Increasing Passenger Rail Capacity - Public Accounts Committee Contents

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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Prepared 9 November 2010