Further devolution - an opportunity for rail transport

In announcing Scotland's next rail franchise, the SNP government's minister for transport, Keith Brown, took the opportunity to criticise the system under which it was awarded. In his statement of 2nd October, he told the Scottish Parliament:

I wish to remind members of the context of railway franchising. As members will recall from my statement earlier this year on the award of the Caledonian sleeper franchise, franchising is a requirement under the Railways Act 1993, and it precludes any UK public sector organisation bidding to operate a railway service. As I have stated publicly on many occasions, that is an unfair restriction that ought to be changed so that private and public sector bidders can compete equally. I have written to three Secretaries of State for Transport to request a change in law and each request has been refused.

Over 13 years, the Labour Administration chose not to widen access to rail franchising to UK public sector organisations, despite having ample opportunity to do so—the Transport Act 2000 and the Railways Act 2005 are silent on the issue. In fact, the Labour Administration supported franchising and its restrictions. In 2009, the then Secretary of State for Transport, Lord Adonis, reassured the House of Commons Transport Committee that

“The evidence so far is that the franchising system has continued to prove its worth.”

I am left to deduce from its legislative silence and its vocal support for franchising that the Labour Administration was clearly happy to leave us operating these patently unfair procedures.

This week, we have started laying the tracks of the Borders railway, but the tracks of the franchising process were laid by Tory and Labour Governments at Westminster.

Earlier this week, I was asked to cancel the franchising process. Doing so might have left us liable for bid costs in excess of £30 million from our five bidders. Members should remember that it cost the Department for Transport more than £50 million for the failure of the west coast franchise, about which Ed Miliband said:

“It is a disgrace that it is going to cost £40m and perhaps more of taxpayers’ money because they have bungled this franchise.”

Nobody in the chamber can guarantee what new powers we will get and on what date, but we know that a delay in the process would be for a number of years. It would be costly and a bad deal for the travelling public, and I am not willing to put at risk the expectations of our passengers or the interests of the taxpayer by playing fast and loose with rail franchising.

There are those, even within the Liberal Democrat party, who see franchising as the only way to introduce private finance into train operating. However, Railfuture's John Rogers offered an alternative when he gave evidence to the Welsh government enterprise and business committee's inquiry last year. He said

We do not yet have full responsibility for rail transport in Wales. I, on behalf of Railfuture Cymru, urge the Government of Wales to do all that it can to get maximum and complete powers over rail transport in Wales, so that it can be planned for the benefit of the nation. It should not be about going cap in hand to Westminster and maybe being rebuffed or bogged down.

and

when we drew up our plan we simply said that, rather like Northern Ireland and the Republic of Ireland—the best example we saw was that of the Republic of Ireland—there should be a vertically integrated not-for-dividend company owned by the Welsh Government, which would appoint the best possible people to run it at arm’s length, but lay down what British Rail did not have, that is, complete cross-party political backing, adequate finance, and some kind of parameters for standards of service, reopening and integrated transport. In Wales, there are so many gaps in the rail network, or what is left of it, we should be considering long-distance bus services, as well as rail, as part of the overall pattern. It is rather sad what is happening with Arriva at the moment. We should be integrating Carmarthen northwards, and Afon Wen to the top and so on. I am open-minded on this. If we have a Government-owned, not-for-dividend, arm’s-length, high-powered, efficient company that the nation can be proud of, which fulfils the criteria that the Government lays down, I am easy on it. It is a matter of getting rid of this tiresome, hideously expensive franchise system.
The committee's final report showed an open mind:

We have listened to arguments for and against the different possible models for managing the next franchise. We are not fixed on any one approach but we agree with some witnesses that the key criterion should be choosing the model that delivers the best outcomes for passengers and taxpayers. The Welsh Government also needs to be clear about how the risks involved in the chosen management model will be managed. A decision on this has to be made by 2015 at the latest.

I suggest that both Scottish and Welsh governments should take advantage of the pressure which the "Better Together" vow has put on Westminster in order to have the Railways Act 1993 amended. If the Treasury wants an example of a viable not-for-dividend company which has invested in infrastructure, they need look no further than Welsh Water.