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 plan | 40 KPI's |
| Punctuality 2006 | 92.5% |
| Income per passenger km | 10 eurocent per passenger km
|
| Duration NS concession | 10 years, 2005-15
|
| Duration HSL concession | 15 years, as of 2007
|
| Number of stations | 390 |
| Number of passengers | More than one million per day
|
| ProRail | |
| Duration ProRail concession | 10 years, 2005-15
|
| Network length in kms | 2,813 kms
|
| Cargo train kms | 9.7 million train kms
|
| Passenger train kms | 117.4 million train kms
|
| Licensed TOC's | 10 companies—four passenger/six freight
|
| Major stations under construction | six 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 | |
| 
