Select Committee on Transport Minutes of Evidence


Memorandum submitted by NedRailways Ltd

  I am delighted that you have invited NedRailways to give evidence in your inquiry in Passenger Rail Franchising from the Dutch experience.

  The Dutch have taken a gradual approach to franchising, which is still under development today, with the aim of introducing competition against a background of certainty and stability. This will reduce risk in the market and deliver greater value for money.

  For the benefit of the Committee we would draw your attention to the following key issues, which summarize in a broad manner some fundamental differences between the Dutch and the UK's approach to franchising.

1.  CORE NETWORK VERSUS DEVOLUTION

  Contrary to the UK system, the Dutch have taken the approach of defining a core rail network with one operator to secure the benefits of franchising and avoid the complexities of too much fragmentation. The core network is regarded as socially and economically crucial to the well being of the Netherlands. Government wants to have a clear role in the development and operation of this network, including the High Speed Link to Belgium and France which will be fully integrated.

  Apart from the core network the government's rail policy is to fully devolve powers, including financial control and service specification, to regions and the large cities. This has led to some important improvements, for example:

    —  Syntus has an intermodal 10 years franchise for the eastern part of the Netherlands. This approach has been successful in delivering better integration of services and delivery so that costs could be reduced, while at the same time passenger satisfaction has been substantially increased. Based on this same model also all public transport in the South has been recently franchised to Veolia.

    —  Responsibility for two major rail lines has been given to the city councils of Rotterdam and The Hague. These will be converted to light rail and integrated with local tram/metro systems. To accommodate this the major railway station is being redeveloped to offer strongly improved service shaped around local needs.

2.  APPROACH TO COMPETING WITH THE CAR (END TO END JOURNEY)

  The Dutch government plays an important role in developing end to end journey optimization, which is believed to be the best way for rail to compete with the car. In this respect the government has driven and promoted a number of strategies:

    —  The government strongly promotes and provides incentives for station development, aimed at short and efficient passenger transfers, coupled to integration with local economic and social needs. Stations are regarded as drivers for regeneration. The tools government uses for this are direct central government investments together with investments by the station facility operator and the local authorities.

    —  The government has initiated, in close cooperation with all stakeholders, the introduction of a unique nationwide smartcard scheme for all modes of public transport including rail. The benefits will be ease of use for passengers and expected growth of patronage. Introduction will be phased in over the coming three years. The whole development is industry led by a consortium of five parties (including NS as one of the founding fathers) and is a good example of public-private partnership.

3.  FRAMEWORK FOR CONTRACTING THE CORE NETWORK

  Since the separation of operations and infrastructure in January 2002 the core network has been franchised. Currently NS has a 10 years concession contract running until 2015.

    —  The contract is a framework contract with an annual specification review which has to be agreed between operator and government. This specification includes investment levels, detailed service specification and improvement targets. This approach allows greater flexibility and stimulates innovation from the operator. This is manageable because of the integrated nature of the core network.

    —  To support the delivery of this contract the government agrees annually an operations contract with ProRail, the infrastructure operator. Subsequently ProRail and NS agree a track access arrangement which includes charges for the variable costs.

    —  NS is an investment led company. Levels of investment are demanded by government under the terms of the contract in concert with specific government investment initiatives in infrastructure and certain station and transfer facilities. This culture of investment improves services and capacity anticipating further growth. There is also an obligation to invest in Rolling Stock.

    —  The concession for the core network is under development. The Government has indicated that it will propose in 2008 plans to introduce competition. The government is looking for a public private partnership approach under which contract flexibility and cooperation between industry groups will reduce the burden of risk on any one party and should encourage innovation and investment.

4.  LONG TERM INDUSTRY VISION ON GROWTH

  The long term vision for rail as outlined in our submission to the committee in 2003, is a shared strategy for delivering major growth opportunities over the next 20 years both for passengers and freight.

    —  This industry led strategy offers value for money as through close cooperation it is possible to achieve the targets with 40% of the originally planned investment (€18 billion versus €34 billion).

    —  The first step of this programme has been executed since 2003 and mainly involves the improvement of reliability of both the fleet and infrastructure (additional government investment is €2.9 billion until 2009). Within this framework NS is also investing in new longer double deck trains (1,500 passengers per train) and regional trains (an investment of €2 billion).

    —  The second step will be a completely new timetable in 2007 which will deliver additional services through:

      —  Simplification from a three tier to a two tier system allowing more trains per hour moving towards turn up and go (six trains between the major cities);

      —  Creating independent corridors to increase punctuality and reliability of the services;

      —  Introducing "green waves" through the network for freight including in the peak hours.

    —  These first steps are, with limited investment, the basis for further growth through capacity enhancements.

  In summary, although the development of the Dutch system is very much geared towards the specific requirements of the Netherlands, themes such as innovation and partnership, as described above, can deliver value in any market, as demonstrated in our operations in the UK with Merseyrail and Northern.

FACTS AND FIGURES
NS
Traffic plan40 KPI's
Punctuality 200692.5%
Income per passenger km10 eurocent per passenger km
Duration NS concession10 years, 2005-15
Duration HSL concession15 years, as of 2007
Number of stations390
Number of passengersMore than one million per day
ProRail
Duration ProRail concession10 years, 2005-15
Network length in kms2,813 kms
Cargo train kms9.7 million train kms
Passenger train kms117.4 million train kms
Licensed TOC's10 companies—four passenger/six freight
Major stations under constructionsix stations
Yearly fixed maintenance budget infrastructure 1.0 billion euro
Yearly variable maintenance budget infrastructure (track access charge income) 200 million euro
10 July 2006





 
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