Britain’s rail franchising model is no longer fit for purpose, not providing competition and letting passengers down, MPs have warned.
A report from the House of Commons transport select committee said the government was failing to hold train operators to account, while “serious deficiencies” in the Department for Transport (DfT) meant the government should consider transferring some of its franchising powers.
The report found that private operators were restricted in how much they could improve services and efficiency, and their relationship with Network Rail was “not as coordinated as it should be”, leading to higher fares and poor performance.
MPs urged the DfT to commission an independent review of rail franchising, to consider the possibility of handing over enforcement powers to the regulator, the Office of Rail and Road. The report said it was unlikely the department would be able to let all the franchises up for renewal in the next two years, as planned.
Since the West Coast franchising fiasco of 2012, when Virgin successfully challenged the award of the intercity train services it ran to a rival group, most franchise awards have been delayed, and contracts have been extended or awarded to allow the same companies to continue to run trains.
Louise Ellman, the transport select committee chair, said the current franchising model was no longer fit for purpose and that the current crisis on Southern underlined the failings of the DfT. She said: “They should hold the train operating companies to account. Unless that happens the taxpayer will be footing the bill and passengers will suffer.“While franchising enabled passenger growth and service improvements when it was first rolled out, passenger satisfaction with the railways is falling. Its core objectives are no longer being met, potential benefits are being lost and the passenger is suffering through higher fares and continued underperformance.”
Ellman added that the government had “serious lessons to learn” from the management of Govia Thameslink Railway’s contract to run Southern. She said there were “serious deficiencies in the department’s monitoring and enforcement of this franchise”.
The report added that although there can be no single template for franchises, longer agreements for smaller areas could tempt new companies into the market. The committee concluded: “The core policy objective of promoting competition is not being met.”
Fewer companies have bid for franchises, while major players such as National Express have withdrawn from the market, meaning ever less competition.
According to the national passenger survey run by watchdog Transport Focus, satisfaction with services has suffered a significant decline over the past year, with commuters in the south-east particularly unhappy.
Meanwhile, fares rises have far outstripped wage inflation in the last decade. Fares rose by another 2.3% on average across Britain on 2 January, sparking protests by campaigners and trade unions and further calls for renationalisation.
The transport secretary, Chris Grayling, speaking on the BBC’s Andrew Marr Show, said he agreed with much of the report. However, he said the main challenge for the railways was the huge rise in passenger numbers the government was investing to address.
He said GTR’s contract to run Southern was an “exceptional circumstance” due to the level of financial risk during major upgrades to the network, especially at London Bridge.
The DfT said £40bn was being spent on upgrading the railways and the franchising system has brought major investment to help create one of the safest and fastest-growing networks in Europe.
A spokesperson said: “We can make improvements and the transport secretary has been clear that it will take new ways of working, more investment and better collaboration across the industry to tackle the challenges ahead.”
The shadow transport secretary, Andy McDonald MP, said: “A railway works best as an integrated network, but privatisation and franchising have meant breaking it up to create opportunities for companies to extract a profit, resulting in costly inefficiencies. For example, hundreds of people are employed full time on the railway to argue about which company is responsible for delays.
“The current system is broken. It is time for our railways to be run under public ownership, in the public interest as an integrated national asset with affordable fares for all and long-term investment in the railway network.”
Paul Plummer, the chief executive of the Rail Delivery Group, which represents rail operators and Network Rail, said passengers and taxpayers had benefited from the franchising system. He said: “Under franchising, the railway has gone from costing taxpayers £2bn a year in terms of day-to-day costs to now contributing £200m, money which helps to fund the major rail upgrades making journeys more comfortable and reliable.”
