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MPs urge rail franchise reforms MPs urge rail franchise reforms
(about 4 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.
And they charged "unacceptable" fare rises of up to 11% above inflation.And they charged "unacceptable" fare rises of up to 11% above inflation.
The Association of Train Operating Companies said four-fifths of passengers bought discounted tickets.The Association of Train Operating Companies said four-fifths of passengers bought discounted tickets.
The MPs urged the government to run East Coast trains itself. The MPs pointed to the "high profile failure" of operators GNER and National Express as evidence of underlying problems.
They said nationalisation could be a way of comparing the performance of the public and private sectors. They urged the government to run East Coast trains itself after the Edinburgh to London route was hit by dwindling passenger numbers.
The report found operators had exploited a loophole to charge "unacceptable" fare rises. State ownership
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. The government is set to take the National Express-run franchise into state ownership after ministers refused its requests for its contract to be renegotiated.
Tighter rules will now tie all prices to inflation plus 1% - resulting in cheaper fares by next January. But National Express said it continued "to meet or exceed all of its franchise commitments" and had "made significant improvements in the performance of the service taking it from the bottom to the top of the long distance operators".
The franchise mess is beyond reform and the only real solution is a return to public ownership of railways Bob Crow,RMT general secretary "It is recognised the challenges facing East Coast are purely financial as a result of the recession," a spokesman said.
The franchise mess is beyond reform and the only real solution is a return to public ownership of railways Bob CrowRMT general secretary
The committee of MPs said nationalisation could be a way of comparing the performance of the public and private sectors.
They also raised concerns about ticket prices.
Passengers had to go to "extraordinary lengths" to get cheap fares and fares had risen out of all proportion to the rest of the economy, the committee said.
However, tighter rules will now tie all prices to inflation plus 1% - and should mean most fares are cheaper by next January.
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.
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.
'High profile failure''High profile failure'
Mrs Ellman said: "We are pleased Lord Adonis has decided to tighten the rules and to hold firm in face of pressure from operators. Anthony Smith, chief executive of rail customer watchdog Passenger Focus, welcomed the report.
"The system which allowed unreasonable fare rises this year will be kept in place next year when it will be disadvantageous to train operators." "Passengers tell us in no uncertain terms that they find the fares and ticketing system confusing and unfair," he said.
The MPs pointed to the "high profile failure" of operators GNER and National Express as evidence of underlying problems. "Passengers don't mind who runs the railway. What they care about is their ticket offering value for money, sufficient services and punctual trains."
Shadow transport secretary Theresa Villiers said: "Rail users will not welcome the conclusion of this report which is scathing about the way Labour has run the rail franchising system. Shadow transport secretary Theresa Villiers said the report was "scathing about the way Labour has run the rail franchising system".
"The government has failed to tackle the problems on our railways, creating a franchise system which resorts to pricing passengers off the railway to deal with overcrowding." "The government has failed to tackle the problems on our railways, creating a franchise system which resorts to pricing passengers off the railway to deal with overcrowding," she said.
HAVE YOUR SAY The system is run in a fragmented fashion by companies whose principal aim is profit Penny W, Exeter Send us your commentsHAVE YOUR SAY The system is run in a fragmented fashion by companies whose principal aim is profit Penny W, Exeter Send us your comments
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, agreed.
"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," he said.
Peter White, professor of public transport systems at the University of Westminster, told the BBC that franchising was a delicate balancing act. However, Peter White, professor of public transport systems at the University of Westminster, told the BBC having longer franchises for companies could have "substantial benefits".
"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," 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.""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."
There should be more sharing of risk and more sharing of profits Norman Baker Lib Dem spokesman
Liberal Democrat transport spokesman Norman Baker backed longer franchises which he said would "end the bureaucratic costs of changing operators every few years".
"In order to have longer franchises there has to be a robust system to take account of the ups and downs in the economy. The present system doesn't do that," he said.
"There should be more sharing of risk and more sharing of profits. We need a thorough review of the franchise system because at present it is creaking at the seams."
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. "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.
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."
RAIL PRICE INCREASES 1997-2008 1997 is the first year after the entire rail network was privatised Regulated fares, eg season tickets and longer-distance, off-peak fares, are capped by the Government at 1% above inflation, as measured by the Retail Price Index. Prior to 2004 they were capped at 1% below inflation. Unregulated fares, eg most leisure fares including what used to be known as cheap day returns, and advance tickets, are not pegged to inflation