detailed focus groups surveys revealed that six out of 10 people do not like using public transport; eight out of 10 people find it difficult to get where they want to go with public transport; seven out of 10 find that using public transport doesn't come naturally to them and almost five out of 10 admit to problems understanding timetables.

  In practice bringing about integration and the "seamless"railway means:

    —  Providing accurate, comprehensible and easily available information about services.

    —  Ensuring that services connect with each other.

    —  Making stations safe, pleasant and easy to use.

    —  Introducing straight-forward and multi-modal fares.

  Privatisation has taken the rail network in the opposition direction. Companies promote their own branding and services at the expense of their role within a national network; the national rail enquiry service has a reputation for being unreliable; the use of information technology for the benefit of passengers is underdeveloped; and national advertising for the "rail brand" has disappeared.

  The SRA should be given responsibility for bringing about a "seamless" and integrated rail network. Its duties should include:

    —  Requiring all parts of the industry to co-operate in providing passengers with an integrated and seamless rail network.

    —  Reinstating BR's "Informed Traveller" project. This was a major initiative to use information technology to provide accurate, real-time information for passengers at all stages of their journey. In the Netherlands a single computer programme provides door-to-door public transport information. A similar system here could be a significant factor in increasing the use of public transport.

    —  Drawing up an enforceable connections policy.

    —  Taking over the management of the National Rail Enquiry Service as well as travel centre and booking office staff.

    —  Reinstating national advertising, marketing and promotion of rail travel.

    —  Responsibility for the national timetable.

2.9 Improving Passenger representation and consumer protection

  We welcome the Government's proposals to reform the Rail Users Consultative Committees. We fully support their intention to "make more use of the committee network".

  However, if the RUCCs are to become more effective advocates for the travelling public then they will need a new image, more resources and more powers.

    —  At present the RUCCs are so stretched they can do little in the way of original research into passengers concerns (for example new service proposals or station facility surveys).

    —  Many passengers are ignorant of the existence of the RUCCs. The RUCCs need a higher profile, and "rebranding" and relaunching, perhaps as "passengers panels".

    —  They should be given the power to require disclosure of evidence and attendance of witnesses.

    —  They should also be given a duty to foster the development of genuine local user groups, from whose ranks in due course the majority of their own members could be recruited. Their outreach and enabling role should extend to users forums, passengers, surgeries and the like.

  There is also a case to be made for extending the remit of RUCCs to more direct supervision of TOC contracts. The RUCCs could be given a duty to hold regular public hearings, preferably quarterly to tie in with reporting cycles of operator performance. These hearings could have the power to affix a scale penalty if performance falls below commitments, and to reduce this penalty in the face of convincing explanations (e.g., other providers' responsibilities) or increase it (in the absence of any action plan or where franchises are close to the end with no prospects for renewal).

2.10 The Rolling Stock Leasing Companies

  Given the current levels of under investment in rolling stock renewal we urge the Government to regulate the ROSCOs as soon as possible.

  According to figures from ORR, in the first four years since the ROSCOs were created in 1994, 745 new vehicles have been ordered of which 625 will be leased from ROSCOs (source: ORR report to Government—Review of the Rolling Stock Market, 5/98).

  In its last five years prior to privatisation, BR delivered nearly 400 new vehicles a year. Independent assessments of the rate at which new vehicles need to be ordered if the fleet is to be maintained at "steady state" vary from 500 a year (Rail, 11/2/98) to "more than 300 a year" (Labour Finance and Industry Group evidence to the Transport Select Committee).

  The ROSCOs receive public subsidy, indirectly via the TOCs, in return they should ensure that the rolling stock fleet is properly renewed and maintained. This is clearly not happening now, and until the ROSCOs are brought within the regulatory regime, we believe it is highly unlikely to occur in the future.

2.11 The SRA and rail freight

  We welcome the Government's intention to give the SRA major responsibilities for the promotion of rail freight. This should enable freight to get a far better deal from Railtrack than it has hitherto enjoyed,

  In passing, we also note the contrast between the success and reputation of privatised rail freight and privatised rail passenger services. Rail freight is largely run by one company owned by a combine whose sole business is rail. Rail passenger services are fragmented and are run by a variety of combines who see rail as one element within their wider commercial strategies.

  The long term success of rail freight is dependent on wider Government transport policies. Although the Government has yet to publish its sustainable freight strategy, the likely contents have been indicated and lead us to advocate the need for a tougher set of proposals. These should incorporate a weight distance charge, a properly enforced lorry route network and significant restrictions on access to non-trunk roads by the biggest lorries within two years.


  We welcome the creation of a Strategic Rail Authority. Given the scale of the task it faces, the legislation for the SRA needs to be enacted as soon as possible.

  The Government's rail proposals set out a logical remit for the SRA but if it is to be an effective body many of its proposed powers and responsibilities will need to be amplified and strengthened.

  In particular the SRA needs more direct control over Railtrack in order to step up investment and performance levels; and it needs to be able to bring in "quality contracts" with operators as soon as possible.

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