Rail passenger numbers doubled since privatisation to a pre-Covid level of 1.8 billion journeys, on a rail network reduced in size by half compared with pre-Beeching days. The jury is still out on whether franchising, bringing private sector competition and entrepreneurship to the railway, was the cause of this, or whether it would have happened anyway with a different structure. Generally demand is about a growing economy and the ability of suppliers to provide competitive products. Government support is provided where rail addresses national issues such as the economy, the environment, social inclusion and jobs. Railways score high on all these.
Despite this, the franchise system was creaking, as was the capacity of the network to carry more and more trains without lowering performance, hence Railfuture’s campaign on capacity and electrification. Any franchise system depends on the ability of the franchisee to make money. The trick is to ensure the country gets a good rail system in the process.
The Williams Review remit, yet to report, was an acknowledgment by government and by the rail industry that franchises have had their day and the rail industry needs to move on in a way more focused on the needs of passengers (and freight customers), and more responsive to national and regional government requirements, particularly in the provision of investment in integrated transport to address economic issues. This suggests a move to the concession model where stakeholders have a greater say, particularly at region or city level, on what they want from the rail network.
This worked particularly well in London, which has the powers to regulate and coordinate bus services and all rail modes to provide an integrated service. The key component of London’s success is an integrated fares system in a regulated environment so application of the Concession model across the industry requires careful thought, including on how such a model can be adapted to ensure rail operators are motivated to attract passengers by meeting their needs.
And then came Covid-19 where rail traffic was reduced to 5% of pre-Covid levels at the height of lockdown - a shock to the system well outside the normal world of “stress testing”. Emergency Recovery Management Agreements are necessary irrespective of the more general need for franchise reform. It is important to note that introducing ERMAs, including a 1.5% mark up on costs, is a recognition by government that our railways are necessary in the future when we can return to addressing other priorities. The ERMAs basically sustain our railway system, pending a return to near normal. The focus in this interim is on performance and providing a more consistent customer interface at stations, such as those served by more than one operator.
The ERMAs have probably been over hyped in terms of changes to rail operations but rightly hyped in terms of government commitment to sustaining the rail network through this winter. In fact the limited changes contained in the new arrangements pave the way for the future and seen as consistent with a more defined, strategic role for our railways.
The Williams Review is planned to surface early next year timed when the country is through this current stage of the pandemic. A White Paper will be tabled containing plans to improve the strategic leadership of the industry and the replacement of franchises, and the current ERMAs by a new Concession style structure, including how this fits with the devolution agenda, whilst maintaining a national rail network. There is much work to be done on getting this right and we in Railfuture will be contributing to informed discussions on the White Paper with stakeholders.
DfT announcement: Rail franchising reaches the terminus as a new railway takes shape