The beginning of this month saw the annual increase in rail fares across the country, often the second headache which commuters suffer on New Year’s Day. The average increase across the country was 3.4%, and so my constituents are now paying £5104 for an annual ticket from Colchester to London – an amount that probably rivals some mortgages.
When travelling to work costs so much money for so many people, we need to make sure that the current franchising process works. In my mind, there is no question that privatisation has had an enormous benefit to our railway system. Passenger journeys, which fell by a third between 1960 and 1995, have doubled, and we have one of the safest railway networks in Europe.
That doesn’t mean the system is perfect though. I sat on the Transport Select Committee when we published our report raising a number of concerns on this issue last year. One of the key challenges is ensuring there is actually competition as part of the tendering process, and encouraging more companies to come forward.
As an example, in the Invitation To Tender of our most recent franchise on the Great Eastern Main Line, the three companies who put in a bid were Abellio, who were the existing franchise holder, National Express, who had the franchise before Abellio, and FirstGroup, who had the franchise before National Express. Passengers would be forgiven if they didn’t feel it was a case of “meet the new boss, same as the old boss” as immortalised by The Who.
In order to protect the taxpayers from franchises failing, companies have to provide a bond, often in the millions of pounds, in order to secure the rights to run a franchise – this is known as Parent Company Support. It is absolutely right that there are costs to withdrawing from a franchise, however with large franchises, sometimes with revenues of over £1 billion per annum, companies have to put up multimillion pound bonds. Our large franchises create large risk even for large companies.
We need smaller franchises where possible. We need to reduce the level of risk so that we can attract a wider level of interest and more bids. We also need to look at more Open Access – where two or more companies compete on the same franchise – as there tends to be higher satisfaction ratings with operators where this is in place.
I won’t pretend this is feasible on every line, and there will invariably be discussions of where you would break existing franchises. However we continue to have risks with large franchises dependent on very narrow revenue forecasts. The answer cannot ever be fewer, larger companies bidding for the franchises. Rather we should double down on more competition to drive better value for money.
There are also changes which could be made to fares as part of the franchising process. For example there are perfectly sensible discussions which we should be having over the way in which fares increase: should it be CPI or RPI? Above or below inflation? Should we move more of the cost of running our railways onto general taxation, even though this means that those who don’t travel via train pay more?
However the focus must be on dealing with the here and now. We need a vastly simplified ticketing system which ensures that passengers will always get the cheapest fare for whatever distance they’re travelling. I would also like season tickets to take inspiration from the fare capping on the London underground. Buying an annual ticket, as opposed to a monthly ticket, offers a substantial discount. However, if a commuter’s employer does not offer a season ticket loan, it can be difficult for them to afford a one-off payment of often thousands of pounds.
Passengers should not pay more just because they are unable to afford such a large amount in one go. The Government should look at capping season ticket travel on new franchises so that commuters will never pay more than the cost of a weekly ticket in a single week, a monthly ticket in a single month, and an annual ticket in a single year.
This would instantly save commuters hundreds of pounds, as well as provide flexibility to part-time workers who are never sure whether they will be travelling enough to need a season ticket. It would also be made easier by the implementation of smart ticketing, which we are seeing rolled out across franchises, as these could simply be linked to debit cards for billing purposes.
Through all this, what we must all agree on is that need for investment. More money in our railway infrastructure and in our train services. It isn’t like the current rail fares are simply lining the pockets of greedy companies. Out of every £1 spent on a ticket, 97p goes back into the running and improvement of our railways.
Yet many commuters wouldn’t think this, and there are moments I wouldn’t blame them. In the new franchise on the Great Eastern Main Line, passengers will see 1000 brand new carriages coming into service from next year providing more than 32,000 seats during the morning peak period by 2021, all at a cost of over £1 billion. This is a tangible investment in our line that will make a real difference to those travelling.
Yet it means nothing when there are still frequent delays caused by overhead line problems, track defects or signal failures. A comfier seat doesn’t make you ignore the extra 30 minutes it has taken to get home.
We need to break down the barriers between Train Operating Companies and Network Rail. I welcome the Government’s announcement that they will be formalising the creation of new, tailored alliances on franchises as they come into force. Passengers only see one journey when they travel, so it is right that there is one face answerable to the public. However we need to go further.
I no longer believe that franchises can separate out necessary investment in trains from necessary investment in track. I have already mentioned the changes which we are seeing on the Great Eastern Main Line in our new franchise, yet the best trains in the world cannot avoid disruption when the track itself has issues. The extra seats which the new carriages bring doesn’t avoid the fact that our line needs investment, whether it is Liverpool Street Station which will soon need improvements, re-signalling between London and Chelmsford, or an extra passing loop south of Colchester.
The Department for Transport has recently changed how infrastructure improvements are assessed and moved over to a business case approach, yet I think we should look to build infrastructure improvements into franchises. I am aware that train companies can bring forward small-scale infrastructure proposals, yet it is the big ones that will make the most difference.
No-one is talking about moving infrastructure out of public ownership. However building it into franchises means that passengers will see service improvements from both companies in the franchise period. It can bring in money from the private sector to help fund these improvements, and it gives a timeframe for Network Rail to deliver.
Under franchising, our railways have seen a remarkable transformation. Yet looking to the future, we need to be ready to meet the challenges posed by even more passenger growth. By breaking up large franchises with too much risk to encourage more competition, reforming ticketing so that passengers always get the best deal and building infrastructure improvements into franchises, we can ensure our railways will be a success story for years to come.
Will Quince is the Conservative MP for Colchester