November 2022, Virtual
21 November 2022, Hilton London Metropole
The UK’s rail franchising system is “failing” passengers and “not fit for purpose”, MPs have warned.
The Transport Committee said the current franchise model is leading to poor performance and higher fares.
In a damning report the department warned the relationship between Network Rail – which owns and manages rail infrastructure and rail operating companies – is “not as coordinated as it should be”.
It urged the Department for Transport (DfT) to commission an independent review of its franchising functions, including the possibility of transferring enforcement powers to regulator the Office of Rail and Road (ORR).
It states that many metrics of performance are plateauing “against the backdrop of substantial growth in premiums paid to government”.
The report’s other proposed changes include making it easier for open access operators – who currently operate services outside franchise agreements – to bid for future deals, and for longer-term franchises to be considered.
Chair of the committee, Louise Ellman MP, said: "While franchising enabled passenger growth and service improvements when it was first rolled out, passenger satisfaction with the railways is falling. Its core objectives are no longer being met, potential benefits are being lost and the passenger is suffering through higher fares and continued underperformance.
“Our report explores why the current model is no longer fit for purpose. But this will not be solved overnight. There is no one-size-fits all approach and the Government should work with other agencies to introduce steady, strategic reform to secure improvement,” she said.
MPs also say the DfT has failed to take responsibility for some of the failings in handling the Thameslink, Southern and Great Northern franchise.
Ellman added: "The Government has serious lessons to learn from the management of the TSGN franchise. This highlights the lack of progress by the Department since the overhaul of franchising that followed the failed re-let of the West Coast franchise in 2012.
“Our Committee exposed serious deficiencies in the Department's monitoring and enforcement of this franchise which has already led to a change of policy on performance reporting. This can only help to hold serially underperforming operators like Govia Thameslink Railway (GTR) to proper account.
If GTR is officially found to be in breach of contract – and the Committee is still pushing ministers for an answer on this – the Department for Transport should consider restructuring the franchise to realign the incentives and focus of the operator back to the passenger."
A spokesman for the DfT said it was investing over £40bn to deliver the faster and more comfortable trains.
“Franchising has brought major investment to our railways and helped to create one of the safest and fastest growing networks in Europe,” he stated. “But we can make improvements and the transport secretary has been clear that it will take new ways of working, more investment and better collaboration across the industry to tackle the challenges ahead.”