13 October 2021

UK: The Department for Transport has announced the first phase of engagement with industry stakeholders regarding plans for the Passenger Service Contracts which will replace the previous franchising system.

A central part of the Williams-Shapps Plan for Rail, PSCs are intended to encourage greater private sector involvement by offering companies the chance to ‘showcase innovation and expertise’ and work collaboratively with new public body Great British Railways.

DfT aims to work with existing passenger service operators and also to encourage new entrants to the rail market, including those from other transport sectors and from outside the UK, to bring in ‘fresh ideas, investment and innovation’.

Under the PSC model, GBR will carry the revenue risk, collecting all fare revenue and paying the companies for procuring rolling stock and operating the trains. DfT says ‘operators will be rewarded for efficiently providing high standards of operational performance and service quality’. A ‘pipeline of contracts’ is envisaged, with bids being invited at intervals of six to nine months. The first competition is expected to be launched in 2022, leading to a contract award in 2024. DfT anticipates that this ‘will be for an operation that primarily serves commuter markets’.

An initial engagement day on November 4 will provide potential bidders with the opportunity to learn more about the future commercial model, raise questions and to have their say in the development of the contracts.

‘Our Plan for Rail will deliver the most significant reforms to our railways in a generation’, said Rail Minister Chris Heaton-Harris on October 13. ‘Unlocking the expertise, investment and ingenuity of the private sector — including new and ambitious market entrants — is vital to delivering the reforms that put passengers first.

‘I encourage all those interested in playing a central role in the future of Britain’s railways to engage with this process, helping build a railway that is fit for the future.’

Comment:

All Change!!…. with still a lot unclear as the count down to the new PSCs begin.

There is certainly likely to be a tug of war between the desire for contestability on the one hand which implies frequent tenders aka short contracts and to incentivise investment by the TOCs on the other requiring lengthy contract durations. How would the incentives (or penalties for that matter) be crafted to encourage TOCs to be efficient, on time, safe and environmentally appealing? Many other questions trouble over the simplification of ticketing and the GBR subsidy regime.

That the franchising system failed is however not enough reason to replace it with any fancy. No doubt lessons have been learned but the objective must remain how to deliver a punctual, comfortable and reliable service with value for money. So the jury is still out on the Shapps’ reforms as we head into implementation.

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