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| Rail franchising could cost more due to lack of competition, MPs say | |
| (35 minutes later) | |
| Bidding for rail franchises could soon shortchange the taxpayer because fewer firms are competing to run train services, a committee of MPs has warned. | Bidding for rail franchises could soon shortchange the taxpayer because fewer firms are competing to run train services, a committee of MPs has warned. |
| In a report into how the rail franchising system has recovered since the West Coast debacle at the Department for Transport in 2012, the public accounts committee (PAC) said there were still gaps in the department’s ability to manage the process effectively. | |
| Fears over dwindling interest and competition in rail were underlined last week when the DfT announced only two shortlisted bidders for the South Western franchise, Britain’s most lucrative commuter network. One of the bidders was the incumbent, Stagecoach, which has run it for 20 years. | Fears over dwindling interest and competition in rail were underlined last week when the DfT announced only two shortlisted bidders for the South Western franchise, Britain’s most lucrative commuter network. One of the bidders was the incumbent, Stagecoach, which has run it for 20 years. |
| The number of bids has reduced on average from four to three since the rail franchising programme was restarted in 2013, the PAC report said. It found that the DfT was struggling to attract new operators and that some of the nine transport companies currently running trains in the UK could drop out of the market. The committee suggested that the DfT should learn from sectors with few players, such as energy, to develop new approaches. | The number of bids has reduced on average from four to three since the rail franchising programme was restarted in 2013, the PAC report said. It found that the DfT was struggling to attract new operators and that some of the nine transport companies currently running trains in the UK could drop out of the market. The committee suggested that the DfT should learn from sectors with few players, such as energy, to develop new approaches. |
| Related: Government backs TfL plan to run London's commuter rail services | Related: Government backs TfL plan to run London's commuter rail services |
| Despite its concerns, the PAC endorsed the franchising model and said it was encouraged that the DfT had recovered since 2012, when a botched competition saw Virgin manage to get the award of the West Coast franchise to a competitor overturned, and subsequent inquiries found serious flaws in the department’s processes. But it added that the DfT still lacked a coherent strategic vision for rail, creating “a risk that it will make decisions now that prove costly in the future”. | Despite its concerns, the PAC endorsed the franchising model and said it was encouraged that the DfT had recovered since 2012, when a botched competition saw Virgin manage to get the award of the West Coast franchise to a competitor overturned, and subsequent inquiries found serious flaws in the department’s processes. But it added that the DfT still lacked a coherent strategic vision for rail, creating “a risk that it will make decisions now that prove costly in the future”. |
| Meg Hillier, the chair of the PAC, said: “It was clear from the events of 2012 that radical change was needed in the way the Department for Transport managed rail franchising. While we welcome steps taken by the department since then, it is vital more work is done to ensure the franchising system delivers promised service improvements to passengers, and value for money to taxpayers. | Meg Hillier, the chair of the PAC, said: “It was clear from the events of 2012 that radical change was needed in the way the Department for Transport managed rail franchising. While we welcome steps taken by the department since then, it is vital more work is done to ensure the franchising system delivers promised service improvements to passengers, and value for money to taxpayers. |
| “We are particularly concerned about the effects of declining competition within the programme. By its own measure, the department requires at least three bids per competition to increase the likelihood of receiving high-quality bids. Yet last week, it was announced that only two companies will compete to run the South Western franchise from June next year. | “We are particularly concerned about the effects of declining competition within the programme. By its own measure, the department requires at least three bids per competition to increase the likelihood of receiving high-quality bids. Yet last week, it was announced that only two companies will compete to run the South Western franchise from June next year. |
| “This hardly inspires confidence and highlights the urgent need for the department to develop new approaches it can draw on when there is a risk competition will not deliver the result rail users and the wider public deserve.” | “This hardly inspires confidence and highlights the urgent need for the department to develop new approaches it can draw on when there is a risk competition will not deliver the result rail users and the wider public deserve.” |
| Franchising was briefly paused in 2012 after the West Coast troubles, but a favourable review of the system conducted by Richard Brown saw it slowly restored from 2013, including a number of direct awards of franchises to existing operators, without competition. | Franchising was briefly paused in 2012 after the West Coast troubles, but a favourable review of the system conducted by Richard Brown saw it slowly restored from 2013, including a number of direct awards of franchises to existing operators, without competition. |
| Rail unions described the report as “hopelessly inadequate”. The RMT general secretary, Mick Cash, said: “It attempts to create the impression that the great rail rip-off can be halted by a bit of tinkering with the franchising process when it is privatisation itself that has reduced our railways to a chaotic, moneymaking racket. The answer is to rip it up and return the whole rail network to direct, public ownership.” | Rail unions described the report as “hopelessly inadequate”. The RMT general secretary, Mick Cash, said: “It attempts to create the impression that the great rail rip-off can be halted by a bit of tinkering with the franchising process when it is privatisation itself that has reduced our railways to a chaotic, moneymaking racket. The answer is to rip it up and return the whole rail network to direct, public ownership.” |
| A DfT spokesperson said the report was a welcome confirmation of the significant progress it had made. |