Memorandum submitted by the Shadow Strategic
Rail Authority PAC 2000-2001/275
The purpose of this paper is to inform the Committee
of relevant developments since the publication of the NAO Report
(HC 842. 1999-000) on 3 August 2000. It is hoped that the Committee
will find this information useful in advance of the oral session
to be held on 27 November 2000 with Mike Grant, the Director of
Passenger Rail Franchising and Chief Executive of the Shadow Strategic
Rail Authority.
HATFIELD
The industry has been shaken by the tragic accident
at Hatfield and its immediate consequences following Railtrack
safety checks across the network. The implications of this are
being examined as a matter of urgency through a joint industry
review process which is explained further below.
TRANSPORT 2010—THE
10 YEAR PLAN
The plan, published in July, announced a £60
billion package for the railways, about half of which will be
funded by the SRA directly. It sets out the targets for growth
and quality which the railways must meet to deliver their part
of the overall transport plan.
The elements of the plan to be funded by the
SRA includes:
— £12 billion for support for
the passenger and freight railway;
— £4 billion for projects including
WCML (West Coast Main Line);
— £5 billion for CTRL (Channel
Tunnel Rail Link); and
— £7 billion for the RMF (Rail
Modernisation Fund).
PASSENGER—FRANCHISE
REPLACEMENT
As the NAO Report explains (at para 1.10), the
sSRA, under Objectives, Instructions and Guidance from the Secretary
of State, embarked in 1999 on a programme of franchise replacement
aimed at stimulating investment in additional capacity and improving
the quality of services for passengers. That programme is proceeding
apace.
On 10 August, the sSRA announced that Heads
of Terms had been reached with M40 Trains on the replacement Chiltern
Railways franchise. This has been followed by continuing negotiation
and due diligence which will lead to the signing of a new 20 year
franchise agreement in due course. As the first of the new replacement
franchises, this gives an indication of the significant investment
that is to be achieved in increased capacity and service quality
through this approach. The Chiltern franchise has generally been
well run, with relatively modern equipment, and has achieved growth
of some 15 per cent passenger miles for five years. The replacement
franchise indicates the further step change in quality and capacity
which is possible and which will deliver the objectives sought
in the 10 Year Plan.
Committed investment in the franchise totals
£370 million and the key features under negotiation of the
first phase of the new franchise are designed to deliver:
— 50 per cent increase in train miles;
— 15 out of 16 trains to run on time;
— All trains to be new or refurbished;
— Level access at all stations within
the first four years; and
— Increased car parking at stations.
As a second stage, the franchisee will develop
plans for journey time improvements on its services to Aylesbury.
In the longer term, the new franchisee will
examine the case for:
— A new interchange station at West
Hampstead, giving access to the Jubilee Line and other parts of
the national rail network;
— A new line from Princes Risborough
to Oxford via a new Parkway Station from the M40;
— Possible restoration of services
north of Aylesbury onto the east-west route which runs from Oxford
to Bletchley and Milton Keynes;
— An extension north of Aylesbury to
an M1/M6 Parkway Station near Rugby.
On 24 October, the sSRA also announced that
it had reached Heads of Terms with GoVia the preferred bidder
for the South Central Franchise, securing total investment of
almost £1.5 billion.
— £325 million in infrastructure;
— £250 million in stations and
depots;
— £900 million in rolling stock;
as well as creating additional train paths between
London and the Sussex Coast, enhancing South London Metro services,
replacing Mark I trains and electrification of the two remaining
diesel routes.
The sSRA expects by end-2001 to reach Heads
of Terms with preferred bidders to replace 18 franchises due to
expire by September 2004. Those include the Merseyrail and Island
(Isle of Wight) franchises, for which a different form of local
franchise is under discussion.
PASSENGER—FRANCHISE
EXTENSION
On 10 August, the sSRA announced a two year
extension of the MML (Midland Main Line) franchise, operated by
National Express Group.
The MML franchise was a longer franchise, due
to expire in 2008. The extension to the franchise has been agreed
on a "no subsidy/no premium" basis, and has secured
£238 million of new investment by the company. The benefits
include:
— A new fleet of high speed trains;
— Infrastructure improvements;
— Ten minute journey time reduction
between London and Sheffield;
— A 2 per cent improvement in punctuality
by 2008; and
In August and September, the sSRA announced
negotiated deals, first with Prism Trains (holder of four franchises)
and then with National Express Group which moved from five to
nine when it acquired Prism with the Franchising Director's consent.
The net product of those deals will be significant investment
in the long-term London, Tilbury and Southend franchise (London
commuters) and consent to proceed early without further cost to
terminate two franchises whose routes will go into Wales &
Borders or Wessex and one, WAGN (West Anglia Great Northern),
which will be split and absorbed into Thameslink and Great Eastern
upon refranchising.
INFRASTRUCTURE
The NAO Report (at 3.25) rightly drew attention
to network capacity as the root cause of overcrowding and increased
capacity as the key to accommodating passenger growth.
The £7 billion RMF provided in the 10-Year
Plan is to be managed by the SRA and will provide funding direct
to Railtrack and others throughout the 10 year period both as
a basis to lever in additional private sector investment in infrastructure,
and to purchase incremental capacity or performance outputs where
this is not a commercial proposition within a normal period for
return on capital or have wider social benefits. The RMF will
supplement the SRA's support of infrastructure investment through
franchise support payments to TOCs, enabling them to meet Railtrack's
track access charges.
RAIL REGULATOR'S
REVIEW OF
RAILTRACK'S
CHARGES
The Rail Regulator published his Final Conclusions
on setting Railtrack's charges for the next control period (2001-2006)
on 23 October 2000. These provide for a very substantial rise
in Railtrack's income over the next control period as compared
with the last six years. The Regulator has described his review
as providing Railtrack with £15 billion over the next five
years to deliver a modern safe railway able to invest strongly,
competently and efficiently in the railway industry. The sSRA
is discussing the implementation of the review with Railtrack
and the train operators.
STRATEGIC PLAN
Between Royal Assent to the Transport Bill 2000
and the formal establishment of the SRA (assumed to be 1 February
2001), the sSRA will publish a Shadow Strategic Plan. This will
be a statement of intent for vigorous action during 2001 and beyond
on refranchising, freight development and infrastructure project
preparation and progress (the last in partnership with Railtrack).
This statement will invite comment and reaction to our intentions,
and will specify a number of strategies on which we are obliged
to consult before adoption. Following that process, the SRA's
first formal Strategic Plan will be published in Autumn 2001.
RAIL INDUSTRY
COOPERATIVE REVIEW
The Shadow Strategic Plan will also reflect
the findings of the joint industry examination of impediments
to integrated operation of the railway to ensure safety, performance
and capacity for growth. This review, requested by the Deputy
Prime Minister in response to the issues raised by the accident
at Hatfield on 17 October 2000 and its aftermath, is being led
by Sir Alastair Morton, Chairman of the Shadow Strategic Rail
Authority. Through a series of joint working groups it is examining
where perverse or conflicting incentives or interests may be militating
against integrated operation of the railway. The sSRA Chairman
will report to Ministers in December.
Strategic Rail Authority
13 November 2000
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