Transport Committee publishes Rail 2020 report

04 January 2013

MPs call for an end to peak time fare rises and greater transparency about use of public subsidy.

In a report setting out their vision for the railway by 2020 Transport Select Committee endorses quest for a more efficient railway but raises concerns about safety, staffing and the protection of passenger interests.

Chair's comments

Launching Rail 2020 (HC 329-1) the report of its inquiry examining government proposals to reform the railway, Louise Ellman MP, Chair of the Transport Committee said:

“The number of rail passengers has increased but train companies’ unit costs have not come down. The Government wants to reduce the cost of the railway to taxpayers, but it must not do so by ramping up fares which can be complex and are often very expensive. Ministers must urgently set out a long-term policy on fares and rule out using higher fares to reduce peak demand for train services.

There are good economic, social and environmental reasons for the Government to provide a £4 billion subsidy to the railway, but to drive efficiency savings across the sector the Government and the regulator must shine a light on complacent management, waste and profiteering by ensuring greater transparency in the finances of the rail industry.

It is vital we know far more about how public money is spent so that there is confidence it does not leak out of the system in the form of unjustified profits. The Government should publish and consult on a clear statement of what the subsidy is for and where it should be targeted. Commercial confidentiality should not be used to block legitimate requirements for information.” 

Substantial savings

The Committee supports the McNulty Report’s general approach to achieving substantial savings.  But it considers his target to save £3.5 billion by 2018/19 to be challenging and expresses specific concerns about safety, staffing and the protection of passengers' interests. Commenting on this Louise Ellman added:

“If train operating companies do not realise substantial efficiency savings over the next five years, then the case for more far-reaching structural changes to the industry will become compelling. Changes to the numbers and duties of station staff should not be pursued solely to reduce costs or at the expense of passenger safety or service quality. The Office of Rail Regulation (ORR) should also monitor safety where Network Rail and train operating companies have formed alliances, ensuring these arrangements reflect the interests of taxpayers and passengers."


The report does not focus on the lessons of the West Coast Mainline Franchise debacle* but the MPs make some recommendations about rail franchises, to influence the current government review. In particular, the Committee sees merit in continuing with longer rail franchises but suggests the Government explores options for reviewing contracts every five year and looks at spreading premium payments over the full length of each franchise contract. MPs also recommend that franchises which need to be re-let soon should be tendered on the basis of medium-term franchises of seven to ten years’ duration, to avoid holding up the whole process.

The Committee calls on the Department for Transport to consider delegating the letting and management of rail franchises to an arms-length body with more commercial expertise than the Department has at its own disposal. It also suggests that franchises should be designed to deliver wider policy objectives such as the promotion of sustainable end-to-end journeys, the quality of the passenger experience, or economic development.

Speaking about future franchising,  Louise Ellman said, “Confidence in the DfT has been badly shaken by the collapse of the West Coast Main Line franchise.  We are not convinced that the DfT as currently structured is best placed both to set rail policy and deliver the detailed work required to run each franchise competition. A new arms-length franchising body could employ staff with the appropriate specialist and commercial skills required to let and manage effective franchise contracts. However, ministers must remain fully accountable to Parliament for the railway.”  

Committee's vision

The Transport Committee has set out its own vision for the railway, including:

  • Clarity about the purpose and effectiveness of rail subsidies.
  • A clear link between policy on rail and other aspects of transport policy, for example a focus on sustainable end-to-end journeys
  • A strategic approach to policy-making which does not sacrifice democratic accountability, takes passenger interests more clearly into account, upholds safety standards and develops a strategy for improving the security of the rail network.
  • Greater transparency about the costs of rail (and the assumptions underpinning the Department for Transport's analysis of the ratio of taxpayer to farepayer funding on different types of rail service), to ensure that new investment, operator alliances, profit or wastage levels and different forms of franchise can be better compared and evaluated.
  • More modern, flexible fares and ticketing options and a clear long-term policy on regulated fares that rules out even higher fares for commuters on peak time trains.
  • A strong single economic regulator for the rail industry with capacity and credibility to deliver savings across the board
  • Effective industry leadership via the Rail Delivery Group, scrutinised closely by the regulator to ensure that this strategic body acts in the best interests of the farepayer and taxpayer, rather than simply of established rail interests.
  • Devolution for some rail franchises, such as the Northern franchise,  to local or regional bodies.
    The Committee recommends that the Rail Delivery Group, made up of senior industry leaders, should spearhead the swift implementation of innovative ticketing technology and work with Passenger Focus to develop a clear strategy for improving retail facilities on stations and trains.
    MPs also warn the rail regulator it must ensure that alliances between Network Rail and train operators don’t disadvantage rail freight. Likewise  the regulator must take a cautious approach to approving the sale or redevelopment of former railway land in case such resources may be required for rail in future.

    * the committee plans to issue a further report in due course examining franchising including lessons from the west coast mainline franchises debacle.

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