INTRODUCTORY SUMMARY

  Our Rail User Group cannot answer all the questions and sub-questions that this Committee has posed, simply because few if any outside Department of Transport circles—even aspiring franchise-holders, in some instances—have access to the criteria used at present to allot rail franchises. This does not stop us from expressing our very strong views on those matters to which we do wish to contribute answers, and that is what I do, on behalf of "Coastliners", now.

What should be the purpose of passenger rail franchising?

—  Is the current system achieving that purpose?

  Any student of elementary logic will have seen that the rider cannot be posed until the basic question has been answered, so why pose it? Existing systems cannot be measured against what would apply in an ideal world, sadly. But, as a starting point to answering the main question, may we suggest that such an ideal world would be one in which rail operators at all levels of the railway hierarchy were able to provide the extent and the quality of rail services that their customers, actual and potential, known and unknown, would wish for, at a reasonable price. We see no reason why such provision should have to be restricted to franchise holders as such—for instance, the Government, or its Transport department, need not by definition be excluded from running train services, which is what seems to apply now—except that, in southern England, at least one section of rail passenger operation is supervised directly by Government as a result of the franchise-holder proving consistently unable to do what was expected of it. Why not, with suitable safeguards, encourage more such sections?

How well does the process for awarding franchises work?

—  What input do operators, passengers and other interested parties have into the design of franchised services?

—  Has there been a smooth transition of franchising arrangements from the Strategic Rail Authority to the Department for Transport?

  If we as "Coastliners" compare what we have submitted as what we would like from our next franchise-holder with what has actually been provided, the gap is of an intolerably-glaring size. Often this is because of short-sighted (in our view) Government curbs on overall spending; the recent Northern Franchise Review illustrates this very well, even if, for now, few if any cuts in service-levels are pending. Another source of discrepancy is, in our region, Tyne and Wear's passenger transport operator, NEXUS. "Heavy" rail services between Newcastle and Sunderland have been halved simply to help NEXUS balance its finances; the needs of the users affected and/or displaced have scarcely come into it, and the implications of this radical reduction of train availability on levels of car-use in south Tyneside seem to have been ignored completely. To the best of our information, nobody who was asked about. the nature and scale of future rail-service in the North-East would have dreamed of advocating a drastic cut on this scale: so why is NEXUS allowed to get away with it?

  Every week or more, we are reminded of the increasing and dangerous threats posed by CO2 emissions, of which there are fewer attributable to rail than to just about every alternative on offer. Where does the Department for Transport stand on this? Should it not be demanding ever-increasing funds from the Treasury to add more electrified lines local and national, to Britain's undoubtedly below-average total (even with the Southern network taken into account)? We as a group have urged such additions in our contribution to a Passenger Focus questionnaire about the impending Cross-Country franchise, as we see no hope for a healthy 20-year development of existing cross-country services unless the stretch from York to Birmingham (at least), if not Bristol and beyond to Plymouth, is programmed for state-of-the-art electrification well within the lifetime of a renewed Cross-Country franchise. Similar considerations would have prompted us to lobby similarly for Bristol-Paddington to go under the wires, had we been in a position to comment even briefly on the now-completed Great Western re-franchising process.

  So our answer to the first "rider" here has to be "hardly at all": to the second "rider", that we cannot possibly know; and to the main question "demonstrably badly, with no sign of imminent improvement".

Are Franchise-contracts the right size, type and length?

(a)  What criteria and processes are used to determine the nature and length of franchises?

(b)  What criteria and processes are used to evaluate franchise bids?

(c)  Do franchise-holders deliver value for money to passengers and the Government throughout the duration of their contracts?

(d)  Are risks suitably apportioned between the Government and franchise-holders?

(e)  What is the scope for improving services through franchise agreements?

  Main Question "Right" for whom? The operators or the rail users? Or the Government Treasury? A feature of the first tenure by GNER of the East Coast Main Line was that, almost from Day One, spokesmen publicly lobbied for the then seven-year franchise, to be renewed—the only way in which they could be expected to plan service-improvements sensibly. It is to the greater credit of some other franchisees, eg of Arriva North-East (hurried successor to MTL Holdings), that they strove to maintain and improve their service and quality standards even after they knew that they had not won a renewal of their Northern Franchise.

  We as users are grimly used to the long delays between a rail operator deciding to renew rolling-stock, gaining an acceptable quotation from a manufacturer, its application for finance if need be, Government approval for the investment concerned, the testing of the desired new trains, the hurried repair-work and vital modifications, and—eventually, years later—full acceptance and operation of the trains concerned. By this time the "state of the art" has usually moved well on. Anything that can speed up this process is more than welcome, and does not directly affect the desirability or otherwise of lengthy franchises; but it does raise the increasing spectre of high leasing-charges, the only other method of stock-change that we have come across. We are by no means alone in bemoaning the (apparent) high rents that rail operators must pay, even for 20 year old diesel units in Classes 142, 143, 144, 150, 153 and 156. The shaky basic economics of many a local rail service are skewed even more unfavould ly by such standing charges than they are by apparently limited passenger-use; and (though it is not, strictly, part of the same answer here) the Track Access re«gime makes such fragile balance-sheets even worse. Yet if we had a franchise system that, effectively, allotted lines and/or service-groups to one operator ad infinitum, subject only to review every five years and the right to remove a franchise for unsatisfactory performance (and such a right demonstrably exists, as the fate of Connex proves conclusively), we would certainly see far better results for one and all, not least the passengers. Encouraging a long-term programme of steady improvement in service, and hence in numbers that use it, would lead to far better prospects than what prevails now, where threats from a narrow-minded Treasury and/or Department for Transport too often seem to lurk in rail management's collective sub-conscious.

  Riders (a) and (b)  If only we knew what these were! Without them, we cannot comment.

  Riders (c) and (d) We are fairly confident that the franchise holders deliver as best they can, but, for reasons stated above in the main answer, we deplore the undoubted financial handicaps with which they all have to work. If, for instance, the full costs incurred by Network Rail in maintaining and improving track and signalling nationwide became chargeable fully to the Treasury, as happens with the nation's road network, we are convinced that the financial picture presented by all rail operators, local and long-distance alike, would look infinitely more attractive. (Track Access charges would become a thing of the past, for instance.)

  There is another point on this arising from the Government's expectation that GNER and now First Great Western will not just operate the services laid down but also contribute several million pounds of profit annually to national funds as part of their franchise obligations. This, implying as it does that both these operators are compelled to charge their passengers significantly more than the fares-rates needed to balance their books, smacks of an unfair handicap against rail users and operators, especially when perceived costs of travelling by car seem, if anything, to be falling gradually. (Compare also our remarks above on increasing CO2 emissions, page 1.)

  Rider (e) In our experience, very small, when it should be far larger. See earlier remarks answering the second Main Question (How well does the process . . . work?). As long as an excessively-hands-on financial scrutiny is applied to rail operators, to the detriment of their regular and occasional users, especially those who know what specific extra train-services could immediately benefit their local line, franchise agreements will double as straitjackets at a time when global warming increasingly calls for flexibility at all levels of rail operation. One example from our own Coast Line will serve here—we have been unsuccessfully campaigning since 1997, when we were first formed, for a later last train south from Newcastle (at 21.00, believe it or not!) to serve known demand from Sunderland University students who commute daily to and from Teesside. How much longer do we have to wait?

Do we need more competition and vertical integration?

(f)  Is franchising compatible with Open Access operations?

(g)  Should train, rolling-stock and track operation be more closely-integrated?

  The main question, in its posed form, is inappropriate. It is combining two quite distinct features.

  More Competition? It depends on how this is defined. Between rail operators along the same route, it. would depend on the perceived purpose and responsibilities of each operator; as it is, there is a controversial system by which revenue from an entire line is allocated among all operators [ORCATS], and apparently not every operator is happy with how the revenue is split—cf GNER's current apoplexy in the face of Grand Central trains, despite their clearly separate basic passenger markets, intended service-frequency, and overall standard of passenger facilities on board.

  We would in any case argue that there is quite enough competition in the world of transport already, thanks to parallel attractions of road (bus, private car, etc) and, less often, air transport. All rail operators have long faced, and will continue to face, competition of this sort.

  Vertical Integration? This term puzzles us. If it refers to the reduction of conflict of interests among operators, track authorities and so on, yes; the current improvements should continue indefinitely, to the advantage of everyone using and running train services. See also "Rider (g)", below.

  Rider (f) We see nothing, endemically, to prevent it. Anyway, European competition law seems to insist, rightly or wrongly, that provision for Open Access (however defined) must be made on all lines in all countries belonging to the European Union. That includes our own. And, indeed, with a strong minded Office of Rail Regulation, such as we seem to have now, led by a firm Regulator with an expect command of current legal checks and balances, ditto, we have confidence that all applications for Open Access services, from operators new or existing, will be treated firmly but dispassionately. However, we do note the danger of a Department for Transport, now or in future, trying to lean on the Rail Regulator to vary a judgement between operators, either "minded" or finalised, just to fit in with an agenda, hidden or otherwise, to save money (ostensibly), instead of developing fresh rail services.

  We also urge that somebody, somewhere, takes greater pro-active responsibility for advocating new rail services in parts of the country without them, for whatever reason. Examples from this area could be the desired introduction of faster direct Tees-Tyne passenger services along the now freight-only Stillington route (Norton South-Ferryhill); and an extension of existing Middlesbrough-Whitby rail services along the former trackbed (with tracks restored, of course) to Robin Hood's Bay, at the edge of the North Yorkshire National Park, in the interests of reducing road traffic congestion in and around Whitby. Neither innovation would necessarily look financially good in their early years, largely thanks to vast sums needed to improve or restore adequate track facilities, but both would benefit their communities and the surrounding areas enormously, when viewed over, say, a 20-year perspective. Both look to us to be schemes best financed entirely from public funds in the first instance, just as most if not all road improvement schemes are now (cf. our earlier remarks about funding Network Rail as a national asset instead of a drain on the finances of rail operators and rail users).

  Rider (g) Again, it is not clear what the hidden agenda may be behind this question, but our view on this should be fairly clear from remarks foregoing. The fewer obstacles there are between the several vital elements in the provision of a successful rail service for passengers and for goods traffic, the better.

CONCLUSION

  On the face of it, a response to an Inquiry that spends much time criticising the Committee for asking questions that often seem either illogical, or irrelevant, or both, is not one that is likely to gain much notice. But, as pointed out in our introductory remarks, we as a group do feel very strongly about a number of aspects of current rail operation, and to that extent we are very glad that this Inquiry is taking place. Our conclusion, however, is that this discussion is trying to adjust rail-users' deckchairs on the privatised deck of a railway Titanic. Climate-change, energy-conservation, increasing road-congestion and the innate inability of extra road-building to reduce it, all persuade us that Rail facilities must be improved and extended, almost regardless of expense, as a long-term investment for the health—and indeed the physical survival—of everybody in the UK, if not the whole world.

  Sorry to be alarmist, but we see no alternative. However, as a tail-piece, may we point out that the only part of these islands in which rail passenger lines are being re-opened is Scotland, where public funds are more readily available—and where most lines are under one franchisee, viz Scotrail. Does this not suggest lessons for the rail system in England and Wales?