Memorandum by Railtrack (PRF 38)
PASSENGER RAIL FRANCHISING
Railtrack owns and operates the rail infrastructure
of Great Britainthe tracks, signals, tunnels, viaducts,
level crossings and stations. We own 2,500 stations, which are
mainly leased to the train operating companies. Railtrack owns
and operates 14 major stations.
Railtrack welcomes the Transport Sub-Committee's
Inquiry into the implications for rail services of the Government's
recently issued draft policy statement on passenger rail franchising
and the draft directions and guidance to the SRA. Railtrack notes
that this new approach places emphasis on the negotiation of changes
and short extensions to existing franchises, rather than on the
awarding of new long-term contracts.
The rail industry has faced a number of significant
difficulties in the last 12 months, from which we are now showing
some signs of recovering. The consequences of those difficulties
have been all too visible to our customerspassengers and
freight shippers. Delivering improvements in quality of service
for customers requires a significant and sustained team effort.
Over the last 12 months both the industry and Government have
shown a willingness to co-operate and have begun to work more
closely together to find solutions to the problems that we have
all encountered. The changes that are heralded in the policy papers
that are the subject of this inquiry are significant elements
of this new approachand we broadly welcome them as a response
to the recent experience of operational performance and the difficulties
encountered in re-franchising. There is still much to do to earn
trust and restore credibility to the industry. Railtrack is committed
to playing its part in delivering the improvements and changes
that are neededalbeit a lesser part than was once contemplated
for us now that the SRA takes on the mantle for developing enhancements.
The Committee asked that respondents address
specific questions in submitting their written evidence. Railtrack's
comments are set out against each of the questions below:
1. Will the new approach ensure that rapid
improvements in the safety, punctuality, reliability, comfort
and frequency of services are achieved?
Railtrack welcomes the clarity that the new
approach gives the industry around the need to focus on short-term
deliverables. In themselves the Directions and Guidance cannot
assure delivery of "day-to-day" outputs, but the overall
focus on delivery is appreciated and understood, we believe, by
all the industry.
the transport, local government and the regions
Railtrack is focusing its efforts to re-build
public confidence in delivery of a safe and well performing railway,
and working with the industry to promote safety, punctuality and
reliability. In many cases increasing the frequency of services
requires significant investment and can therefore take some time
Over recent months the efforts put into restoring
punctuality have begun to work and the chart below summarises
the reductions in delays caused by infrastructure over the 26
weeks from April to September 2001.
The industry continues to work together to deliver
better performance and safety through a number of national initiatives,
National Task Force focusing on performance,
safety and industry-wide strategic issues,
cross-industry working to respond
to the Cullen and Cullen/Uff recommendations,
creation of Systems Authorities for
Wheel-Rail Interface and other safety issues, and
Rail Industry GroupRolling
Stock sub groupwork on train reliability,
as well as continuing local performance and safety
initiatives with individual customers.
In our response to the draft Directions and
Guidance we have suggested that the SRA should be required to
produce a performance strategy for the network that takes into
account the level of train service, and the requirements for basic
maintenance and infrastructure improvement. In particular we see
that there are opportunities for the SRA to promote better performance
by reviewing Public Service Requirements (PSRs), changes to franchise
agreements that avoid perverse incentives, and other changes which
place a higher value on performance for passengers.
2. Will the new approach secure investment
in additional network capacity and other improvements to meet
both the long and short-term needs of the railways and will the
sums allocated to rail investment remain adequate in the light
of events since the publication of the Government's ten-year plan
We believe that a shorter-term approach to franchising
will not, by itself, promote investment. However, for reasons
set out below, we do not think that this approach will, in itself,
Two-year extensions to franchise serve to highlight
the potential for severing infrastructure investment from franchising,
which we support. The recent re-franchising round has failed to
achieve significant risk transfer to the private sector for many
reasons. It sought commitments from Train Operators that they
were not in a position to deliver, and it failed to acknowledge
the complex interdependencies and long development timescales
for infrastructure investment. In short it left the Government
with little choice but to focus on short-term extensions in order
to make any progress at all. With infrastructure investment decoupled
from franchising, the SRA will be better placed to develop a robust
plan, taking account of national priorities, the resources available
to it and the industry, and to procure investment and services
at the appropriate speed and time.
The SRA's ability to fund its contribution to
new commitments, including those projects currently being explored,
is not yet clearly established. Railtrack is working positively
with the SRA, DTLR and HMT to help the SRA develop their new framework
for funding and delivering enhancements through third parties
(Special Purpose Vehicles). A new procurement framework for enhancement
is a necessary precondition for significant new private capital
to be brought into funding the ten-year plan.
The SRA's strategic plan should address the
question of how much funding is required to deliver long-term
Government objectives, and we look forward to its publication
3. Will the new approach 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?
The Committee should note that whilst Railtrack
is to focus on the maintenance and renewal of the existing network
it also has commitments to deliver several major enhancements,
including West Coast Route Modernisation, TPWS, ECML phase one
(principally Leeds First), Sunderland Direct, Virgin Cross-Country
Upgrade and Channel Tunnel Rail Link phase one.
The new approach creates the environment in
which the SRA can lead the development and implementation of major
upgradesand we welcome this. In settling the new framework
there are many complex issues relating to risk allocation which
provide a challenge to the designers of the framework, to ensure
the safe, efficient and timely delivery of enhancements. Railtrack
has committed substantial resources to helping the SRA identify
these issues and to find ways to enable the SRA to deal with them.
It is too early to say how effective this will be in achieving
the SRA's objectives.
In promoting development of the network, we
believe that it is critical that the SRA should prioritise its
ambitions according to the value for money that each potential
scheme represents for the public. Railtrack will support this
process through both its network stewardship and business development
The Statement of Principles, agreed between
Government and Railtrack in April 2001, stated that in order to
allow Railtrack to focus on day-to-day delivery, Railtrack would
not take forward projects to enhance the network above a certain
threshold. In order to be able to focus on our maintenance and
renewal responsibilities, Railtrack is asking Government to confirm
this through the Direction and Guidance. Government also agreed
that it will clarify the respective responsibilities of the Rail
Regulator and the SRA in relation to infrastructure development
to avoid potential overlaps. This should be done partly through
the Directions and Guidance to the SRA. It is important to complete
this process along with the procurement framework in order to
provide clarity as to the respective roles of the SRA, the Regulator
and Railtrack for both the future maintenance and future enhancement
of the network.
It is important that sufficient time and investment
is allowed for major projects to be developed to allow firm scope,
project plans and cost estimates to be formed before commitments
are made to implement and parties are invited to go on risk. A
major constraint on the delivery of enhancements to the rail network
is the availability of resources to the rail industry, both financial
and in terms of specialised skills. It is important that the SRA's
Strategic Plan provides a realistic assessment of these constraints
and the consequences of them for the delivery of the Government's
Ten Year Plan and safety targets.
4. Will the new approach 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?
We note that the SRA is in the process of going
through a charge of leadership, and that the Directions and Guidance
bring SRA decision-making more into the control of government.
It follows that Government will itself have a more direct role
in providing leadership to the rail industry, with the SRA's role
being to implement the Government policy.
SRA should produce a Strategic Plan that has
been consulted with stakeholders and which has their support.
The franchising process should be used to promote the goals set
out in the Strategic Plan.
We welcome the requirement in the Directions
and Guidance for the SRA to set out clear specifications for future
franchises and clear criteria through which bids will be judged.
We believe the strategic plan should contain a timetable for franchising.
The Directions and Guidance allow for the separation of franchising
and infrastructure investment. We agree with this separationthe
recent experience of trying to combine the two has helped to highlight
the difficulties it creates. Separation enables the SRA to concentrate
on the separation activities of developing (a) network capability,
and (b) service provision.
5. Will the new approach improve the poor
state of industrial relations in the railways?
We do not believe that the new approach set
out in the two policy statements has been specifically designed
with industrial relations goals in mind, and we believe it will
not, in itself, change industrial relations in the industry. The
industry is turning its attention to ensuring that it trains and
retains people with key skillseg in signalling design or
electrification installation. The industry is now planning much
more closely together to provide the right environment to meet
its long term needs in terms of skills and manpowerthrough
a number of initiatives led both from within the industry and
also with the Department for Education and Skills and the SRA.
A strategic plan that enables suppliers to plan their business
with more certainty is a prerequisite to developing and retaining
skilled resources in the supply side of the industry. We are working
very closely with the SRA to ensure that they understand our perspective
on the need to plan realistically across many disciplines.