Get rail franchises back on track, MPs say

Monday 27th July 2009

A group of MPs have today said there needs to be fundamental reform of the rail franchising system.

The influential group said reform is urgently needed to prevent more private operators abandoning their obligations when times get tough.

The transport select committee report also highlighted fare increases over 11 per cent seen on some routes this year as completely unacceptable when inflation is close to zero.

Committee chairman Louise Ellman said: "Current risk-sharing arrangements are probably storing up problems for the future.

"There is no point involving the private sector if companies can cream off the profits in good times, but leave passengers and tax payers to pick up the bill when hard times hit."

While the committee supported the government's decision to nationalise the East Coast main line, Ms Ellman cautioned: "The failure of two major contracts in three years is evidence of serious underlying problems with the current franchising model.

"We need to get these problems sorted out as a matter of urgency."

MPs also urged the government in their report to make the most of the bad situation and use the East Coast main line to provide a benchmark for comparing the performance of other types of franchises, both in terms of financial viability and passenger service quality.

There were also calls for operators who fail in one franchise to have all their other franchises confiscated in the future.

Ms Ellman said: "The fare rises we saw this year were excessive. We are pleased that Lord Adonis has decided to tighten the rules and to hold firm in the face of pressure from operators."

Transport minister Lord Adonis pledged in February the government will close the fares loophole and hold rail franchises to ticket prices linked to the current retail price index (RPI) by January next year.

This could mean regulated fares will decrease in 2010.

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