ONE YEAR AGO we were writing about a legal battle delaying the award of the first of 25 franchises to run passenger services on Britain’s rail network. At the time we were deeply sceptical about the private sector’s willingness to enter the rail business. Yet, as we have chronicled in our fortnightly newsletter Rail Privatisation News, progress has been both swift and surprising. Franchising Director John O’Brien was able to claim on December 6 that ’72% of the rail network, in passenger revenue terms, has been awarded to private operators’. It is an astonishing achievement.
With the next batch of handovers scheduled for January 5, the furious pace of sales continued in late November and early December. Most recent of the 17 franchises to have been awarded by December 5 were:
n On November 28 Virgin Rail Group Ltd was awarded a 15-year franchise for Cross Country Trains, which runs services that extend from Brighton and Penzance to Glasgow and Aberdeen. Subsidy of £112·9m in the first financial year will fall to zero in 2009, with Virgin paying Opraf a £10m premium in 2011-12. The company is to replace loco-hauled stock with 128 high speed DMU cars by May 2002, and the fleet of IC125 trains by 24 seven-car DMU sets by May 2004.
n On December 3 FirstBus plc took a 71??4 year franchise for Great Eastern, which runs inner and outer suburban services from London Liverpool Street to Shenfield, Southend, Clacton, Harwich and Ipswich. A subsidy of £29m in 1997-98 will switch to premium payments to Opraf in 2001-02, reaching £9·5m in 2004. FirstBus is to spend ’at least £8m’ on station improvements.
n On December 5 GB Railways Group plc won a 71??4 year franchise for Anglia Railways, which operates inter-city trains between London Liverpool Street and Norwich, plus local trains in East Anglia. Subsidy of £35·9m in 1997-98 will fall to £6·3m in 2003-04. Weekday London - Norwich services will be increased to half-hourly by September 2000, by when GB Railways promises to replace the present push-pull trains by a fleet of 20 four-car leased EMUs costing £60m to £80m. It is to spend £2m on station improvements.
n On December 5 Prism Rail Plc signed a 71??4 year franchise for West Anglia Great Northern, operator of two groups of commuter services from London King’s Cross and Liverpool Street to Peterborough, Cambridge and King’s Lynn, plus inner suburban trains from Moorgate. Opraf support of £52·9m in 1997-98 will reverse to a premium payment of £24·8m in 2003-04. Prism plans to spend £3m on station improvements.
We are pleased to see more commitments to order rolling stock: suppliers are busy with bids and enquiries for nearly 1300 EMU and DMU cars. The Association of Train Operating Companies claims that £645m is being invested in trains, stations and information systems. On the other hand, Railtrack’s results for the six months to September 30, announced on November 15, suggest capital expenditure on infrastructure - which includes a substantial amount of renewals - is only around £400m a year.
Despite the ritual claims of ministers, it is far too early to know whether the experiment launched by the Railways Act 1993 has been a success. Only when we see if the franchisees keep their promises on investment and miraculously falling subsidies will judgement be possible. We note that the Opraf subsidy for 1996-97 of £1760m is forecast to drop to £1260m in 1999-2000, although this excludes grants from Passenger Transport Executives. That is still substantially more than grants paid in 1993-94 to British Rail by government and PTEs of £1073m.
Meanwhile, it is worth remembering that the franchising auction has coincided with a buoyant spell in the British economy, and the acid test of the WCML modernisation lies ahead. The whole process could still end in tears. o
n To subscribe to Rail Privatisation News, call +44 1622 77 88 00 or fax +44 1444 44 55 99
