Conclusions and recommendations
1. All but one of the fifteen English rail
franchises have no requirements for the operator to meet demand
without excessive overcrowding, and so the taxpayer usually has
to provide additional funding for extra carriages. For future
rail franchises the Department should impose clear obligations
on operators to avoid overcrowding, and to bear the costs of meeting
that obligation themselves.
2. The current round of planning relied heavily
on buying extra carriages and on extending platforms to accommodate
longer trains but this approach cannot go on indefinitely. Clearly,
alternatives must be found to meet the capacity challenge in the
future. The Department should vigorously pursue and promote
smart ticketing and other demand management techniques to reduce
the inefficiencies of overcrowding in peak hours and underused
rolling stock at other times.
3. The Department's knowledge of how many
people use which parts of the rail network and when is inadequate,
sketchy and so gives a poor basis for decision-making. The
Department should require all new train carriages, whether procured
by the Department itself or by franchisees, to be fitted with
automatic passenger counting equipment to show how many people
are travelling on what trains and when. It should require franchisees
to provide useful and verifiable data from that counting. It should
also report back to the Committee on progress to establish a computer
system to capture, analyse and report on this data.
4. It is not clear to passengers where the
money from increased fares has been spent. For example, passengers
in some parts of the Southeastern franchise are paying premium
fares to support new services which do not stop at their stations
and do little to alleviate overcrowding on the trains they use.
The Department should provide transparent information on how many
new passenger places it is delivering, on which trains, and at
what cost to taxpayers and fare payers.
5. The Office of Rail Regulation does not
have a grip on Network Rail's efficiency and appeared remarkably
relaxed about the continuing gap in performance between Network
Rail and international comparators. It is surprising that
the Regulator, which has been in operation since 1994, accepts
that there is still a "very large potential" for Network
Rail to improve its efficiency (for example a potential to reduce
costs of platform lengthening by 25% compared to European peers),
yet does not have a detailed bottom-up and complete understanding
of Network Rail's costs. Particularly given that Network Rail
is the monopoly provider of the rail infrastructure, there appears
to be marked complacency in the Regulator's approach and he should
do much more to challenge the underpinning reasons for existing
inefficiencies. The Department should take any steps which are
necessary to enable the Regulator to do this.
6. The unique and complex structure of the
rail industry makes it inherently cumbersome and expensive, and
provides little external challenge to its vested interest in its
own growth. The Department should conduct a fundamental review
of the rail industry's structure, to ensure better accountability
and value for money, with the aim of reducing conflicts of interest,
aligning efforts on maximising efficiency, and restraining the
tendency to seek solutions through growth.
7. Governance arrangements for the railways
do not provide enough independent scrutiny and transparency to
drive value for money relative to the sums of taxpayer money involved.
The Department should take the necessary steps so that the Comptroller
and Auditor General becomes the auditor of Network Rail, including
full access rights so that he can report on value for money to
Parliament.
8. It is unacceptable for Accounting Officers
to challenge the findings of a National Audit Office report in
evidence to this Committee, having previously agreed the accuracy
of the report prior to its publication. The Permanent Secretary
must in future satisfy himself that facts and their presentation
within National Audit Office reports are accurate before their
publication, and not wait until the committee hearing to reveal
new evidence. Such late presentation of evidence also prevents
the NAO being in a position to provide us with independent validation
of new material. The Treasury should reinforce to Accounting Officers
the importance of providing supplementary material in time for
the Committee to consider it and for the NAO to validate it.
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