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MPs urge rail franchise reforms MPs urge rail franchise reforms
(about 2 hours later)
The rail franchise system is "a muddle" which allows train companies to "take advantage" of passengers and needs reform, a report by MPs has warned.The rail franchise system is "a muddle" which allows train companies to "take advantage" of passengers and needs reform, a report by MPs has warned.
The Commons transport committee said operators were making profits in good times but forcing the government to step in when revenues fall.The Commons transport committee said operators were making profits in good times but forcing the government to step in when revenues fall.
It wants the government to offer longer franchises to encourage companies to invest in their services.It wants the government to offer longer franchises to encourage companies to invest in their services.
The report also urged the government to run East Coast trains itself.The report also urged the government to run East Coast trains itself.
It said nationalisation could be a way of comparing the performance of the public and private sectors.It said nationalisation could be a way of comparing the performance of the public and private sectors.
The report also found operators had exploited a loophole to charge "unacceptable" fare rises at up to 11% above inflation.The report also found operators had exploited a loophole to charge "unacceptable" fare rises at up to 11% above inflation.
Passengers had to go to "extraordinary lengths" to get cheap fares and that fares had risen out of all proportion to the rest of the economy, it said.Passengers had to go to "extraordinary lengths" to get cheap fares and that fares had risen out of all proportion to the rest of the economy, it said.
Tighter rules will now tie all prices to inflation plus 1% - resulting in cheaper fares by next January.Tighter rules will now tie all prices to inflation plus 1% - resulting in cheaper fares by next January.
The franchise mess is beyond reform and the only real solution is a return to public ownership of railways Bob Crow,RMT general secretaryThe franchise mess is beyond reform and the only real solution is a return to public ownership of railways Bob Crow,RMT general secretary
The committee's Labour chairwoman Louise Ellman said: "The fare rises we saw this year were excessive.The committee's Labour chairwoman Louise Ellman said: "The fare rises we saw this year were excessive.
"Companies cream off profits in good times, but leave passengers to pick up the bill when hard times hit.""Companies cream off profits in good times, but leave passengers to pick up the bill when hard times hit."
The report found the current structure had allowed rail operators to hike-up prices at the worst possible moment.The report found the current structure had allowed rail operators to hike-up prices at the worst possible moment.
But Mrs Ellman said the price formula that allowed companies to take advantage in 2009 would remain in 2010 - when changed economic conditions should have the opposite effect.But Mrs Ellman said the price formula that allowed companies to take advantage in 2009 would remain in 2010 - when changed economic conditions should have the opposite effect.
Transport Secretary Lord Adonis has now closed a loophole which allowed train companies to increase prices of certain journeys if average fares remained within rules.Transport Secretary Lord Adonis has now closed a loophole which allowed train companies to increase prices of certain journeys if average fares remained within rules.
Mrs Ellman said: "We are pleased Lord Adonis has decided to tighten the rules and to hold firm in face of pressure from operators.Mrs Ellman said: "We are pleased Lord Adonis has decided to tighten the rules and to hold firm in face of pressure from operators.
'High profile failure''High profile failure'
"The system which allowed unreasonable fare rises this year will be kept in place next year when it will be disadvantageous to train operators.""The system which allowed unreasonable fare rises this year will be kept in place next year when it will be disadvantageous to train operators."
However, the Association of Train Operating Companies said more than four-fifths of passengers travelled on discounted tickets.However, the Association of Train Operating Companies said more than four-fifths of passengers travelled on discounted tickets.
The MPs pointed to the "high profile failure" of operators GNER and National Express as evidence of underlying problems.The MPs pointed to the "high profile failure" of operators GNER and National Express as evidence of underlying problems.
Bob Crow, general secretary of the RMT union, said: "This report exposes the chaos of the franchise system.Bob Crow, general secretary of the RMT union, said: "This report exposes the chaos of the franchise system.
"The franchise mess is beyond reform and the only real solution is a return to public ownership of railways.""The franchise mess is beyond reform and the only real solution is a return to public ownership of railways."
Peter White, professor of public transport systems at the University of Westminster, told the BBC that franchising was a delicate balancing act.
"If franchises were awarded for a longer period of time, that could have substantial benefits," he said.
"For example, they could invest in improved ticketing systems such as smartcards.
"But the problem is that if you've made a long-term franchise commitment and the company runs into difficulty, you must have some means of curtailing that franchise over a shorter period."
Lord Adonis said reforms to improve the rail franchising system were being considered - including longer franchises.Lord Adonis said reforms to improve the rail franchising system were being considered - including longer franchises.
The "risks and rewards" of the rail industry are shared between operators and the government, he said.The "risks and rewards" of the rail industry are shared between operators and the government, he said.
He said: "When the rail franchising system was examined by the National Audit Office last year they found that it was delivering good value for money, and steadily improving services.He said: "When the rail franchising system was examined by the National Audit Office last year they found that it was delivering good value for money, and steadily improving services.
"The government will consider the committee's report and respond fully in due course.""The government will consider the committee's report and respond fully in due course."