DfT must lead ‘fundamental and bold review’ of rail fares

Department-sponsored study flags move as part of wider reform of franchising system


By Jim.Dunton

05 May 2017

A study on the future financing and stability of the UK’s train operators has urged the Department for Transport to create a new fares structure that ends the “absurd complexity” of the current ticketing, ahead of a more fundamental review of rail franchising.

The report, written for the Tracks think tank, says a “fundamental and bold review of fares” by DfT and a political “clarification” of the next government’s vision of the economic and financial role of the nation’s rail network were pre-requisites for reforming the franchise system.

Tracks is an offshoot of the Campaign for Better Transport, and the study was produced with what it said was the support of DfT and trainmaker Alstom. It was written by consultant Credo.

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The report authors said that while the average turnover of rail franchises let by DfT had tripled between 1998 and 2016, passengers may not view that situation as a success, while the current franchising model appeared to be facing a period of “significant risk and uncertainty” that could ultimately make it unsustainable.

Despite the success of previous failed franchises where DfT stepped in to take over services, the report also questioned whether DfT had the capacity to handle multiple failures, particularly as the size of rail operators became larger.

The report concluded that previous attempts at reforming the rail franchising system had not delivered long-term sustainable benefits, while structural reform of the railways could not be considered in isolation from its wider economic and social-development role.

“The government needs to define what it expects from the railway in driving the growth agenda, and ensure that the franchise models can deliver this,” the authors said.

“This should not only include the access which the railway can provide to employment and job opportunities, but also the role which the industry can plan in the wider industrial strategy and the opportunities for the key players in the supply chain to support the UK’s renewed focus on an export-led growth strategy.”

They said that much of the current friction between passengers and the rail industry was due to concerns about the level of fares and the level of investment – issues driven a requirement to meet ever-growing premium payments to government and to ensure the railway placed smaller demands on the taxpayer. 

“If the country needs to spend less on its railway and ask passengers to meet a higher cost, then the government should be explicit about what the taxpayer can afford and explain the
implications of this to passengers and businesses,” the authors said.

“If the country does not feel that this is a reasonable or effective offer for passengers, additional funds will have to be allocated from the taxpayer.”

A DfT spokesman said it would be for the next government to respond to the report.

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