Press Release - The Department for Transport: Letting
Rail Franchises 2005 – 2007
15 October 2008
Under the management of the Department
for Transport, the process for awarding passenger Rail Franchises
in England and Wales has delivered better value for money, with
subsidies expected to fall. But some fares will rise above
inflation and crowding for many commuters will increase in the
short term until investment delivers more carrying capacity.
Today’s report from the National Audit
Office found that the Department – which took over the franchising
process from the Strategic Rail Authority in 2005 – has provided
service specifications for Train Operating Companies that reflect
Government aims of improving railway performance while controlling
industry costs.
At the time the eight franchises we
examined were let, a continued rise in the number of passengers and
length of passenger journeys was projected to result in a
turnaround from a subsidy from the taxpayer of £811 million in
2006-7 to a payment of £326 million in 2011-12. The turnaround
relates to payments to train operators to run passenger services
and does not include other subsidies paid through Network Rail.
Achieving this reduction in subsidy will depend on a number of
factors including the effect of any slowdown in the economy.
The Department’s contract terms should
improve the security, reliability, accessibility and quality of
passenger rail services on the eight franchises it has let, but
there is a risk that overcrowding and fare increases may offset any
improvements to passenger satisfaction.
Most regulated fares (such as saver
and season tickets) have risen by RPI plus one per cent. Increases
in non-regulated fares have been substantially higher – often six
to seven per cent. Some one-off increases have been as high as 20
per cent in 2007, although incentives for passengers travelling
outside peak hours have included special low fare offers.
The Department plans to increase
capacity on the rail network, mainly from an additional 1,300
carriages. In the eight franchises we examined this would lead to
increased capacity of 22 per cent. Many passengers – particularly
on routes serving London – will, however, face increased crowding
at peak periods until the planned improvements can be carried
out.
Tim Burr, head of the
National Audit Office, said today:
"Taxpayers and passengers
should benefit from changes made to the franchising process for
passenger rail services. The Department for Transport has
contracted to save the taxpayer money while improving service
quality, but it will need to see that capacity increases are
well-managed and timely if passengers are to expect less crowded
and more reliable journeys."
Notes for
Editors
- Press notices and reports are available from the date of
publication on the NAO website, which is at
www.nao.org.uk. Hard copies can be obtained from
The Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Tim Burr, is the head of
the National Audit Office which employs some 850 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 41/08
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