A cross-party group of MPs have attacked the Department for Transport's “completely inadequate” management of two major rail franchises which expose weaknesses in contract management capability more widely.
They criticised “appalling delays” for passengers on the Thameslink, Southern and Great Northern franchise, which at one point presided over less than two-thirds of trains arriving on time, and the failure, for the third time, of the East Coast franchise.
In a new report the Public Accounts Committee outlined a “catalogue of failures” by the department on franchising, including over-ambitious timetables, a failure to engage constructively with rail unions and, in the case of East Coast, failing to learn from past mistakes on the same line.
But the DfT said the committees new report on franchising was “imbalanced” and failed to grasp the complexity of the model.
Meg Hillier, chair of the PAC, said taxpayers would not have faith in the rail network unless DfT conducted and acted on a thorough review before any further franchises are awarded.
She said “new measures to embed the protection of passengers’ interests at a contractual level” should be at the heart of any reforms.
The PAC report added that the department must ensure that the providers of these franchises, who received their contracts in 2014, align their interests with those of customers in future bids.
In the case of Thameslink, the committee criticised the handling of trade union disputes. It said the department had failed to foresee the potential impact of strikes and had tried to “heap blame on the unions”. The PAC said DfT's own decisions and “lack of constructive engagement have played a large part in the dismal service for passengers”.
The MPs also hit out at the move to set the level of fines Govia Thameslink, the operator, will pay for future poor performance before knowing how they were performing.
On the East Coast franchise, they said the government had “for a third time” allowed the operator to promise more than it could deliver. The PAC's predecessor committee found in 2011 that the department had “not been rigorous enough in questioning the previous franchise holder on its over-optimistic assessment of the business”.
The franchise failed because the operator got its passenger growth forecasts “wildly wrong”. The PAC said “urgent action” must be taken to understand changing passenger demands and to consider this when handing out franchises in future.
The MPs also said the problems surrounding rail services had sparked wider concerns about the government's ability to manage contracts.
“The issues [with these two franchises], and the small pool of potential bidders in the market, highlight the broken model of franchising,” they added.
Hillier, a Labour MP, said the Thameslink, Southern and Great Northern franchise has been a “multi-faceted shambles causing untold misery for passengers”, while East Coast has failed through “wildly inaccurate” passenger growth forecasts.
“In both cases the government appears to have seen its task as simply to contract out the service, with wholly inadequate consideration given to passengers’ best interests and behaviour,” she said.
“This imbalance cannot continue. The franchising model is broken and passengers are paying the price.
“If taxpayers are to have any faith in government’s ability to deliver an effective passenger rail network then it must conduct and act on a thorough review before any further franchises are awarded.
“At its heart should be new measures to embed the protection of passengers’ interests at a contractual level – and to ensure taxpayers’ interests are properly protected should franchisee performance break down.
“Govia Thameslink’s new train timetables kick in next month. This will be a critical test for the operator and we will be watching closely.”
A spokesperson for the DfT pushed back at the findings, saying the PAC had drawn up “an imbalanced report that fails to grasp the complexity of the situation”.
They added: “Our franchising model already puts passengers and taxpayers first and has doubled the number of passengers using trains since privatisation reversed decades of decline and underinvestment under British Rail.”