6. Franchise Issues
58. At the time of our inquiry we received considerable
evidence about the performance of particular franchises. We do
not wish to produce a sustained commentary on individual cases,
but there are a certain number of issues we wish to draw to the
House's attention.
59. The experience of Arriva Trains Northern and
Arriva Trains Merseyside demonstrates the flaws of the original
franchising system. The two franchises were originally held by
Merseyrail Electrics and Northern Spirit; when Arriva took over
the franchises the following problems were identified:
i) the franchise had a driver shortfall of 34;
ii) there were severe shortages of other staff,
including conductors;
iii) there was insufficient driver training resource
without any systematic programme to recruit new train drivers;
iv) the franchise had access to "insufficient
rolling stock".
The contract was transferred to a cost plus basis
in 2001.
60. Mr Cameron, of Arriva Trains Northern, explained
that:
"When we took over the franchise in February
2000, the Strategic Rail Authority asked us to take it over on
the basis of the MTL[70]
contract because they were only expecting us to run that operation
until the end of 2000 when the franchising programme would be
complete. The Trans-Pennine Express bid would have been finalised
and awarded and so would the Northern Rail franchise. When we
took over, we took over with the losses we inherited from MTL
and we put in a very robust recruitment and training programme
once we found out the scale of the problem. The difficulty is
that it takes some 15 months to recruit and train a driver, so
even though we put the programme in place in April 2000, it was
not going to be until July 2001 that the first driver would come
out of the training programme and that is what would cause the
underlying problem in September/October 2001".[71]
61. Mr Newton, Chief Operating Officer of the SRA,
explained;
"It is true to say that the full range of the
problems were not fully understood; I do not think they were understood
by Arriva or the SRA or SSRA [the Shadow Strategic Rail Authority]
as we were at the time. I think the priority in that situation
was that we were faced with the imminent financial collapse of
the existing franchisee and it was fortunate, in that context,
that Arriva were able to move in and take over at relatively short
notice but also maintain the then current funding level for at
least a 12 month period. At the time, the prospect was that that
12 month period would be sufficient for us to put in place a revised
alternative franchise as a policy developed in the concept of
Trans Pennine and Northern separate franchises, but that did not
materialise and I think it was over that period that Arriva really
started to address [them]".[72]
62. He was entirely clear that:
"Because the original policy which surrounded
the original franchises was very much an arm's length policy,
to place a contract or place a franchise at minimum cost and to
stand back to a great extent and leave the franchisee to deliver
the service. The situation when Arriva took over was that the
key objective was to actually rescue the franchise from imminent
financial collapse. It was an acquisition by Arriva of MTL and
part of that process was their due diligence of the business they
bought. It was not only Northern Spirit, it was Merseyrail and
also Bus Businesses".[73]
63. We were concerned that Arriva did not appear
to have conducted adequate due diligence checks on the franchises
it took over. It is extremely troubling that these discoveries
were not made until April 2000. The difficulties led to appalling
passenger services, with trains delayed or cancelled.
64. Eventually, Arriva decided on drastic action
and in October 2001 reduced rail services, and substituted some
with buses. Very little notice was given of these changes, which
were announced on a Friday and implemented the following Monday.
Professor May of the Institute for Transport Studies at the University
of Leeds, described the effects:
"The overall reduction, for services from my
local station, Thirsk, was just under 40% on a service which was
previously only hourly. Key commuting services to Darlington and
Newcastle, and to and from York and homebound from Leeds were
withdrawn. The only alternative for commuting journeys to Newcastle
was a bus with a three minute connection at Darlington. As a result
some commuters from Thirsk were forced to change jobs. Many more
will have had to switch to car use, and many will not have returned
to the trains since".[74]
65. Mr Cameron defended Arriva's actions, saying
"We had to do something when we were 165 drivers short, which
was the worst position that we faced in early October".[75]
He also claimed that announcements of timetable changes were delayed
for over a month by the need to agree them with PTEs and the SRA.
Professor May noted that although Arriva did stop a through service
at Thirsk, the service stopped "did not appear in the timetable,
and they claimed negotiations with Railtrack had delayed its announcement".[76]
66. It is entirely
unacceptable that passengers should have been given a weekend's
notice of passenger service changes which had been foreseen for
over a month. It is irresponsible to hope
the industry will muddle through severe shortages of skilled staff.
If a Train Operating Company ever again considers it is necessary
to take drastic action to stabilise services, all other parties
should engage urgently. There should be clear and adequate notice
of planned changes, and the quality of replacement services should
be monitored. This will require that the TOC, Network Rail, the
SRA and, in some cases, local authorities and passenger committees,
work together. If the service to passengers can be improved by
requiring changes to services which are not directly affected,
this should be a requirement. Planning for these service changes
should begin by assessing the needs of the passenger, and attempting
to meet these needs, rather than by considering the interests
of franchise holders or the SRA itself, encouraging new routes
to Manchester offered by Midland Mainline.
67. In March 2002, the SRA confirmed that Arriva
would be fined £2 million and required to recruit and train
new drivers. The company would face additional fines if it failed
to do so. We welcome the fact that the SRA required that the drivers
be newly trained, and not recruited from other operators.[77]
68. It would be unfair, however, not to acknowledge
that all parties are working together to address the skills shortages
which underlay the failure of services experienced by customers
of Arriva Trains Northern. Arriva themselves invested heavily
in the training of new drivers and in an improved customer helpline
service. The PTEs and the SRA are working to implement a "framework
for skills in the Rail Industry", to help support the industry
in developing the trained workforce it requires. We
welcome the Government's lead in establishing a framework of skills
for the rail industry; the industry itself must now take responsibility
for ensuring it has the trained workforce it needs.
Operation Princess
69. In September 2002 Virgin Cross Country launched
a new timetable in "Operation Princess". Although it
extended beyond the North, Virgin told the Sub-committee:
"The entire CrossCountry timetable is to be
re-written on 30 September to create the new regional network
in which train services frequencies will almost double overnight
and many journeys accelerated. The new CrossCountry timetable
is code-named Operation Princess and represents one of the biggest
national timetable changes in the last 30 years. The North East
will be one of the main beneficiaries of the upgrading with a
doubling of train frequencies throughout the region as follows:
| CrossCountry trains: daily to/from
| Now | 30 September 2002
|
| Berwick | 6
| 32 |
| Newcastle/Durham/Darlington
| 27 | 64 |
| York | 28 |
64 |
| Leeds | 21 |
33 |
| Doncaster | 11
| 30 |
| Sheffield | 32
| 65 |
The new service will give the North East two core CrossCountry
links across the UK: a) an hourly Edinburgh-York-Leeds-Birmingham-South
West service; and b) an hourly Newcastle-York-Doncaster-Birmingham-South
Coast service. Trains will be routed alternatively via Leeds and
Doncaster to provide each with an hourly CrossCountry service
and more connections into local train service networks (40% of
CrossCountry passengers use another train company). The new services
also create a new two-hourly direct service link between the North
East and South Wales."[78]
70. Services would also be improved in the Northwest:
"A rather ragged CrossCountry service pattern will be replaced
with a new hourly service to Carlisle/Scotland and Birmingham/Reading.
There will also be new two-hourly service from Manchester to Scotland,
from Blackpool to Birmingham and from Liverpool to Birmingham.
Operation Princess will renew the entire CrossCountry train fleet
with Voyagers/Super Voyagers from 30 September 2002 in the North
West, and will bring major timetable benefits in both service
frequency and journey times:
| CrossCountry trains: daily to/from
| Now | 30 September 2002
|
| Manchester-Birmingham | 38
| 50 |
| Warrington-Birmingham-South
| 15 | 32 |
| Liverpool-Birmingham-South |
10 | 18 |
| Blackpool-Birmingham-South |
3 | 14 |
| Preston-Birmingham-South West
| 22 | 48 |
| Birmingham-Scotland | 29
| 55 |
71. Operation Princess has not gone as smoothly as planned. In
the first place, there has not been the capacity on the Network
to accommodate all these service increases. By February 2003 the
SRA was announcing thinning some services to increase network
reliability.
72. Secondly, Virgin replaced old trains with new Voyager trains
which, Virgin told us:
"...offer a vastly improved travel experience with an on-board
shop, and club class area with an at-seat service, electronic
information systems and audio entertainment at every seat. The
Voyager/Super Voyager fleets are amongst the first in the UK to
fully comply with the European legislation for disabled access".[79]
73. The new trains, although more frequent than those they replaced,
were smaller. It was not long before there were widespread complaints
about their overcrowding. When he appeared before us in another
inquiry, Mr Green explained:
"The underlying cause of the overcrowding was a massive growth
in short term travel on the route which we designed as a long-distance
route.... We have learnt some tough lessons on overcrowding, particularly
overcrowding on a congested railway. I think we have also demonstrated
that introducing a fast, frequent service of new trains does attract
a lot of new passengers, so the challenge is how to maintain this
upward trend at a slower growth rate so we have time to match
demand with capacity".[80]
74. There are several lessons to
be drawn from this episode:
a) the SRA
needs to take a much clearer view of the network capacity before
approving timetable changes.
b) when
high quality, frequent, trains are provided overall passenger
use grows. This suggests that there may be ways to cut subsidies
while improving the service.
c) the increased
demand is for regular short to medium journeys, rather than long
distance ones. The Government's target for increasing passenger
kilometerage must not be an excuse to provide a service which
does not meet customer needs.
75. Given this history, it is entirely understandable
that the SRA has adopted a new franchising policy, which allows
it to impose far more detailed controls over operating companies.
However, the SRA has itself compounded the difficulties by failure
to make clear plans and to keep them. Refranchising was expected
in 2001. In 2002, when we took our evidence, it was expected that
the Transpennine and Northern Franchises would be created by 2003.[81]
Since then the SRA has reached agreements with Arriva Trains Northern
to operate services on the Transpennine Express services until
late 2003 and the Northern Rail services until summer 2004. The
franchises are now expected to last for eight to ten years, rather
than the fifteen years envisaged by Mr Steer of the SRA in June
2002. We note that although in November 2002 the SRA thought it
would announce the preferred bidder for the Transpennine Express
"early in the New Year"[82]
there had been no announcement by the time this report was agreed
on June 11 2003.
76. We understand
that letting franchises can be a lengthy business, and that timetables
may not be precise. It is better to change a bad policy than to
keep it simply to avoid disruption. However, the SRA has spent
two years longer than originally envisaged to let these franchises,
and the process is still incomplete. The SRA, quite rightly, wishes
the industry to have clear targets, and to be penalised for failing
to meet those targets. It must set an example by itself being
clear about its own processes, and performing the tasks it sets
itself in the timescales it predicts.
70 Mersey Travel Limited Back
71
Q 5 Back
72
Q 267 Back
73
Q 271 Back
74
Ev 91. Back
75
Q 35. Back
76
Ev 91. Back
77
SRA news release, 25 March 2002. Back
78
Ev 158. Back
79
Ev 159. Back
80
Overcrowding on Public Transport Q 137. Back
81
SRA Strategic Plan, January 2002, p93. Back
82
SRA Press Notice, February 3, 2003. Back
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