[A-List] UK corporate state: railways fiasco

["Michael Keaney" <michael.keaney@xxxxxx>]

The regulator "gets tough" by shortening franchises. This is supposed to
excite the poor taxpayer fed up with subsidising the inefficient profiteer.
However, even inefficient profiteers need longer franchises in order to make
essential investments in new rolling stock, routes, etc. In other words,
more chaos...


Poor train firms to be thrown off network

Rail watchdog to set quality standards for all operators

Andrew Clark, transport correspondent
Thursday November 7, 2002
The Guardian

The government's strategic rail authority promised a crackdown on dirty
trains, poor punctuality and unstaffed ticket offices yesterday through a
new franchising regime that strengthens its control over train operators.

In a wide-ranging shake-up, there will be a smaller number of train
companies, each on shorter contracts. The SRA pledged that any operator
failing to meet clearly determined "journey quality" standards would be
thrown off the network.

Teams of "mystery shoppers" and auditors will roam the railways, seeking
inadequacies. Companies which make unexpectedly high profits will have to
hand over a portion to the government.

In the first stages of a nationwide carve-up, the SRA said it was creating a
new Greater Western franchise, combining Great Western, Thames and Wessex
trains. Each of the London terminus stations will see services merged into
one operator.

Stagecoach, the widely criticised operator of poorly performing South West
Trains, was told it was likely to get a new franchise running to 2007 - well
short of an earlier proposal for a 20-year deal.

Richard Bowker, the SRA's chairman, said the existing franchise system,
designed on privatisation during 1996, allowed operators to grow in an
"uncontrolled, haphazard way" in search of higher profits. "There has been a
lack of clarity over what is required of franchisees," he said. "We have
been saying 'here's a minimum level of service, now go for it'. Instead, we
will be saying 'this is exactly what we want you to do'."

Mr Bowker intends to set clear criteria on everything, from security to
cleanliness, punctuality, staffing and provision of toilets. "We will have
the ability to monitor performance, work in partnership, and if necessary,
step in, take over and re-let franchises to somebody else."

At present the government can only axe a train company through a long,
"legalistic" process. "We will use the ultimate sanction if that is what we
need to," Mr Bowker said. "But this is not a master and slave relationship,
it's between two parties, a specifier and a deliverer."

Many train operators aim for profits of 10% to 11% under the existing
arrangements. Under the new deals, the government will take a greater share
of the risk for unforeseen events like the Hatfield train crash. But
operators' profit targets are likely to be closer to 5% and any
"super-excess" will be creamed off by the SRA.

Critics suggested the changes represented a further step in
renationalisation of the railways following on from the replacement of
Railtrack with not-for-profit company Network Rail. One industry source said
the private sector would be left with just short-term management of trains,
with all strategic issues and infrastructure projects in the hands of the
government.

But the changes received a warm response from the Association of Train
Operating Companies and from passengers' representatives, who described them
as a step towards greater stability.

Moir Lockhead, chief executive of the inter-city firm FirstGroup, said:
"Overall it is a more balanced approach. There will certainly be less risk
for train operators. It will be a very much simplified structure, with
incentives to perform better."

Stewart Francis, chairman of the statutory Rail Passengers' Council, said
the reorganisation was a step in the right direction: "This should help the
industry achieve the joined-up railway that we have been calling for."

The franchises will last for five to seven years, representing a u-turn from
the SRA's earlier view that it wanted longer deals of up to 20 years. They
will come into effect when existing franchises expire, 15 of which run out
in 2003 or 2004.

The SRA has been seeking ways to end a torrid period for train operators,
which are yet to recover the rate of reliability they achieved before the
Hatfield crash in 2000.

Morale has been hit this year by Railtrack's financial crisis, the Potters
Bar crash and complaints over a slow response to severe weather conditions.
Mr Bowker denied suggestions that the SRA intended to "micromanage" the
network.

"We do not need an army of people or an army of accountants," he said. "We
do, however, need to change from an organisation which is very good at
ticking boxes to an organisation which is good at managing relationships
with people out in the field."

· A new Greater Western train franchise will be created by 2006, merging
Great Western inter-city services with Thames Trains and Wessex Trains

· All services from London's Liverpool Street will be combined into a
Greater Anglia franchise, taking in Great Eastern, Anglia and WAGN trains

· Stagecoach's franchise over Britain's most unreliable commuter service,
South West Trains, will be extended by a year to 2004. The company has
agreed "in principle" to an enlarged franchise to 2007 which will include
all services from Waterloo, taking over Wales & Borders trains to Cardiff

· In the long term, the government wants a single operator from each London
terminus, with inter-city and local services likely to be merged at King's
Cross and Euston

· A TransPennine Express franchise, comprising high-speed trains between
Manchester, Merseyside, Tyne & Wear and Yorkshire, will be carved out of the
existing Arriva Northern network. Arriva will not run it - the two
shortlisted bidders are Connex and a partnership between FirstGroup and
France's Keolis

· Other franchises across the country are likely to be combined into larger
operations, on shorter term contracts, as the existing deals expire over the
next five years