House of Commons Library

Railway passenger franchises

Published Thursday, January 18, 2018

This is one of two briefing papers on rail passenger franchising. This paper sets out the terms of the various rail franchises in England, Wales and Scotland. A second paper, CBP 6521, sets out in more detail how franchising works and the franchising policy of successive governments.

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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 franchises.

Franchising involves the Government setting out a specification for what it would like a franchisee 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.

This paper does not look at concession agreements, which are not legally franchises though they may be structured in a similar way – the most well-known of these are the London Overground rail services and Merseyrail.

After coming to office in 2010 the Coalition Government announced reforms to the franchising process, which caused some delay in scheduled re-lets. This was exacerbated in late 2012 after the failed re-let of the West Coast franchise caused the whole franchising programme to be suspended and then redrawn. The programme restarted in 2013 and is set out in the Rail Franchising Schedule. The most recent iteration of this was published in July 2017. Most recently, a number of franchises have been or are in the process of being re-let as alliances or partnerships, where the train operator works in tandem with the infrastructure manager, Network Rail.

Information on other rail-related matters can be found on the Railway Briefings Page of the Parliament website.

Commons Briefing papers SN01343

Author: Louise Butcher

Topic: Railways

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