Appendix 2: Response from the Office of Rail and Road (ORR)
Letter from ORR Chair to Transport Committee Chair
Dear Mrs Ellman,
I am writing to respond to the Transport Select Committee’s recommendations in your report, ‘Rail Franchising’, published in January 2017.
Recommendation 5
“Reforms are needed if open access is to be expanded on the network. We recommend that the Department and the ORR work together, as they develop the financial framework for the railways over Control Period 6 (2019–24), to present a comprehensive set of reforms to track access charges. These reforms need to manage the differing requirements of OAOs and franchisees and ensure that operators, taxpayers and passengers get a fair deal. A specific proposal for a PSO levy should be put out to consultation over the next 12 months, so that a new regime can be introduced from April 2019. We further recommend that timetabling spaces for open access services are determined upfront during franchise development prior to the publication of the Invitation to Tender. This will provide the certainty that industry needs to plan, particularly at the bidding stage of franchising but it will also help to encourage OAOs.”
ORR Response
We published a major consultation on track access charges in December 2016 and are now considering the responses we received. In this document, we set out proposals to apply fixed cost charges (which under the relevant legislation take the form of ‘mark-ups’) to all operators, including open access. If this proposal is confirmed, it would ensure that all operators make an appropriate contribution to the cost of providing the network. Over time, this should support greater competition, as governments will be better able to choose between the provision of services by franchise or open access operators based on their suitability, rather than this decision being unduly affected by the different charges paid by these operators.
ORR has been working closely with the Department for Transport (OfT} on the development of the Public Service Obligation (PSO) levy, which is now subject to a consultation, in particular to ensure that the reforms to charges and any levy arrangements are aligned. However, as a tax, the implementation of the levy is a matter for government, as is franchising policy more generally.
Recommendation 23
“We question whether it is effective for one of the commercial partners to a franchise (i.e. the Department) to a/so be the enforcement authority. In light of this, we recommend that the Government transfer enforcement and monitoring capabilities of franchising to the Office of Rail and Road or another independent body. It should bring forward a consultation setting out the options for independent enforcement including the ORR option or the creation of a new body. This consultation should a/so consider the costs of doing this and examine the implementation issues for the ORR in terms of the impact on its other functions and resources.”
ORR Response
It is a matter for Government and Parliament how franchise contracts are monitored and enforced. If Government chooses to bring forward a consultation, ORR will of course work closely with it, particularly to understand whether any proposals could sit alongside and support our existing work, such as our monitoring of passenger facing licence conditions.
Yours sincerely,
Stephen Glaister
ORR Chair
Appendix 3: Response from Network Rail
Letter from Network Rail to Transport Committee Chair
Dear Mrs Ellman,
I am writing further to the Committee’s publication of their report on rail franchising as the report raised a number of issues that I thought it might be helpful to respond to. Given the forthcoming inquiry on governance and financing we will reserve any further comments on those areas that the Committee has indicated they will return to.
The first issue I would like to respond to is the reference that most disruption on the Thameslink Southern and Great Northern (TSGN) franchise is the result of the infrastructure work being undertaken at London Bridge. This is not the case and I thought it might be useful to give a little more detail . We have been very open with the Committee in previous inquiries that there was a period of around three months over Christmas and New Year 2014/2015 where new infrastructure failures at at London Bridge were responsible for an unacceptable level of disruption. These issues have since been put right, infrastructure failures are no longer a significant cause of disruption at London Bridge and we have learned some valuable lessons from this in terms of taking a holistic approach to planning major upgrade work that truly plans changes to the railway as a whole system.
In terms of ongoing disruption on that franchise, I know that you have recently heard directly from the operators of the franchise on the significant impact on performance that has been caused by the ongoing industrial relations dispute and driver availability issues. Aside from that, the principal causes of declining performance are complex and interrelated. As we have previously mentioned in evidence to the Committee, the reliability of our infrastructure assets has been improving steadily over time and, despite a huge increase in rail traffic over the past decade, we have significantly reduced the number of disruptive incidents that affect services. This focus on reducing disruptive incidents has been responsible for the sustained improvement in performance in the years folllowing the tragic accident at Hatfield.
While we remain committed to improving the reliability of our infrastructure assets, this focus on reducing the original causes of delay is no longer sufficient to continue reducing delay and improving performance for passengers. Despite our successful efforts to reduce the number of disruptive incidents, the overall amount of delay per incident has continued to increase such that it now outweighs the benefits of fewer incidents. This is the result of a steady increase in knock-on or secondary delay – now 70% of all delay – as the network has got more congested and now runs at or close to capacity. To put it simply, this increase in knock-on delay is just the same as an incident on a busy road cause causing more delay than an incident on a quiet road.
Another key issue for performance on the busiest parts of the network – including London and South East – is what we refer to as ‘sub-threshold delay’ – very small amounts of delay that are individually too small to be attributed to a specific cause. This can be a matter of just a minute or less and caused by something as seemingly small as it taking longer for passengers to get on and off trains. This unattributed category of minor delays has been increasing steadily, as has their impact as the network has grown busier. The combination of increasing numbers of minor delays and their growing impact is particularly relevant at London Bridge where the reduced capacity of the infrastructure while we rebuild the station means that the impact of even the smallest of delays is magnified.
Tackling these issues is a key focus for Network Rail over the coming years and, if we are to restore acceptable levels of performance, will require investment that is targeted at improving the resilience of the network.
The second issue I would like to respond to on the franchising process returns to the key principle I have already mentioned which is that it is vital that the railway is always planned and considered as a whole system and parts are not considered in isolation. While we welcome the Committee’s desire to make the franchising process as efficient as possible, the collaboration between Network Rail and franchise bidders to create a workable timetable is a critical part of a successful franchise bid and ·must be retained. The importance of collaboration to produce timetables is even greater when capacity is constrained, as it is in much of the country. Thorough analysis can be the difference between a workable timetable and one which causes significant disruption.
The final issue I thought it would be helpful to respond to is the Committee’s direct recommendation that we work with DfT and Manchester Airports Group to improve journey times to Stansted Airport.
I would like to assure the Committee that members of our strategy and capacity planning team attend the West Anglia Rail Action Group which looks at short to medium term timetable improvements on the West Anglia Main Line. The work of this group has included the aspiration to reduce journey times to Stansted Airport from Liverpool Street without significantly negatively affecting other users of the route eg the significant commuting market that exists and ahead of a major long-term infrastructure investment such four-tracking the route.
As part of our work we have led two high level pieces of.analysis. The first of these is to understand the choices made in the timetable proposals for the Anglia franchise on the West Anglia Main Line and what these mean for Stansted journey times and the second is to identify what options exist within the constraints of these proposals to offer small journey time improvements to Stansted passengers. This would be achieved by transferring stops from Stansted services to those serving Cambridge.
Having completed the initial analysis on this, this work is being continued by Abellio who are working through and refreshing their bid timetable proposals to see what can be done to offer modest improvements to Stansted journey times. This work is informed by estimates provided by Manchester · Airports Group as to likely levels of future demand at Stansted Airport. We understand that Abellio will feed back to one of the next meetings of the West Anglia Rail Action Group in the Spring, and we remain committed to progressing any workable solutions.
It is however important to be aware that the degree of capacity constraint on the West Anglia Main Line is such that, ahead of a major improvement such as fourtracking, there isn’t a quick, low cost or easy way of markedly improving journey times to Stansted without significantly negatively impacting on one of the other groups of services using the line. We do however welcome the Committee’s acknowledgement that infrastructure improvements like this should receive substantial funding contributions from private parties where they are likely to benefit considerably from them. We would be very happy to discuss that principle in more depth as part of the forthcoming governance and finance inquiry.
I hope that update is helpful. Do let me know if you would like further information on either of these issues.
Yours sincerely
Jo Kaye
Director, Network Strategy & Capacity Planning
24 April 2017