Select Committee on Transport Appendices to the Minutes of Evidence

Memorandum by the Department for Transport (REN 44)



  1.  The key roles of Ministers in relation to passenger rail services in the north of England are: to set the broad policy framework within which the Strategic Rail Authority (SRA) manages and awards passenger franchises; to allocate funding to the SRA from their department's budget in accordance with the Ten Year Plan; and to approve SRA recommendations for the award, extension or modification of franchises.

  2.    The policy framework within which the SRA operates is set out in:

    —  its statutory Directions and Guidance (D&G) published by the Secretary of State on 11 April 2002; and

    —  the Government's statement of policy "Passenger Rail Franchising" published on 19 December 2001.

  These documents refer back to the Government's wider transport policy, as set out in:

    —  "Transport 2010: the Ten Year Plan" (the 10 Year Plan); and

    —  "A New Deal for Transport: Better for Everyone" (the White Paper).

  3.  This memorandum focuses on the Government's role in relation to the issues identified by the Committee. It complements the memorandum prepared by the SRA, which addresses operational and franchise-specific issues.


  4.  Service standards comprise a number of factors including, in particular:

    —  the service patterns provided for in the timetable (including train frequency and the times of the first and last services);

    —  the operator's performance including the extent to which they provide these services; and

    —  customer care and journey quality experienced.

  5.  Service standards are affected by a range of factors including passenger demand, franchise obligations (including PTE specifications), network capacity, timetable flexibility, rolling stock condition and availability, and network maintenance requirements. The minimum contractual service patterns are set out in the passenger service requirement (PSR) for each franchise. These are at least broadly equivalent to the services operated by British Rail before privatisation. Operators in the north of England are currently operating services in excess of the PSR requirements.

  6.  The D&G[25] state that:

    "The Authority must secure that minimum levels of service remain at least equivalent to those specified in the current Passenger Service Requirements or which are otherwise contractual obligations. However, services should be developed to reflect passenger demand and best use of capacity."

  It should be noted that "equivalent" here does not mean "identical". Circumstances change over time, and what was appropriate at the time of privatisation may be less than optimal today. PSRs will need to evolve and hard choices about capacity may need to be made.

  7.  Ministers are concerned by the recent poor levels of operational performance, including by train operating companies (TOCs) in the north of England. The latest available rolling annual average Passenger Performance Measure (PPM) statistics are set out in the table below:

Table 1: PPM annual rolling average, up to quarter 4 2001-02


Arriva Trains Merseyside (ATM)
Arriva Trains Northern (ATN)
North Western Trains (NWT)
Average for regional operators
Average for all operators

  8.  As well as being at an unacceptable level in absolute terms, the majority of train services in northern England fell below the average performance for regional operators. They were also below the regional average in relation to customer satisfaction (although often above the national average), as set out in the table below.

Table 2: National Passenger Survey (NPS), Spring 2002, % "satisfied" or "good"

Aspect of survey
Northern average[26]
Regional average
National average

Overall opinion of journey
Station ticket buying facilities
Amounts of seat/standing space
Information about train times/platforms
Comfort of seats
Upkeep/repair of train
Appropriate environment to catch a train

  9.  The Government recognised the Committee's earlier concern at the use of buses to replace train services because of shortages of rail staff. This is not acceptable and it is entirely appropriate that TOCs who fall short in this regard should be subject to enforcement action from the SRA. The penalty that the SRA levied in respect of Arriva Trains Northern (published in draft on 25 October 2001) made use of new powers provided by the Transport Act 2000.

  10.  The D&G make it clear that the Government expects the SRA to take a more active role in the management of franchises, and where necessary in the enforcement of franchise obligations, than in the past. One of the SRA's two priority objectives, set by the D&G[27], is to "work with the rail industry to achieve substantial lasting improvements in performance". Ministers recognise that this will require the SRA to work on a range of issues across the industry and have therefore set a number of further objectives[28]. These include objectives to:

    —  "achieve a significant improvement in the resilience of railway operations" (which will have performance benefits);

    —  "provide leadership for the rail industry and ensure that different parts of the industry work co-operatively towards common goals" (including performance improvements);

    —  "secure progressive improvements in the performance of franchised rail services and improved levels of customer satisfaction with the quality of stations and services";

    —  "manage passenger franchises actively so as to ensure that commitments on performance and investment are delivered and that the standard of service to passengers is improved in accordance with franchise terms"; and

    —  "take opportunities to achieve improvements in the terms of existing passenger franchises, both in relation to performance".

  11.  The particular opportunity to address performance and customer satisfaction issues through the award of franchises is reflected in the policy statement "Passenger Rail Franchising", which defines the Government's overall objective for franchising as:

    "to secure the earliest possible delivery of better rail services for passengers while providing value for money for the taxpayer. We are seeking continuous improvement in safety and operational performance, as well as better customer service."

  12.  The SRA's Strategic Plan sets out its proposals for improving performance and translating this policy framework into real improvements for passengers. The Government particularly welcomes the development of the SRA's £400 million Rail Performance Fund (RPF), for which bids were first formally invited on 14 May.

  13.  The Government has not sought to prescribe how the SRA should seek to deliver performance improvements or monitor performance requirements in franchises. However, through the D&G and regular discussions, it has encouraged the SRA to address the underlying problem of skills shortages. The SRA is doing so in a number of ways-not least through its work on the National Rail Academy, by supporting the Rail Industry Training Council and the terms of individual franchises (the GNER franchise extension, for instance, included a programme of driver recruitment).


  14.  Government provides support to the railway industry, primarily through the SRA , in recognition of the benefits that rail services bring. Traditionally, and helpfully, passenger rail services have been divided into three main sectors: long distance travel, London and south east services, and regional services. The regional sector is itself made up of different types of services, ranging from commuting services around major conurbations to longer distance rural services. The benefits that services bring differ among these sectors, as does the level of government support currently provided. Table 3, below, provides some key facts.

Table 3: Key statistics by sector, 2001-02

Net subsidy
Subsidy per
passenger km
Passenger km
Passenger journeys

7.7 (20%)
227 (24%)
Strategic Routes
12.9 (33%)
74 (8%)
London and SE
18.5 (47%)
655 (68%)

  15.  The 10 Year Plan establishes an unprecedented forward funding framework for the railway industry. Within the 10 Year Plan provision, it is primarily for the SRA to establish revenue support and investment priorities that are consistent with the policy framework set by Ministers. It has done so, at a high level, in its Strategic Plan.

  16.  The Strategic Plan recognises that revenue support for rail is heavily focused on regional services and makes it clear that current levels of support should not be diverted from regional networks in order to achieve the key 10 Year Plan targets. It identifies three main channels for further investment:

    —  major enhancement projects;

    —  investment programmes eg Rail Passenger Partnership (RPP) scheme, RPF and Incremental Output Statement (IOS) schemes; and

    —  franchising.

  17.  There are constraints on both the physical capacity of the railway network, and on the ability of the SRA and the railway industry to deliver major enhancements to it. In particular there are skills (especially in signalling design) and financial limits on the number of major enhancements that can realistically be made to the national network over any given period. Given this, it is reasonable and realistic that the SRA's Strategic Plan concentrates on its highest priorities; safety and those areas where demand for passenger and/or freight services is greatest. Nevertheless, the programme of major enhancements identified in the Strategic Plan will deliver significant benefits across the network. Of the seventeen "major projects"[29] identified in the Strategic Plan, seven[30] will have a direct impact on services in the north of England.

  18.  The Strategic Plan allocates over £800 million for RPP and RPF over 10 years, and £700 million by 2007 through IOS schemes. All of these schemes have the potential to make a real difference to the experience of passengers in the north of England, by addressing those areas (such as the station environment) where quick results are possible. Generally these are also areas in which the National Passenger Survey has identified particular weaknesses. Examples of RPP schemes include:

    —  £3.4 million for additional capacity on Leeds Metro services;

    —  £2.8 million for new rolling stock and extended platforms at Wakefield; and

    —  £2.5 million for additional fast and local stopping services between Sheffield and Hull.

  A full list of current RPP and IOS projects, grouped by franchise, is included in the Strategic Plan.

  19.  The SRA is currently in the process of awarding new TransPennine and Northern franchises, following statutory consultation with the relevant Passenger Transport Executives on their content. In doing so, it will take account of the Government's policy statement, "Passenger Rail Franchising". This states that one of the Government's aims for franchising is to deliver the following sorts of benefits:

    —  better punctuality and reliability eg extra drivers, spare trains for emergency use, better arrangements for dealing with disrupted services;

    —  reductions in overcrowding eg extra rolling stock, longer trains;

    —  better service and facilities eg refurbished or improved rolling stock; improved station signage, information, waiting rooms, and ticket offices;

    —  improved safety, personal security and accessibility eg more CCTV at stations and on trains, secure parking, extended staffing hours; and

    —  integrated transport measures.

  20.  The Government is aware of comment from stakeholders that the Ten Year Plan's use of passenger kilometres to measure passenger growth focuses investment on long distance routes and services in London and the South East. The department believes, however, that passenger kilometres is a more appropriate measure than passenger journeys, which would (as table 3 above illustrates) focus investment even more on south east commuter services, at the expense of longer distance services which benefit different parts of the country.


  21.  The Government believes that the railway has a key role to play in delivering its objectives for economic success, social development and environmental sustainability. The extent to which it will do so in any particular line, route or region, however, will depend on the circumstances. Proposals for Government support for rail projects will be looked at on their merits using an assessment process that is common to all modes of transport. This will present wider benefits of rail in a consistent and fair manner so that the SRA can take them into account when coming to an investment decision. The methodology does not presume that the benefits on offer could best be secured through rail funding.

  22.  As set out in paragraph 14, above, it is primarily for the SRA to establish funding and investment priorities within the policy framework and appraisal criteria set by Ministers. The D&G make it clear that the SRA should appraise investment opportunities on a case by case basis, but within a consistent framework. They state[31] that, whilst having regard to value for money, the SRA should:

    "give particular encouragement to schemes which support the Government's integrated transport policy and broader sustainable development objectives" and

    "consider whether direct public financial support . . . would be justified" where a scheme appears to secure "significant wider, economic, social or environmental benefits".

  23.  The D&G also require[32] the SRA to apply the appraisal approach described in "Planning Criteria: a Guide to the Appraisal of Support for Passenger Rail Services"[33]. This is consistent with the Department's "New Approach to Appraisal" used in the appraisal of all other major transport projects, including the Multi-Modal Studies. It draws together a large amount of information collected as part of the appraisal process and assesses it against the following five key criteria: environment, safety, economy[34], accessibility and integration.


  24.  The Government believes that rail services in the north of England are part of a national network and have an important role to play in delivering its policy objectives—including in relation to social and economic development. In recognition of this it provides, through the SRA and PTEs, significant revenue support funding for these services.

  25.  The Government has established, primarily through the documents set out in paragraph 2, a policy framework within which the SRA will take the lead in the management and award of passenger rail franchises and the prioritisation of investment in the industry. The SRA has set out how it will do this in its Strategic Plan.

Department for Transport

19 June 2002

25   Paragraph 5. Back

26   weighted average of NPS results for ATM, ATN and NWT. Back

27   paragraph 6.2. Back

28   set out in Annex A to the D&G. Back

29   as set out on page 53 of the Strategic Plan, excluding RPP and IOS schemes. Back

30   Train Protection Warning System, Midland Mainline upgrade, West Cost upgrade, Cross Country upgrade, TransPennine upgrade, East Coast Main Line upgrade, other freight projects. Back

31   paragraph 8.7. Back

32   paragraph 8.6. Back

33   Issued by the Office of Passenger Rail Franchising on 24 May 1999. Any changes must also be agreed with the Secretary of State. Back

34   The assessment of the economy criterion includes consideration of any regeneration impacts. Where significant regeneration benefits have been identified they are described in the assessment but not included in the value for money assessment. Revised appraisal guidance covering this issue is expected to be issued in early 2003. Back

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