Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by the Association of Train Operating Companies (PRF 32)



  The Association of Train Operating Companies (ATOC) represents the 25 franchised train operating companies. ATOC is pleased to submit this written evidence to the Transport Sub Committee Inquiry into the draft policy statement on passenger rail franchising issued by the Secretary of State for Transport issued on 16 July 2001, and on the draft directions and guidance to the SRA issued by the Secretary of State on 29 June 2001.


  What Stephen Byers wants from the SRA on franchising was made very clear in his statement made on 13 July 2001:

    "The SRA should concentrate on improving services for passengers within existing franchises, or by negotiating short two year extensions".

  He has also said that the SRA is required, as its prime objective, to work within its statutory objective to deliver:

    —  50 per cent growth in passenger kilometres while at the same time securing improvements in punctuality and performance;

    —  standards on overcrowding;

    —  a significant increase in freight's share of the freight market by 2010.

  These primary objectives and other objectives set out in the draft guidance, are to be achieved within the budget which is available. This budget is under greater pressure since the publication of the 10 year plan.

  This is a different agenda to that which was presented to train operators 18 months ago. How different it is will emerge more fully following the decision by Ministers on the new franchise replacement and extension programme which is expected shortly, and the SRA's strategic plan which is due to be published in November.

  The comments that ATOC has on the Governments policy statements can only therefore be preliminary views

  ATOC shares the view of Ministers that fresh directions are needed given the changes to circumstances and the slow progress that has been made on securing new franchises and new investment. Below are a set of suggested supplementary directions to the SRA which may be implicit in what the Secretary of State has said, but which we suggest are worth expressing explicitly:

    —  Train operators should be involved more closely by the SRA in the development of strategies. Train operators believe that they can make important contributions to the development of strategies. This experience should be drawn upon more fully than has been the case to date. In part this can be done through the bidding process but there are earlier stages in the development of plans where the involvement of train operators would be helpful. A good example is the review of the allocation of track capacity which is about to start.

    —  There must be tighter project planning of franchise extensions and replacements. When the refranchising programme was initiated in June 2000, it was said that:

    "Replacement of the shorter term franchises, expiring in 2004, should be completed in 2001".

  This did not happen. There are of course reasons why this did not happen, many of them good reasons. But if we are to achieve the targets and objectives by Ministers in a reasonable timetable for the benefit of customers, the extension/replacement programme must be more carefully planned.

    —  The resources which are available to meet the targets and objectives must be reviewed in the light of events since the publication of the 10 year plan. Train operators recognise that railways are competing for resources with other Government priorities. We also recognise that the bold vision in the 10 year plan for transport in general and rail in particular was unprecedented. Significant additional calls on the finance in the 10 year plan have however arisen—extra money for Railtrack, DDA, and significant additional safety requirements—and there are also further interim reviews of Railtrack's finances in the pipeline. The SRA's Strategic Plan must test the consistency of targets and resources, and consider the inevitable trade-offs. Train operators can help in this.

    —  The SRA must work more closely with the DTLR. It has been evident that the requirements of Ministers have not always been met, and this has led to delays in decision making. The most obvious case of this is the ECML bidding. There are already signs that a closer relationship is being established, and the publication of the two draft policy papers helps in this. This must however be kept under continual review and where necessary further instructions and guidance should be given.

    —  There must be greater constancy of purpose to attract the right amount of investment from the private sector. The shift of policy over the past 18 months has been noted above. If the private sector is to invest in rail in the broadest sense (ie ranging from investing in the preparation of bids to acquiring assets) there must be a core consistency of purpose. Without this consistency, private investment will not be forthcoming. ATOC looks to the translation of the Ministers Policy Statements into the SRA's Strategic Plan and franchise replacement plans to re-establish that consistency of purpose.

  On a drafting point which is of considerable importance, the passenger overcrowding standards set out in the Instructions and Guidance is not the correct one. We believe that in the attempt to simply the drafting of the standard which appears in each train company's franchise agreement, important features of the existing standard have been lost. We suggest instead that the overcrowding standard references what is in the franchise agreements.

  Finally, ATOC recognises that choices will need to be made in the context of the SRA's strategic plan and government expenditure plans. We urge that they are made quickly. This will then provide the stable platform for planning and attracting private sector investment.

September 2001

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