Rail franchising in Great Britain

Rail franchising in Great Britain

Rail franchising in Great Britain was created by the Railways Act 1993. Passenger services are franchised, for a limited period, to train operating companies. The award of the franchise is determined by competition.

Administration

Rail franchising was, initially, administered by the Director of Passenger Rail Franchising. On 1 February 2001 the position of Franchising Director was abolished by the Transport Act 2000 and the passenger rail franchising functions were transferred to the newly-created Strategic Rail Authority (SRA). The SRA was in turn abolished in 2006 and the SRA's franchising functions were taken over by the Secretary of State for Transport.

Operation

When a franchise becomes due for renewal, the Department for Transport (DfT) invites bidders to tender for the franchise. The DfT specifies the level of service required and judges bids on several criteria. In the past, many services required a public subsidy and the level of subsidy required by each bid was one of the factors considered by the DfT. Recent franchise renewals have seen a reversal of this process and bidders are now expected to offer a premium (typically around GBP 1,000 million over 10 years) for the franchise.

Criticism of the franchising process

In order to pay premiums to the government, Train Operating Companies have been forced to implement large fare rises and this has led to the allegation that the premiums are a Stealth tax on rail passengers. It has been impossible to compare premiums offered by successful and unsuccessful bidders because the DfT has refused to release the information. A decision on 28 July 2008 by the Information Commissioner [http://www.ico.gov.uk/upload/documents/decisionnotices/2008/fs_50141374.pdf] may change this but the matter is still unresolved because the DfT has appealed to the Information Tribunal (case number EA/2008/0070) [http://www.informationtribunal.gov.uk/Documents/PendingAppeals/CurrentCaseUpdate_01Sept08.pdf] .

Passenger Rail Franchising is also being examined by the National Audit Office [http://www.nao.org.uk/publications/workinprogress/passenger_rail_franchising.htm] and a report is expected in summer 2008.

References

External links

* [http://www.dft.gov.uk/pgr/rail/passenger/franchises/ Department for Transport - Rail Franchises]
* [http://news.bbc.co.uk/1/hi/uk/6117728.stm BBC News - MPs raise rail-franchising fears]


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