A departmental disconnection

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publicaccountscom
With the all UK mainstream media and much of the UK blogsphere focussing on MPs expenses and the resignation statement of House of Commons Speaker, Michael Martin, Behind The Water Tower cannot entirely ignore the matter, so if – in spite of the everything already published – you still want to read more about MPs and Michael Martin, just skip to very end of this post for a few links to some material that you may have not yet read.

Now back to railways. It seems that only The Railway Eye and Behind The Water Tower consider the report on Rail Franchising by the House of Commons Public Accounts Committe worth reporting.

Though railways have not escaped completely from the media’s gaze. The Guardian reports that 2.2 million railcard holders such as students and pensioners face fares rises of up to 50%, while The Daily Mail predicts that 1.6 million train travellers face misery because of line closures during the bank holiday weekend.

Incidentally a year ago, we reported on the complexity of UK rail fares and that only the Internet-savvy could find good deals. It is encouraging to see that the Public Accounts Committee has come to the same view.

Here is the Conclusions and recommendations section of the Committee’s report. If you want to download the full report, just click on the picture at the head of the article.

Conclusions and recommendations


  1. Since taking over from the Strategic Rail Authority, the Department has shown itself capable of letting rail franchises to the planned timescales and protecting the taxpayers’ interests. The Department has procured passenger rail services that live within the public funding available and improve railway performance, although passenger satisfaction continues to pose problems. The Department cannot be complacent and should provide regular analysis and assurance to demonstrate that rail franchising developments are consistent with the Government’s wider objectives.
  2. The Department does not consider damaging side effects for passengers from its rail franchising approach. The Department sets requirements for service frequency and punctuality but does not, for example, measure the impact of rising car parking charges, complex fares and crowding on travellers, including on vulnerable members of society.
  3. Although the Department consults widely, regional transport bodies are not involved in selecting the bidder who will operate services in their area. The Government plans an increased emphasis on a local approach to transport decisions, with Integrated Transport Authorities providing oversight to a number of Passenger Transport Executives in the regions. The Department should invite local and regional bodies to second suitably qualified staff to join the Department’s bid evaluation teams so that details of the services, as bid, are checked against local needs.
  4. The present economic crisis may well put additional pressure on the commercial skills of the Department’s staff. The Department’s franchise management and monitoring will only be effective if there are enough staff in post with the necessary skills to interpret and question financial and commercial information. The Department should be flexible in its recruitment, remuneration and use of staff with commercial experience. Pressure to reduce administrative budgets should not undermine its ability to negotiate effectively with train operators.
  5. The Department promises of bringing 1,300 new rail carriages into service by 2014 look over-optimistic. There are only 423 on order so far, and another 150 carriages are the subject of negotiations. It takes 30 to 36 months to mobilise the supply chain, suggesting deliveries running into 2011–2012 for the current work in progress.
  6. It is unacceptable that low cost fares, which should be available to all rail passengers, are most readily found by those with access to the Internet. This approach undermines the whole basis of the railways as a public service available to all. It excludes those people without access to the Internet, without the time to search or who decide to travel at short notice. There is no reason why the Department should favour a system which supports such perverse and unwarranted exclusion.
  7. The Department must do much more to simplify fares. The Department has made a start in simplifying fares, but some complex fares still exist and the best fares are hard to find without access to the Internet. Fare structures should be simple, fares should be accurately named, and the lowest priced fare for a journey should be publicised and readily available at station ticket offices, as well as on the internet.
  8. In the economic downturn, the Department intends to hold train operating companies to their financial commitments. The Department hopes that, by 2010– 2011, direct subsidies to train operators will be eliminated as companies increase their revenues. But the recession may trigger a reduction in rail travel and fare revenues, and some train operating companies may ask the Department to relax their contractual obligations. The Department should hold train operators to their contract terms although, in some cases, including National Express’s bid for the East Coast franchise, the original bid might have included over-optimistic revenue assumptions.
  9. In the short term, there is an increased risk of train operator financial failure. Although the Department has effective arrangements for monitoring the operational and financial viability of train operating companies, there is a risk that some companies could fail as their revenues fall. In some cases problems that are temporary in nature will be managed through parent company support for additional bank finance. The Department should explore all options and develop robust contingency plans to keep train services running in the event of multiple failure.
  10. In the short term, there is also an increased risk of financial failure by banks that have issued performance bonds. The Department requires train operating companies to issue performance bonds, backed by banks, which the Department can call in the event of the failure of a company. The bonds cover about 5% of the annual cost base of each franchise holding company and have been issued by a selection of banks. The Department should review the ability of the issuers of performance bonds to respond to a call as often as necessary, potentially even on a daily basis.

MPs and Michael Martin

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2 Responses to “A departmental disconnection”

  1. White Horse Pilgrim Says:

    I do hope that the TOCs are made to pay the price of their commercial adventurism, by which I mean the management teams who made over-optimistic forecasts as if the world owed them a living. They are quick enough to grab money when times are good. Now times are hard, same for any business but of the course the bus bandits expect a golden parachute.

    It’s notable too (I write as one who has the misfortune to commute on FGW) how they are treating passengers as “incipient fare dodgers” with less courtesy almost every week. I did travel in Poland and the DDR in the “former times”, and even the communists had more respect for travellers.

    It’s sad, as a great enthusiast for railways and rail travel (and a professional involvement in creating tomorrow’s railways) to say that, other than commuting, I travel by train as little as possible. Simply there is less pleasure in it than at any time in my life before. It is clear too that maintenance and cleaning have been cut back to the bone.

    • dyspozytor Says:

      The whole system is daft and the craziness begins with Network Rail being expected by the Treasury to pay for its historic costs of capital. This leads to inflated track access charges. The fragmented nature of the railway industry and the fairyland nature of the franchising process further distorts the market. The result – Britain has the most expensive and the worst railway system in Europe.

      And the Polish government wants to copy the UK privatisation model!

      PS. I read your blog – great picture of steam on the GWR main line near Didcot!

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