Yesterday the government announced that Virgin Trains would not run the West Coast mainline for the first time since 1997. A consortium of FirstGroup and Trenitalia (the Italian state rail operator, we have state run rail in the UK, it’s just not our state that runs it) will take over the Franchise in December.
The Franchise system has come in for some pretty heavy criticism recently. And not without good cause. The TUC and rail unions have pointed out that it is inefficient to regularly re-tender for train franchises. It duplicates functions across all the companies bidding to run a single service and simply managing the process is a drain on the public purse. The House of Commons Transport Committee pointed out that Franchising has failed to drive up competition, as the Department for Transport (DfT) very often receives only one or two bids for each franchise, and the tax payer is often left liable for any losses. Even the man heading up a full review of the rail industry, Keith Williams, has stated that the franchise system is not fit for purpose.
Transport minister Grant Shapps was quick to reassure the public that the latest franchise is in keeping with the guidelines set out by the Williams Review, and that Williams himself had signed off on the deal. This might surprise some observers, because we are still waiting for Williams to publish his recommendations on how to reform Franchising, beyond a few hints that a lot of responsibility will be taken out of the hands of the DfT.
But the fact is, whether or not the latest franchise award matches Keith Williams’s standards, franchising itself is the problem. What we need, is a radical overhaul of our rail system, and that should start with public ownership. Publicly owned rail would divert the £200m in dividends that Train Operating Companies paid in dividends towards improving infrastructure or reducing fares. It would strip out the costly duplication of roles across multiple TOCs and Network Rail, reducing the numerous inefficient and often dysfunctional interfaces between train, track and infrastructure - all of which are ultimately paid for by passengers and the taxpayer. And a reformed, integrated national rail system under public ownership could allow passengers and rail workers to have a real say in how the industry is run, for the benefit of all.
Williams is right, the current franchise system is broken, but the problem is franchising, and the solution to that is public ownership.
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