Staying Power

Most current UK rail franchising contracts are for relatively short periods of time. This article summarizes the drawbacks to these short contracts and discusses efforts to lengthen the contract time frame. The two recent failures of the East Coast Main Line franchise after operators defaulted on a costly string of commitments can be partly attributed to their seven-year franchises. Because both companies had short franchises, they were left with little room to maneuver when they had problems. With a longer franchise, management might have had a better long-term business plan. There also is little incentive for operators with short franchises to invest in infrastructure that will almost certainly be handed over to someone else before it has started to return revenue. Short franchises also contribute to operators taking short-term cost-cutting measures to increase revenue. One railroad company maintains that longer rail franchises are not simply a rail issue, but are a key factor in expanding regional and national economies. The company argues that there needs to be a visionary approach where franchises are designed to stimulate improved passenger service by investing heavily in stations and trains. A parliamentary select committee whose members have looked at the state of rail franchising on two separate occasions, 2006 and 2009, has suggested that the government should be willing to attempt different forms of franchising. The select committee proposed in 2006 that the government move towards medium-length franchises of up to 15 years, with one or two breakpoints built in where contracts may be terminated if performance is unacceptable. When the 2006 committee report came out, government ministers argued that difficulties predicting revenue over 15 or 20 years tended to 'militate' against longer franchises. However, following the latest report, the secretary of state indicated that a review of the length of franchises was underway and that there could be scope for a revision of government policy in this area.

Language

  • English

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Filing Info

  • Accession Number: 01142640
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Oct 28 2009 4:12PM