RDG response to East Coast announcement

“The private sector in rail, including Stagecoach Virgin on the East Coast route, has brought significant benefits but we have already been making the case to government for reform. There is an opportunity to reform the franchising system for the long-term so it can deliver more for customers, communities, taxpayers and the economy. We will work with governments to make a success of the East Coast partnership while also setting out a bold vision for the future of franchising to benefit Britain.”

Notes to editors

See our recent blog on how the franchising system could change.

Franchising over the last 20 years

• One of the safest railways in Europe
• Most satisfied customers for a major railway in Europe
• No day-to-day taxpayer subsidy – from a £2bn loss to a £200m surplus
• More services – up by over a quarter (28%)
• More jobs – train companies employ 47% more people than in 1997/98 (national average 20%)
• Of the 48 franchises let to date, only four have ended early (three on East Coast).

Under Virgin Stagecoach

• Higher payments to taxpayers than under DOR – Stagecoach/Virgin has paid back, on average, 30% more per year to the taxpayer than was the case under DOR.
• More investment than under DOR – Virgin/Stagecoach has been delivering a £140m investment plan and has invested more in two years operating the route than DOR did in five years.
• Continued growth and high satisfaction – passenger numbers have continued to grow at 2.4% per annum and satisfaction on the route is at 92% according to the most recent Transport Focus survey.

The temporary measure of an operator of last resort is part of the partnership between the public and private sectors delivering for customers and will ensure customers on the East Coast continue to receive quality services. It’s right that an operator of last resort is in place and can be called upon in the unusual event that a contract can’t be fulfilled

Initial examples of how the current system could be improved

• Key is making contracts more flexible to deal with changes in the external environment that affect train operators so that companies can focus on delivering the best service for customers.
• A focus on delivering outcomes rather than outputs to allow train companies to innovate and respond with a focus on the customer.
• Flexibility to allow companies to respond positively to changes in the regional economy and the wider economy.
• Further devolution, allowing localised accountability as well as more varied franchise lengths and sizes to suit local needs.