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

Memorandum by Merseytravel (PRF 36)


  Merseytravel is the operating name for Merseyside Passenger Transport Authority and Passenger Transport Executive which act together in planning and co-ordinating public transport on Merseyside. The Authority is made up of elected members appointed by the five Metropolitan Districts of Merseyside: Liverpool, Knowsley, Sefton, St. Helens and Wirral. Merseytravel is responsible inter alia for franchised bus and rail services, concessionary travel, transport information, disability access and a range of other functions, including the direct operation of the Mersey Ferries and the Mersey Tunnels.


  1.1  Merseytravel is a co-signatory with the SRA in the Franchise Agreements covering the Arriva Trains Merseyside franchise and that part of the First North Western franchise which operates in Merseyside. Merseytravel has retained revenue risk and the franchises operate locally on a managed cost basis.

  1.2  The Arriva Trains Merseyside network (formerly Merseyrail Electrics) operates as a self-contained third-rail electrified network centred on the Liverpool Underground "Loop and Link" which was constructed in the 1970s. Arriva Trains Merseyside operate the Northern and Wirral Lines of the Merseyrail network. The network contains 66 stations and operates 3.7 million train miles per annum, carrying 28.9 million passengers a year. Despite poor operational performance, passengers were growing at a rate of 6 per cent per annum before the Hatfield accident. This trend reversed as a consequence of the accident and other issues and only recently is showing some signs of re-establishing itself.

  1.3  The First North Western franchise operates the Merseyrail City Line which provides the local services in and out of Liverpool Lime Street to 26 stations on the Merseytravel supported network and to cross-boundary destinations such as Wigan, Preston, Manchester Victoria, Warrington Bank Quay, Warrington Central and Manchester Airport. First North Western Merseytravel-supported services carry 4.8 million passengers per annum. The City Line has been subject to rapid growth in patronage but this has also been affected by the post Hatfield downturn.

  1.4  Monitoring indicates that pre Hatfield growth peaking at 13 per cent per annum had been reached. This was due in part to consistently good service performance by First North Western in delivering Merseyside services and Merseytravel's development policies covering frequent clockface service frequencies, new services and investment in the line.

  1.5  Two new stations at Wavertree Technology Park and Lea Green opened recently funded by Merseytravel and EU Objective One resources. The Merseyrail Northern, Wirral and City Lines, despite the existence of two different operators are marketed and branded as the Merseyrail network serving Merseyside with local identity, fares and ticketing structures reflecting Merseytravel's policies.

  1.6  Merseytravel is a funder of the network through the two Franchise Agreements with Arriva Trains Merseyside and First North Western but also has invested heavily in the modernisation, enhancement and extension of the network. Before franchising Merseytravel sponsored several third-rail electrification extensions (most recently to Chester and Ellesmere Port) new stations, station revitalisations, interchange and several park and ride developments. Merseytravel has continued to invest through improvements specified under the new franchises (CCTV, telephones and help points) and also through directly funded station schemes. Recent schemes have included new stations at Brunswick, Conway Park, Wavertree Technology Park and Lea Green, station revitalisation and access improvements at Kirkdale, Old Roan and Aintree interchange and park and ride developments at Aintree, Maghull, St Helens Junction and Wallasey Grove Road.

  1.7  Merseytravel has taken the view that, despite the difficulties presented by the new railway structure, the need to regenerate Merseyside and passenger needs should be protected and enhanced. Merseytravel has therefore worked closely with the rail industry and other partners to overcome these difficulties.

  1.8  Merseytravel has promoted partnership both within the railway industry and with outside parties such as the five District Councils on Merseyside, adjacent Shire and Unitary Authorities, regeneration agencies such as the Merseyside Development Corporation, City Challenge and Regional Challenge Initiatives, Single Regeneration Budget programmes and European Regional Development Fund programmes.

  1.9  Merseytravel also works closely with partners in the region; examples are a study into the transport linkages across the Mersey Belt (focusing in particular on linkages between Liverpool and Manchester), the Transpennine Rail Group which comprises PTEs, Shire Counties, Unitary Authorities, Railtrack, three Train Operating Companies and the Peak District National Park Authority. Merseytravel also works to develop close links with unsupported train operators that run services in and out of Merseyside: Virgin West Coast and Cross Country, Northern Spirit, Central Trains and Wales and West. Merseytravel is party to various groups such as West Coast 250 and Transpennine Rail Group.

  1.10  There has been sustained fall in service performance on Arriva Trains Merseyside over the two years. While reliability has now recovered somewhat, punctuality is poor and shows little sign of recovery. It is worth noting that a largely self-contained single train operator should be able to operate the levels of performance specified in the local Merseyrail Passengers Charter: 99 per cent of scheduled trains run and 95 per cent of trains running within five minutes of right time. The 1999-2000 results were 98.35 per cent and 90.62 per cent respectively and in 2000-01 98.58 per cent and 87.26 per cent respectively.

  1.11  Merseytravel has recently been designated a Centre of Excellence for Integrated Public Transport and a Centre of Excellence for Transport Planning. The Merseyside Local Transport Plan (LTP) has the following four key objectives:

    1.  To ensure that transport supports sustainable economic development and regeneration.

    2.  To moderate the upward trend in car use and secure a shift to more sustainable forms of transport such as walking, cycling and public transport.

    3.  To secure the most efficient and effective use of the existing transport network.

    4.  To enhance the quality of life of those who live, work in, and visit Merseyside.

  1.12  The LTP contains proposals for:

    (a)  a multi-modal transport interchange at Allerton serving Liverpool Airport (this project features in the 10-Year Plan for Transport);

    (b)  upgrade of five underground stations;

    (c)  remodelling of Liverpool Central Station;

    (d)  Lime Street Gateway;

    (e)  relocation of Moorfields underground station entrance;

    (f)  upgrade of 25 stations;

    (g)  systemwide enhancements;

    (h)  expansion of park and ride as part of a wider strategy;

    (i)  additional bus/rail interchange as part of the Merseyside-wide interchange development strategy;

    (j)  enhanced security;

    (k)  new station at Carr Mill; and

    (l)  improved information.

  1.13  An important mechanism for delivery of the wider service and quality objectives in the Local Transport Plan is the process of Franchise Replacement.

  1.14  Both these franchises have been the subject of franchise extension agreements that require commencement of new franchises in February 2003 (Arriva Trains Merseyside) and April 2004 (First North Western). Discussions have taken place with the SRA and the DTLR (and previously the DETR) regarding the transfer of powers to Merseytravel to progress the Merseyrail Electrics franchise as a local franchise with Merseytravel as the Franchising Authority. (See Section 3). The SRA propose that First North Western will form part of the new Northern Franchise created out of the First North Western and Northern Spirit operations after implementation of Transpennine Express and other services transferred to the Wales and the Borders franchise.

  1.15  Any delay in the process of franchise replacement or a change in the principles guiding the process could therefore affect the delivery of the Merseyside LTP and the Government 10-Year Plan.


  2.1  Merseytravel believe that the investment needed in rolling stock, infrastructure and service development can only come through the mechanism of long-term stable franchises. It is indeed folly in the extreme to place long-term objectives in jeopardy because of short-term thinking.

  2.2  Merseytravel has carefully considered the Draft Directions and Guidance and the separate Draft Policy on Franchising. The objectives and the content of the 10-Year Plan and the principles behind the two statements are welcomed. However, it is a concern that a short-term approach to franchising will be to the detriment of investment and development of the railway and that this will focus scarce financial resources on the Inter-City and South East franchises this would be to the detriment of the old Regional Railways services. The important metropolitan PTE supported networks may well lose out on a value for money basis, reflecting the lower revenue generation of these services with short passenger journey length and lower levels of fares, but ignoring their strategic commuter role and social, environmental and economic benefits associated with the services.

  2.3  The Statements contain various references to PTE and PTA interests; the importance of which is underlined in view of the recent difficult relationship with the SRA and the funding difficulties now being experienced by the rail industry. Despite the references by the previous Chairman of the SRA to the nature of the relationship between PTEs and OPRAF in the first round of franchising, the relationship at that time was open, productive and focused and without the tensions suggested. PTA members would not agree with this view regarding themselves, for instance, the Merseyside franchise was bound to "end in tears" and the Office of the Franchising Director was informed of that view at that period in time, ie December 1996. The PTEs look forward to the resumption of a similar relationship in the future. The reference to formal consultation with the PTEs in the recently issued press release for the Transpennine Express is a pointer to the future in this respect. The foundation of this relationship should be reflected in the Directions and Guidance and take into account the statutory responsibilities of the PTE's. It is of concern that:

    (a)  despite the reference to LTPs and Regional Transport Strategies, the LTPs may still be ignored by the SRA. Although consistency must be achieved with Regional Planning and Transport Strategies, these do not contain the local detail of LTPs;

    (b)  there is no duty to consult and take into account the views of the PTE/PTA in relation to any rail matters affecting its area;

    (c)  there is no definition or advice on delegation of powers to the PTE or to the extension of PTEs activity through business units;

    (d)  the reference to national standards being applied to PTE-funded services is a concern in view of the impact of equalisation on PTE services which have higher standards (eg allow less standing passengers) which have been important in the past success of PTE strategies; and

    (e)  while PTE Public Service Requirements appear to be protected, there are other references to best use of capacity that may allow the SRA to overrule local interests and undermine the PTE achievements of the past.

  2.4  The reference to the need to take into account the needs of the mobility-impaired and the Disability Discrimination Act in all investment and franchise replacement decisions is welcomed.

  2.5  Despite the issue of various consultation documents on the Code of Practice for the Mobility-Impaired by the ORR and SRA, no clear guidance is given on the responsibility for investment and a funding strategy to meet the considerable expense involved in delivering the needs of the Mobility-Impaired this is required as a matter of urgency in view of 2004 deadlines.



  3.1  Merseytravel has been working for almost two years on a proposal to fundamentally change the basis of operating the rail franchise within the County of Merseyside in a way which it believes will, to use the Sub-Committee's words:

    —  ensure that rapid improvements in the safety, punctuality, reliability, comfort and frequency of services are achieved;

    —  secure investment in additional network capacity and other improvements to meet both the long and short-term needs of the railways;

    —  provide the framework for major infrastructure enhancement projects to be taken forward;

    —  transform the day-to-day management of franchises and the way in which new and extended contracts for passenger services are assessed and awarded; and

    —  improve the poor state of industrial relations in the railways.

  Merseytravel believes that these objectives can be secured by the transfer from the SRA of the franchising powers in respect of Arriva Trains Merseyside.

The Rationale

  3.2  The Arriva Trains Merseyside franchise is unique among the 25 Train Operating Companies formed from the break up and privatisation of British Rail. This is because it:

    —  operates almost exclusively within the boundaries of the County of Merseyside;

    —  shares relatively little rail infrastructure with other operators due to its third rail system power; and

    —  provides a frequent level of service—indeed it is the most intensive rail system outside of London.

  Similar networks elsewhere in the UK—the London Underground, the Tyne & Wear Metro, the Manchester Metrolink, and the Glasgow Underground—are effectively under local control rather than being subject to decisions of the SRA. Frustration shown by rail commuters and Merseytravel is evident because of the inability of the SRA to be seen to champion the cause of the local rail travelling public.

The Need for Change

  3.3  Because Arriva Trains Merseyside forms part of an integrated local public transport network co-ordinated by Merseytravel—including buses, ferries, cycling and walking as well as trains—many users of the service look to Merseytravel to put things right with the rail service. However, Merseytravel currently has few genuine powers over the train operator to make this happen; thus the feeling of abandonment by rail passengers.

  3.4  Moreover, many of Arriva Trains Merseyside's problems are the legacy of decades of under investment by British Rail under previous Governments. The ambitious Merseyside LTP, endorsed by the present Government in December 2000, envisages bringing a cocktail of public and private sector funding into the region's public transport network, with rail forming a central component of this strategy. A more locally based system for controlling the vital rail network would clearly be an advantage in delivering the objectives of the LTP (ie local solutions for local problems).

  3.5  Merseytravel also believes that a more locally-based long-term franchising regime (with improved accountability of the train operator, investment in the refurbishment of stations and of the train fleet and a generally more stable and secure employment framework for railway staff) could contribute to an improvement in the industrial relations environment within Arriva Trains Merseyside. It is imperative railway staff believe they are at the heart of the system and their efforts are acknowledged in what, in many instances, can be the most trying of circumstances.

The Discussions So Far

  3.6  The strategy behind detaching the franchise from the SRA was acknowledged by the SRA in both its Strategic Map of 2000 and its Strategic Agenda of 2001. These public statements reflected private discussions which had been taking place between the SRA and Merseytravel for more than 18 months regarding the possibility of Merseytravel assuming all of the SRA's powers with respect to Arriva Trains Merseyside.

  3.7  Agreement was reached in principle between the SRA, Merseytravel, the Office of the Rail Regulator (ORR) and officials at the Department for Transport, Local Government and the Regions (DTLR) early in 2001 that the transfer should take place, subject, of course, to Ministerial approval and ratification by Parliament through a statutory process. Merseytravel would thus become responsible for running the competition to select the next private sector franchisee for Merseyrail Electrics, and would enjoy the full range of powers over performance, investment and consumer protection currently wielded by the SRA.

  3.8  Under the proposed new arrangements, ownership of the infrastructure—stations, track and signalling—would remain with Railtrack, but Merseytravel would in the future be able to build more easily on the substantial work it has already undertaken in generating investment in these assets, as exemplified by the recent total modernisation of Old Roan, Kirkdale and Aintree rail stations. Access to European Union Objective 1 funding through Merseytravel could be important in this context.

  3.9  With all parties agreed on the desirability of the transfer of powers, the only remaining problem is a legal technicality. Under the terms of the Railways Act 1993, and the Transport Act 2000, the SRA remains the "operator of last resort" where a franchised rail operator is for some reason unable to continue to provide the contracted service. The SRA is then expected to have the capability to run the service until a new private sector operator can be chosen.

  3.10  Merseytravel envisages taking on this role so that, in the unlikely event of the new franchisee collapsing, Merseytravel would operate the service until a further franchisee could be appointed.

  3.11  The problem is relieving the SRA of its ultimate duty to become the operator of last resort without a suitable legislative vehicle for such a change. The SRA has received legal advice that if the new franchisee were to collapse, and Merseytravel fail to commit to operate the service until a new franchisee could be appointed, the responsibility and associated residual costs for this could revert to the SRA.

  3.12  In the absence of an opportunity to extinguish these liabilities through a clause in a piece of primary legislation, discussion has focussed on three possible remedies:

    —  the indemnification of the SRA by Merseytravel against a possible reneging on its obligations by means of a suitable bond;

    —  subjecting the Arriva Trains Merseyside network to the closure procedures set out in the Railways Act 1993 and the Transport Act 2000, thereby removing it from the control of the SRA only to reopen it immediately under the control of Merseytravel (the option favoured by SRA officials but which did not find favour with the DTLR because it would involve a high profile publicity exercise and a public inquiry into the "closure" and be likely to cause confusion and distress in the community);

    —  the use of an Order under the Transport and Works Act (favoured by the SRA's legal advisers but thought to be a difficult process by many involved, and which would in any case entail considerable time delays).

  3.13  Recently, Merseytravel has proposed to the SRA a fourth option:

    —  proceeding with the indemnity plan as an interim measure until an Order under the Transport and Works Act can be progressed, with the Order including a clause to extinguish the SRA's residual liabilities.

  3.14  A further option has been suggested to the SRA by Merseytravel. This seeks to go with the grain of what was the SRA's preferred route (ie using the closure provisions of the 1993 and 2000 Acts to extinguish its obligations). The franchising powers would still be transferred in the way suggested previously (closing it as an SRA network and reopening it as a Merseytravel one) but in a way that would avoid a high profile publicity exercise which might cause undue public distress.

  3.15  This would be achieved by using Sections 49(4), 49(5) and 143 of the 1993 Railways Act which allow the Secretary of State to exempt parts of the railway network from the closure arrangements. In other words, the Secretary of State is allowed to create conditions in which a section of railway can be closed without the paraphernalia of notices in the press and a public inquiry. These powers are exercised through a Statutory Instrument approved by Parliament.

  3.16  An Order of exactly this nature was made on 8 May 2001 and laid before Parliament on 9 May 2001. This resulted in Section 39 of the Railways Act 1993 (formal notification of proposals to close railway facilities) not having effect with respect to St. Pancras Station in London. This allowed certain works to be completed.

  3.17  It is understood by Merseytravel that this procedure was used to facilitate the transfer of parts of the network in and around St Pancras Station from Railtrack to the Channel Tunnel Rail Link (CTRL) without the need for a public inquiry. That the Government was prepared to act in this way reflected the fact that nothing which could reasonably be described as a "closure" was taking place. The network would continue to function uninterrupted, but a change of ownership was necessary to achieve the public policy goals of constructing the CTRL. There was no need to run the risk of creating public alarm amongst the users of St Pancras Station by publishing "closure" notices.

  3.18  There is a clear parallel with what is proposed for Arriva Trains Merseyside. The transfer of the franchising powers to Merseytravel will not cause the slightest disruption to the quality of local services. Indeed, they will in time be enhanced. The need identified by the SRA to declare the network "closed" by them, only to reopen a moment later under Merseytravel's control, is nothing more than a legal nicety but one which the SRA has a duty to the taxpayer to respect.

  3.19  There is an urgent need to resolve the future of the Arriva Trains Merseyside franchise because the contract of the current operator—Arriva PLC—is due to expire no later than February 2003. In order to complete the legislative, legal and contractual processes of transferring the franchising powers, and then to run a competition for a new franchisee to be in place by this date, a speedy decision on this matter is now required.


A.  Ensure that rapid improvements in the safety, punctuality, reliability, comfort and frequency of services are achieved

  A.1  There appears to be a switch to short-term franchise extensions rather than the proposed 20-25 year franchise replacement model. An alternative seems to be franchise replacement over a limited period of five years.

  A.2  While the short-term franchise extensions negotiated with First North Western and Arriva Trains Merseyside have levered in increases in train-crew, engineering staff and some additional rolling stock, the improvements in performance have not yet materialised.

  A.3  Franchise extension is costly and not perceived as value for money as the incumbent operator and franchisee has a strong negotiating position (eg recent renegotiations of Arriva and First Group franchises). However, this may be difficult to sustain when compared with the longer term benefits of 20 year franchises that are seen as providing the time horizon and incentive to invest and plan for staff, infrastructure and equipment requirements.

  A.4  There is a clear problem in terms of franchise extension on Arriva Trains Merseyside, First North Western and Arriva Trains Northern—can these be extended again? Is there money available to extend? Currently, the arrangements in place give no provision for a further extension and therefore the need for early progress is pressing.

  A.5  A further concern in this short-term approach is that it makes SRA (and PTE) contract management difficult to enforce against a failing operator. In this circumstance it is not in the interest of the SRA to destabilise the franchise while on a short-term contract pending a yet to commence franchise replacement process. This is particularly the case with Northern Spirit where a strategy of planned cancellations is now in place. A long-term franchise would allow more robust contract management but also significantly reduce the likelihood of it being necessary.

  A.6  Some of the core problems of the rail industry relate to the passenger growth delivered in recent years which has led to rolling stock shortages and shortfalls in capacity in such locations as the West Coast Main Line, Leeds, Birmingham and Manchester. It is not clear how franchise extensions and short-term franchises can deliver the investment in capacity and rolling stock necessary to meet the aims of the 10-Year Transport Plan and Local Transport Plan strategies especially given the lead times for delivering new rolling stock or major infrastructure schemes. The lack of the time horizon and stable contractual arrangements gives little or no incentive for franchise operators, franchisees, Railtrack, Special Purpose Vehicles, ROSCOs, as well as the SRA and PTEs to enter into long-term investments and development strategies.

  A.7  Manchester is one of the key hubs in the UK rail network with more daily movements than Leeds and Birmingham: the lack of capacity in Greater Manchester constrains development of West Coast Main Line services, North and South Transpennine routes as well as regional and local services across the North West, including those across the Mersey Belt to Liverpool. Certainty and confidence is required to give the industry the incentive and stability to address capacity solutions to last 50 to 100 years.

  A.8  The issue of rolling stock is a particular concern in view of the growth in patronage across the UK on all lines. Within the FNW area and in West Yorkshire, overcrowding exists and is increasing and potential passengers are being lost to the railway industry. There is therefore already a serious rolling stock shortage in the North across the First North Western and Northern Spirit franchises. This will be exacerbated by the process of franchise migration whereby current rolling stock resources are being reallocated to the proposed new franchises (Transpennine Express, Northern and Wales and the Borders). This process is proving less efficient in the development of rolling stock and will exacerbate this shortage. Rolling stock shortage is already a pressing matter and will deteriorate in the run up to franchise replacement and needs urgent SRA action to address the problems. The contribution of the railways of the North to the Government's 10-Year Plan and LTP strategies are already being damaged in this respect. The franchise replacement process needs to be re-commenced utilising a long-term view and the procurement of new rolling stock. Additionally, the SRA seem to be favouring rolling stock refurbishment rather than new build on financial grounds. This is a major concern in view of the ageing fleet of Class 142, 150, 153, 156 and 158 diesel units. There is a need for a clear and sustained rolling stock strategy backed by longer-term franchises to address these issues and give manufacturers the confidence and incentive to provide the plants and skilled staffing to deliver rolling stock programmes.

  A.9  Angel Trains, Arriva Trains Merseyside and Merseytravel have been reviewing options for refurbishment of the Class 507/508 rolling stock fleet on Merseyside, comprising 53 three car operational units plus 6 mothballed units. The refurbishment comprises two elements: the first of which is an operational refit which addresses life extension of the units (which were introduced over the period 1978-1983). This element is of great urgency in view of the rapid deterioration of the units arising from poor maintenance over the past two years. This resulted in a performance of less than 5,000 miles per casualty at one stage, although this is now rising due to a locally implemented action plan as an interim measure. This was due in no small way because of the involvement of senior politicians and officers, as the general public were demanding answers, alas to no avail, by the owners of the units and the TOC operating the franchise. The second element is the refurbishment of the interior of the carriages to improve the passenger environment including installation of CCTV and customer information displays. This work can commence subject to contract. This proposal has now been put to the SRA with a funding proposal involving Merseytravel sponsorship of the enhancement of the interior. The proposal reflects the draft Directions and Guidance which shifts the focus to refurbishment rather than new build. The continuous delay of the transfer of the SRA obligations to Merseytravel is a major obstacle to a stable and vibrant rail service for the people of Merseyside.

B.   Secure Investment in additional network capacity and other improvements to meet both the long and short-term needs of the railways and whether the sums allocated to rail investment remain adequate in the light of events since the publication of the Government's ten year plan for transport

  B.1  The issue has, to a large extent, been covered in the response to the first question.

  B.2  There would now seem to be a serious financial shortfall in the SRA Budget due in part to the ORR's decisions on the Second Control Period and short-term franchise extensions. This shortfall is having a major impact on the franchise replacement process. It is a concern that the financial difficulties are now driving the short-term approach in terms of franchise extension and replacement which could well drive an inefficient approach to franchise management, thereby compounding the original financial difficulties.

  B.3  The Regional Railways North East franchise (incorporating the North Transpennine route and Transpennine Express services) was one of the success stories of the old Regional Railways network in part feeding off the success of Manchester International Airport.

  B.4  A factor in the demise of the franchise replacement process is the delays in preparation of costings by Railtrack on infrastructure enhancements: this is in part due to the failure of the SRA to make clear franchise specifications at an early stage and the lack of funding of Railtrack to undertake development work (eg Chiltern franchise delays). Means to prevent this in the future with planned infrastructure programmes and proper funding of development programmes is essential.

  B.5  All these issues need to be addressed properly in the forthcoming Strategic Agenda but without the funding back-up no progress will be possible and no base for the 50 year development of the railways can be laid.

  B.6  Wider issues also need to be addressed, including the staffing of the railway industry with sufficient professional and experienced staff through training and education programmes. The fact that major capacity enhancements as well as smaller incremental schemes are delayed by a lack of signalling design resources must be addressed and carried forward into a review across the industry.

  B.7  Bidders for franchises (and Railtrack) have expended considerable resources so far for little or no return. Private Sector and City interest is likely to be low in franchising and investment via whatever mechanism is appropriate. This confidence (in the face of the recession also) needs to be built up by a franchise replacement and railway development strategy that engenders confidence.

C.   Provide the framework for major infrastructure enhancement projects to be taken forward now that Railtrack is to focus on the maintenance and renewal of the existing network

  C.1  It would appear that Railtrack are not now able to finance and lead major infrastructure projects. The lead in infrastructure enhancement and capacity relief now lies with the SRA not Railtrack and is being addressed through SRA sponsored capacity studies. While this gives the opportunities for a strategic approach, it is important that the nationally-led approach does not overlook local needs and focus valuable resources unduly in the South-East where returns may be higher to the detriment of other areas. There is a real danger that the financial constraints imposed on the SRA may constrain the options addressed in these capacity studies and adopt short-term minimalist capacity enhancements and rerouting strategies which do little to address market need and capacity requirement over a 50 year time horizon. It is a particular concern such constraints may lose the opportunities for Transpennine upgrade and Manchester Hub capacity enhancement and the benefits to the national, regional and local rail networks that these will deliver.

  C.2  The Strategic Agenda highlighted new mechanisms for investment such as Special Purpose Vehicles. It is important that these are robust and proven to work with the injection of private finance. This remains a concern, especially in view of the lukewarm interest in the arrangements to date. There is a further danger that the role of Railtrack is marginalised, despite its focus as owner of the network with the experience and understanding of the infrastructure and operational matters. Railtrack in-house expertise needs to be built-up to provide a full role in the operation, renewal and development of the UK rail network. Maintaining and utilising Railtrack resources in small infrastructure and station/property schemes is critical also in delivering LTP schemes and programmes.

D.   Transform the SRA's leadership of the industry, its day-to-day management of franchises and the way in which it assesses and awards new and extended contracts for passenger services

  D.1  Merseytravel supported the creation of the SRA and the extension of its remit including both the passenger and freight railway. However, this lead role requires full involvement of stakeholders. Despite the expansion of staffing levels, the level of dialogue (with stakeholders in local authorities, PTEs and regional agencies) has been disappointing, particularly in the context of franchise replacement. The publication of the Strategic Agenda offers a way forward on this matter without, hopefully, the unproductive comments about PTEs and repeating the previous constructive partnership between OPRAF and PTEs in delivering the first round of franchising. In addition it is to be hoped that the offer of format consultation on the Transpennine Express franchise offers a new approach within the SRA. The PTEs are currently working with the SRA on franchise management and development to this effect.

  D.2  The Directions and Guidance rightly emphasise the importance of contract management. This has been weakened by the process of franchise extension and also, in the North West, by the under-resourcing of the front-line franchise contract management team. In the Arriva Trains Merseyside franchise, the long-standing problems of capacity shortages and passenger growth have not been resolved through the franchise agreement and a strategy of planned cancellations is now in place.

  D.3  The recent franchise replacement process has been developed by encouraging bidders to put forward their proposals in an unconstrained and deregulated fashion. The recent change of emphasis is welcomed. It is to be hoped that this will draw forth a more effective dialogue on cross-boundary franchises than offered to Merseytravel and other PTE's to date.

  D.4  The timing and structure of Transpennine Express, Northern and Wales and the Borders franchises is now uncertain: there are clear benefits from co-ordinating the franchise replacement timescale on these, not least in the co-ordinated restructuring of human, rolling stock and system matters so that the risks of disruptions of the service to passengers are minimised. It should be noted that the restructuring and splitting of franchises may require greater human and rolling stock resources to manage and run services and these must be provided as part of the implementation plan for the franchise in a timely and carefully planned manner.

  D.5  There is now a gap opening between the 10 Year Transport Plan targets and the reality on the ground in terms of meeting passenger growth targets: the SRA will need to identify measures to fill the gap: additional rolling stock deployed on lines short of capacity, such as in West Yorkshire, Greater Manchester and on the Merseyrail City Lines may contribute considerably to this, allied to funding of basic performance improvements on Arriva Trains Merseyside services.

E.   Improve the poor state of industrial relations in the railways

  E.1  Merseytravel does not feel able to comment on this national question.

September 2001

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