Department for Transport: The InterCity East Coast Passenger Rail Franchise - Public Accounts Committee Contents

2  Performance since taking the franchise into public ownership

11. Punctuality on the East Coast line worsened since handover of the franchise to Directly Operated Railways, continuing a year on year downward trend. Most of the delays were attributable to Network Rail and other train operating companies that run trains on parts of the line, with 25% of the delay attributable to the East Coast franchise itself.[20]

12. The predominant cause of delays was an ageing train fleet that, over the years, had not been adequately maintained. In the last 18 months, Directly Operated Railways has been attempting to turn things around. By the end of 2010-11 the line recorded the lowest level of delay in the past 11 years; and the proportion of delay attributable to the East Coast franchise while in public ownership had now fallen to 21%. Directly Operated Railways told us that Network Rail recognises the need for further improvements to the infrastructure on the East Coast line and that it should be a top priority for its management.[21]

13. The witnesses described the East Coast Main Line as the "jewel in the railway crown".[22] Directly Operated Railways informed the Committee that it is improving revenue-forecasting technology, investing in the train fleet and customer services to improve punctuality and generate extra revenue.[23] Much of the investment will benefit the franchise over the next four or five years and Directly Operated Railways expects that the taxpayer will see a return when the franchise is re-let in about 18 months time.[24] Directly Operated Railways is working to this timescale and told us that the Department is keen to understand the issues faced by previous franchisees ahead of preparing the invitation to tender for the new franchise.[25]

14. Directly Operated Railways told us that, on the East Coast franchise, discretionary business and leisure travellers account for some 96% of passenger revenues. Without a large and relatively stable revenue stream from commuters, forecasting passenger revenues for the franchise in an economic downturn is therefore particularly difficult.[26]

15. The Department considered that it was getting better at forecasting and was addressing the Committee's past concerns about the collection of adequate data on passenger journeys, a pre-requisite for good demand forecasting. The Department told us it that is has always expected and allowed for shortfalls in revenue from rail franchises. In 2009-10, the actual amount of revenue support provided by the department had been £87 million higher than forecast. In the following year, however, the amount spent on revenue support was £208 million lower than forecast and the Department had spent the unused funds on investments in the railways such as stations and the Manchester line.[27]

16. The Department told us it wants to develop more sophisticated contracts that put an emphasis on the train operator attracting passengers to trains that had spare capacity and away from services operating at full capacity.[28] The Department is therefore looking to give commercial operators more freedom to manage franchises in a way that more closely matches supply with demand.[29]

20   Qq 103, 104; C&AG's Report, paras 3.8-3.9 Back

21   Qq 75, 104 Back

22   Q26 Back

23   Q119 Back

24   Q96 Back

25   Q26 Back

26   Q12 Back

27   Qq 106-117; Ev 13 Back

28   Q106 Back

29   Q105 Back

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© Parliamentary copyright 2011
Prepared 9 July 2011