Memorandum by the South Hampshire Rail
Users' Group (PRF 12)
PASSENGER RAIL FRANCHISING
Long-term, stable but responsive, arrangements
should be a prime goal in almost any area of government policy.
They can maximise value from taxpayers' investments and allow
people to go about their lives with confidence in the future.
Short-term contracts look anomalous against a ten-year transport
plan. In the case of the railways, the long timescales for achieving
change mean that such contracts may offer the operators little
or no return from investment. Major financial contributions by
the private sector therefore become unlikely.
However, huge amounts of public money have gone
into the rail industry since privatisation, "fat cats"
have been created, and in many areas of the country passengers
get worse standards of service. It should by now be clear to all
sides that things have gone badly wrong. A change of course looks
inevitable, but the Government's new thinking will prove right
only if it can offer both an escape route from past mistakes and
a clear strategy for the future. It would be unwise to reject
short-term arrangements out of hand. Some rail companies have
now agreed to significant improvements in return for short term
extensions of their contracts.
The strengths of BR
Opinion sampling by the media suggests there
are significant public aspirations for re-nationalisation. BR
was perceived by many as bureaucratic, over-staffed and unresponsive,
but it had many strengths:
The public service ethos. It is a
legendary anecdote that the late Sir Bob Reid, when Chairman of
BR, would answer policy questions with the counter-question: "What's
best for the passenger?" Sir Peter Parker popularised the
national system by offering bargain Saturday excursions on quality
trains used by business travellers during the week. Chris Green
brought affordable off-peak travel to the populous South East
through the Network Card.
Investment in electrification or
new diesel trains often led to a major cascade of rolling stock
with the oldest coaches being confined to the scrapheap. This
meant that one scheme could bring far-flung advantages to taxpayers.
A national fare structure meant that
experienced passengers could make a reasonable estimate of the
cost of any journey, by taking account of distance, day of week,
and time of day.
There were nationwide regulations
which were generally unremarkable.
Standards of personal service were
Timetables were recast over wide
areas, ensuring journey opportunities were not sacrificed by unreliable
or time-wasting connections.
Until the Clapham disaster, high
safety standards were taken for granted.
The problems with privatisation
Passengers now feel that they are
at the mercy of some private companies like South West Trains,
which are seen as operations-driven and making big profits from
big subsidies by providing an unreliable service.
There is no rolling stock cascade,
so the quality gap between old and new carriages widens.
The fares structure is unintelligible
and not even booking clerks always know whether someone is getting
the cheapest fare for their needs.
Some passengers can buy their tickets
in the comfort of a train seat, whilst others can get a penalty
fare, and be made to feel criminal, just by going near a train
without a ticket. There can be substantial problems for passengers
required to use ticket machines. For example, how can a non-regular
traveller be expected to know the difference between a travelcard
(London zonal ticket) and railcard (pre-purchased pass giving
entitlement to reduced fares)?
Personal service varies immensely,
from Connex, where passengers can travel long-distances without
seeing a member of staff, to good hotel standards on GNER.
Timetable changes can incur severe
time penalties for "losers", as in SWT's recast of Waterloo-Weymouth
line services from 1999, which brought slower journeys and older
rolling stock for passengers using the major interchange at Clapham
Junction. In addition, the decelerated off-peak services between
Waterloo and Poole now block two of Southampton Central's four
tracks for about 20 minutes of each hour, severely constraining
capacity. The changes have thwarted Anglia Railways' plans to
introduce Southampton-Norwich trains, linking with the Heathrow
bus shuttle at Feltham. This is the rail equivalent of Stagecoach's
behaviour to other bus operators which the Monopolies and Mergers
Commission condemned as "predatory, deplorable, and against
the public interest."
A series of disasters has drained
passenger confidence, with Railtrack seen as putting profit before
Overall, inconsistencies across the
train operating companies mean that fewer passengers are likely
to be totally content. For example, who wouldn't like new Virgin
trains, GNER customer service, and Chiltern's long-distance day
returns in combination?
Re-franchising: what went wrong?
Re-franchising was supposed to procure big improvements
for passengers through longer franchise contracts. Unfortunately,
the exercise immediately followed two separate routes and derailed
The Deputy Prime Minister made clear
that the interests of passengers were paramount, and there would
be no room in the rail industry for the worst performers. The
Rail Passengers Committees went to great lengths to consult local
government and rail users and compiled exhaustive lists of aspirations.
Sir Alistair Morton chose to be non-prescriptive,
asking the train operators what they were prepared to offer.
These opposite approaches inevitably
meant that no unified strategy emerged. The results have been
bewildering for passengers. The first outcomes, the new long-term
contract for Chiltern and the short extension for Midland seemed
fairly uncontroversial. Both companies' tenures had reflected
perceived strengths of BR, in particular by offering maximum benefit
from new trains through full timetable recasts.
Connex's loss of their South Central
franchise was no surprise, given their performance record. Rival
bidder Govia was open and consistent in its intentions: commitment
to new rolling stock and recast timetable, upgrading of the Mid-Sussex
route, electrification of the Ashford-Hastings and Oxted-Uckfield
lines, and long-term aspiration to reinstate the Uckfield-Lewes
link. This sounded like classic BR, and likely to receive public
acclaim. However, the lively public meeting of the Rail Passengers
Committee at Lewes in May revealed that East Sussex residents
would have preferred to keep Connex, with the Uckfield-Lewes link
being given priority over the more westerly Mid-Sussex line, improving
prospects for the ailing East Sussex economy. Lack of a unique
strategic drive meant that Connex versus Govia had become East
Sussex versus West Sussex.
In the case of the East Coast route,
Virgin proposed a new relief route and GNER enhancement of the
existing route. The SRA was seen to dither in choosing between
such greatly different proposals, but users campaigned through
the Yorkshire Post to keep GNER, and have succeeded, although
initially only through a two-year extension.
Choice of Stagecoach as the preferred
bidder for South West Trains was probably the greatest shock for
passengers. In the January 2001 edition of "Inside Labour"
the Deputy Prime Minister stated: "The Strategic Rail Authority
has already shown its clout by taking action against one franchise
for failing passengers". Similarly, "Choices for Britain"
refers to the SRA's tough new powers, stating: "Already one
rail company has been stripped of its franchise. This clearly
refers to Connex South Central. Yet SWT's record had been abysmal
in terms of both performance (always near the bottom) and the
SRA's own latest findings on passenger satisfaction (20th place
out of the 26 operating companies).
The treatment of Connex seems perfectly
in accord with the Deputy Prime Minister's stated approach, but
the success of Stagecoach on SWT is perceived by many commuters
as a betrayal of their interests, and sending out a dreadful message
to the rail industry that in future poor operators have little
Rival bidders for SWT (GNER and First
Group) had their bids rejected, even though they had both achieved
much higher passenger satisfaction ratings than Stagecoach. GNER
(3rd place in the SRA's satisfaction ratings) and First Great
Eastern (9th place) also shared the National Rail Award 2000 for
South West Trains re-franchising: passenger disillusion
History had been ignored. The original
franchising of SWT to Stagecoach was the privatisation which the
Conservative government came to regret. The company won the franchise,
and a subsidy of £350 million from public funds over seven
years, with a bid which was just £200,000 lower than that
of the existing management.
After winning the franchise, Stagecoach
quickly disposed of 125 middle managers and 71 train drivers.
Within a year, the company was unable to run the advertised service.
Some services were suspended and a permanently reduced service
of local stopping trains was introduced in road-congested Southern
The public outcry was immense. Typical
of the comments were those of the prospective parliamentary candidate
for Southampton Test, Alan Whitehead, who is now a Parliamentary
Under Secretary in DTLR: "We have the misfortune to live
in the part of the country served by the worst single example
of rail privatisationSouth West Trains. Anybody who has
travelled on the service recently will know that the whole system
is in chaos, added to by South West Trains' recent decision to
scrap more than 190 of its services in a week." (Southern
Daily Echo, 8 March 1997).
Steven Norris, the Under Secretary
of State for Transport at the time of the franchise exercise,
has said, "Awarding the franchise to Stagecoach was really
taking the fight to the enemy... It was the most aggressive decision
we could take, and if we had to dress privatisation in its most
acceptable form, it would have been better to award it to almost
"We in the Conservative Party
were very happy at the way rail privatisation was goingnew
investment, new ideas, new services. ... SWT instantly unwound
all that. It was so obviously to the disadvantage of passengers,
and so clearly an act committed by a private company. It left
a bad taste instantly in people's mouths about SWT. Even now,
the intelligent non-transport buff will remember SWT and it will
take years to get SWT out of the political lexicon". (from
the book "Stagecoach" by Christian Wolmar).
Who could have imagined that New
Labour would tolerate and reward a private train operator which
had earned the condemnation of the Conservatives?
Since 1997, SWT under Stagecoach
has gained a reputation among regular passengers for:
soaring profits from public subsidy
which are completely disproportionate compared with those of other
increasingly huge fines for bad performance,
running short trains, omitting scheduled stops and terminating
trains short of destination;
use of ruthless clamping contractors
at some station car parks, sometimes with cavalier treatment of
refusal to hold vital connections
for even a few seconds;
lack of information, particularly
when things go wrong;
poor maintenance leading to protracted
absence of passenger facilities and non-functional information
severe discomfort for passengers
from broken seats and faulty air-conditioning on trains;
awards for "secure stations"
where ticket gates are unattended and locked out of use in late
evening when passenger security is a real issue;
poor industrial relations with recurrent
strike action; and
a constantly high level of passenger
discontent and anger manifested in huge numbers of letters of
complaint, the replies to which in many cases take months to reach
the writer and are usually in the form of unhelpful standard letters.
Remarkable chain of events after Stagecoach named
preferred bidder for SWT
The announcement of Stagecoach as preferred
bidder has been followed by a series of events which have further
shaken passenger confidence in re-franchising:
SWT's annual profit for 2000-01 soared
further to £45 million, equivalent to some 80 to 90 per cent
of taxpayers' subsidy for the year. This is hugely disproportionate
to the profits of other operators. Stagecoach explained the profit
in terms of its having being comparatively unaffected by the aftermath
of the Hatfield crash (Evening Standard, 20th June 2001).
Despite its fortunate position post-Hatfield
(and therefore presumably being owed only limited compensation
from Railtrack for operating impediments), SWT's annual performance
penalty soared to £11.5 million, compared with £3.9
million the previous year.
Stagecoach's pre-tax losses for the
year amounted to well over £300 million, casting doubt on
whether it could commit SWT to much investment beyond the hire
of new rolling stock for the mandatory replacement of Mark I coaches.
Passengers cannot have an effective
voice on rail issues when the full facts are not available to
them. It became clear that, although the Government has long declared
that rail passengers should have an effective voice, Stagecoach
had deliberately spread confusion about the scale of its commitment.
SWT Chairman, Graham Eccles, is quoted in the May edition of the
journal Rail Professional as saying, "For the big PR hit,
what you do is add up guaranteed outputs, the primary aspirations
and the secondary aspirations, and then you shout loudly".
Consistent with this approach, SWT
Managing Director, Andrew Haines, presented the whole package
of commitments (£1.7 billion) and aspirations (£1.8
billion) in the Southern Daily Echo of 6 February as "real
benefits for the people of Southampton" compared with Sea
Containers' "vague promises". This clearly suggested
that all the elements of the package were promises, and that people
could therefore rely on full implementation if the Stagecoach
bid proved successful. Subsequent letters from rail users to the
Echo and other local papers are demonstrating confusion and disappointment.
Following the announcement of Stagecoach's
successful bid, the Spring edition of SWT's Gold Service magazine
for annual season ticket holders bore the following message from
Mr Haines: "In all we plan to invest around £3.5 billion
in delivering a better service to you. On paper that amount of
money means little, but in terms of refurbished stations, passenger
lounges, disabled access, state-of-the-art information systems,
better security, new trains, extra staff, better ticketing facilities
and improved performance it means an awful lot". In fact,
the items outlined are broadly the components of SWT's £1.7
billion bid, so £3.5 billion would indeed provide an awful
Glossy zonal leaflets, currently
displayed on trains and at major stations, refer to an order of
785 new trains worth around £1 billion. In fact the order
is for 785 new carriages with a purchase price of £640 million.
The Advertising Standards Authority is looking at this.
The railways need a supremo to drive
up standards in all areas of activity, including safety, infrastructure,
timetabling, rolling stock procurement and maintenance, ticketing
and customer service. While the industry relies on subsidies from
taxpayers it must be prepared to accept control mechanisms comparable
with those which operate in the public service.
Best practice should be robustly
pursued in all areas. This will tend to bring some degree of uniformity
to a fragmented industry and make it less likely that anything
will go seriously wrong in some particular corner.
The two-pronged approach of seeking
public aspirations and industry proposals as discrete exercises
should end. The Government should identify taxpayers' aspirations,
make strategic decisions, and negotiate with satisfactory operators.
The worst operators should have no place in the industry, as the
Deputy Prime Minister used to make clear.
In recognition of the problems for
operators of long-term investment under short term contracts,
the Government should negotiate with them to achieve its strategic
aspirations. Instead of offering twenty year contracts in return
for a mixture of committed outputs and long-term aspirations which
may never materialise, the length of a contract should be relative
to the scale of committed output. There should then be periodic
reviews, perhaps every two years at which, subject to satisfactory
performance and attainment of targets, the term of the contract
could be rolled forward in return for additional commitments.