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Government announces eight-year plan for rail franchising

Transport secretary Patrick McLoughlin today unveiled a new timetable for awarding rail franchises over the next eight years including plans to privatise the state-run East Coast service.

The programme aims to deliver on the recommendations of the Brown review which backed the overall franchising policy but called for improvements.

The government will use extensions to existing franchises and direct award contracts to realign the timing of the contracts.

Competitions will be staggered to ensure there are no more than four per year and the West Coast and East Coast franchises will not be let at the same point in the economic cycle

The timetable and plan aims to provide some certainty to the market, encouraging investment and improvements to rail services.

“This programme is a major step in delivering tangible improvements to services, providing long-term certainty to the market and supporting our huge programme of rail investment,” said McLoughlin. “Above all, in future franchise competitions we are placing passengers in the driving seat by ensuring that their views and satisfaction levels are taken into account when deciding which companies run our railway services.”

McLoughlin also launched a competition for the state-run East Coast franchise. It is hoped the winning franchisee will begin operating on the line by February 2015.

Reaction

Accountant KPMG global chair for transport Ashley Steel said today’s announcement has resulted in long extensions to existing franchises.

“The most fascinating point about today’s rail franchising announcement is the significant number of extensions to existing contracts plus the length of some extensions. Notably, South Eastern by 50 months; Cross Country 43 months; Great Western 33 months;East Midlands 30 months; and West Coast by 29 months.

“Whilst extensions will require renegotiated contracts the news will bring some respite to existing train companies. A failure to agree will risk the Department for Transport having to take the contracts, back in-house, via Directly Operated Railways, the current operator of the East Coast Line.

“The announcement to tender East Coast this year further confirms Government’s recognition that private sector operation of our railways is preferable to that of the public sector.

“Since privatisation, railway passenger journeys have increased 92% and we should not under estimate the vital role of private company management in making this feasible.

“Overall, when you add in the Docklands Light Railway, Crossrail, Scotrail and the Caledonian Sleeper service, all being tendered in the next 12 months, to the franchise timetable announced today, rail operating groups have significant revenues to competitively bid for.”

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