Transport Committee report on passenger rail franchising

Report (288 pages, 3.8M PDF) of the Transport Select Committee on the passenger rail franchising regime in Great Britain. The report is critical of Government policy but does not propose a well-defined alternative to franchising. There is no comparison with the Committee's endorsement of franchising for bus services.

Consistent with its report on buses, the Committee criticises "the dogmatic pursuit of competition where competition is not possible" and suggests a greater role for Passenger Transport Executives in metropolitan areas.

The Committee endorses the current Government stated policy of not renegotiating franchise agreements, arguing that "if risk is not transferred, there is little point in involving the private sector in the running of the railways". But it suggests that Government should share in the financial risk of open access competition with franchised services so as to "create an incentive for the Department to coordinate policy in this area more closely with the Office of Rail Regulation".

The report notes the importance of the few large incumbent bus/rail groups, and appears critical of this market structure. But it recommends longer franchises (15 years, the maximum under EU State aid policy) to improve "stability", and wants the Government to take more account of non-financial factors in selecting franchisees, but to make less use of consultants in assessing bids. It also favours "incorporating competition considerations into the specification of franchises" and the new policy of triggering the merger control process only once a franchise has been awarded, provided that "the late referral does not limit the range of remedies available to the Competition Commission".

For further information or advice please contact Franck Latrémolière.

Filed under DfT, Public transport, UK parliaments.

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