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ITEM EN8 - ANNEX 1

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EXECUTIVE – 7 JANUARY 2003

Rail Projects

Aspirations for Passenger Rail Service Developments

The Rail Industry

  1. The rail industry has been undergoing continuous change over the last couple of years; this report therefore represents a snapshot of the current situation as officers understand it but it should be noted that it could change quite quickly.

  2. Following the Hatfield derailment in October 2000, there was widespread disruption to train services whilst Railtrack instigated a nationwide programme of track improvement work. Confidence in rail travel fell and passenger numbers declined. The train operators have struggled to regain passengers and the rate of growth has remained flat during the past twelve months. The negative media coverage and huge cost of the track improvement work ultimately led the Secretary of State to place Railtrack into Railway Administration in October 2001. This resulted in a hiatus in investment. In October 2002, Network Rail acquired Railtrack plc and took over day to day running of the track and infrastructure. Network Rail is a not-for-dividend company run along commercial lines but with no shareholders. Its creation was viewed by many observers as being a new dawn for the railways and has been the catalyst for the Strategic Rail Authority to become more involved in decisions on investment and developing the rail network.

    3. The Strategic Rail Authority (SRA)

  3. The first Strategic Plan was issued in January 2002, and laid out the main issues for the rail industry and identified a programme of work to move the rail industry forward. The objectives established by the SRA are derived from the Government's 10-year Transport Plan, which set three core targets for the rail industry - 50% growth in passenger rail; 80% growth in freight; and a reduction in train overcrowding, particularly in London and the South East. The SRA are now publicly stating that problems faced by the rail industry have worsened since January 2002 and, in the light of continuing poor performance and escalating operating and enhancement costs, it cannot afford to deliver the programme of work it had identified in the Strategic Plan. The SRA has indicated that the 2003 Strategic Plan will set out proposals to define more prescriptively the level of service and investment the SRA wishes to purchase to ensure value for money and affordability. It is unlikely that there will be any additional SRA-funded commitments until the 2005 Strategic Plan as the SRA works towards sustaining existing projects.

  4. During 2003, the SRA has been reviewing its approach to managing and developing the rail network. It has launched a series of studies to combat inefficiency and challenge rising costs and these will define a clear route to the 2004 Comprehensive Spending Review. In the interim period, the indication from the SRA is that there will be no major investment in enhancements although Rail Passenger Partnership bids for small local schemes may still be considered.

  5. In its new guise, the SRA appears unafraid to recommend radical solutions to ease existing problems. For example, on Fares Policy, the SRA has stated that allowing some fares to be pegged encouraged passenger growth and exacerbated overcrowding. The suggestion was made that it might be better to allow fares to rise so as to 'price' potential users off the network - although this is in conflict with central, regional and local government objectives.

  6. The SRA are also posing some significant questions about the future shape of the rail network and, in particular, the allocation of limited track capacity. The ongoing consultation on a Capacity Utilisation Policy recognises that critical sections of the rail network, including those through Oxfordshire, are operating at near full capacity and major infrastructure solutions are not only expensive but will take some time to implement. The aim of this proposed policy is to maximise use of the existing infrastructure.

  7. The SRA states that the current timetable has evolved incrementally since British Rail days with each train operator 'bidding' for additional slots to run trains. This does not make best use of track capacity and the SRA areis expected to make some difficult choices about the relative priorities for longer distance and local train passenger and freight services. These may include strategies to provide fewer, but longer trains; the lengthening of platforms; a reduction in competition between train operators; and the possible withdrawal of some off-peak train services at smaller stations on the rail network.

  8. In November 2002, the SRA announced its new Franchise Policy. This defined a new approach with the SRA being more prescriptive on service levels and quality of service. In future, new franchises will need to take account of SRA strategies on timetable development, such as the Capacity Utilisation Policy. The SRA areis also linking franchise payments to reliability and quality standards, such as train and station cleanliness and passenger information.

  9. The principle of a single operator at main London termini, such as Paddington, will be extended. The initial proposal for 20-year franchises with the successful franchisee investing in major infrastructure, has been replaced by shorter length franchises where the SRA will decide on the level of investment, based upon value for money. The SRA has a preferred franchise period of between 5 and 8 years, although the exact term will be dependent on a number of characteristics associated with each franchise.

    10. Train Services in Oxfordshire

  10. In addition to the general upheaval faced by the rail industry nationwide, there is uncertainty within Oxfordshire about the future forour two of our principal train operators. In March 2002, the SRA consulted stakeholders about a proposal to reduce the number of train operators serving London Paddington.

  11. In November 2002 the SRA announced that it would combine the Thames Trains, Great Western Trains and Wessex (a smaller operator based in Exeter) franchises into one larger 'Greater Western' franchise by no later than 2006. The SRA is in negotiations with Go-Ahead (owner of the Thames Trains franchise) about the possible extension to the franchise beyond its current termination date in April 2004, until 2006, so that both Thames Trains and Great Western franchises expire simultaneously. The SRA is also investigating alternative First Group proposals to subsume the Thames Trains franchise into the existing First Great Western franchise in 2004, with the subsequent larger franchise being put out to tender in 2006. At the present time we are awaiting an announcement from the SRA on the future of both franchises and this is expected imminently. I shall report any progress to members orally.

  12. The ongoing franchise replacement process may present opportunities for officers to pursue with the SRA and prospective bidders our HIGH priority aspirations.

  13. This is the operating environment against which this report is set and I would ask members to bear this in mind when considering the issues raised herein.

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