This paper explains how passenger rail services are provided in England and the policies of successive governments towards rail franchising. It also looks at those proposals which have been put forward for further reform – specifically more partnership working, competition, public ownership and devolution.Jump to full report >>
Since privatisation in the mid-1990s, there have been two types of passenger rail service on the GB rail network: open access operators (i.e. those that bid for ‘slots’ – specific parts of the overall National Rail timetable – to operate their own passenger services) and franchisees (i.e. those who operate a contracted service on a particular part of the rail network under licence from the Government and the regulator). By far the majority of services are run by franchises.
Franchising involves the Government setting out a specification for what it would like a franchise to do over a set period (level of service, upgrades, performance etc.). Companies then bid for the right to operate a franchise to that specification. The Government picks whichever company it thinks will deliver the best overall package for the franchise and give the best value for money. Franchise agreements include details of the performance standards that franchisees must meet and arrangements for the termination of a franchise in the case of failure to meet these standards.
There have been several reforms of the system since privatisation, most recently in 2012-14 following the failed West Coast let. There is much discussion at the moment about where the rail industry goes next and whether the current franchised system is fit for purpose.
Over the past couple of years there have been a number of reports looking into reform of the rail franchising system, advocating various changes, from more competition to more devolution, to more partnership working and moves towards reintegration of track and train. The Government is generally supportive of most of these trends though it has concerns about particular aspects and some of the more radical proposals.
Had Labour formed a government following the 2017 General Election it had pledged to bring the railways, in particular rail franchises, back under public control. There have been a number of reports looking into this idea over the past five years, suggesting how a future Labour Government could either nationalise the railways or create a publicly-run and partly devolved railway.
Finally, there is the question of what impact Brexit may have on how the railways are structured and operated. This remains uncertain for the moment.
Commons Briefing papers SN06521
Author: Louise Butcher