[Metrobeans]

B412 - Railways Bill 2012, TSR Conservative Party

2012 Railways Act

An act intended to improve railway competition and increase the value for money from the taxpayer.

BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

1. Removal of Network rail monopoly on UK railway management
(a) Regional franchises will be created for the management of the railway in said region

2. Removal of barriers to entry for 'open access'/private rail operators
(a) Moderation of competition franchise clauses would be removed from all new franchise agreements

3. Uniform operating franchise periods
(a) Uniform operating franchise periods of upto six years would be applied to all rail operating franchises
(b) Franchises would be reviewed every two years and revoked if punctuality, reliability or overcrowding targets are not met.

4. Greater freedom for rail operators
(a) Rail operators would be given greater freedom to purchase new trains/carriages outright provided they meet a standard set by the government

5. Reform of fair rise
(a) Rail fares would rise at an average of RPI+5% once per year and capped at 10% on each franchise route
(b) Current pricing mechanism of RPI+3% twice per year would be revoked

6. Commencement, extent and short title
(a) This Act comes into force on the day after the date of Royal assent.
(b) This Act extends to the whole of the United Kingdom.
(c) This Act may be cited as the Railways Act 2012.

Further notes...

The UK has the 5th busiest rail network in the world and has the highest rail fares in Europe. The Conservative Party believes that by injecting competition, loosening regulation and reforming fair rises this bill can cut the cost to the tax payer and put less of a burden onto the consumer.



1) A government report stated that the primary cause for high UK rail fares are a result of National Rail overspend on infrastructure projects increasing the price of tickets by as much as 30%. By removing the national rail monopoly on UK rail infrastructure management through the creation of regional rail authorities, this will allow the development of more competition for franchises purchased from the regional rail authorities and improve efficiency as said competitors will have a greater motive to manage infrastructure efficiently. The result of more efficient infrastructure management is less cost to the taxpayer which in turn means that the government of the day can reinvest this money back into the rail network.

2) With UK passenger numbers at near record levels one goal of this bill is to allow greater access to to the rail network for private companies who pay the Department For Transport an access fee. Allowing these private operators to use the rail network not only increases competition forcing down prices but increases capacity. These private operators are also able to adapt to changes in demand at a much quicker pace than those companies restricted by franchise agreements and as a result open access rail operators typically poll highly in terms of customer satisfaction. One major barrier to entry for these firms is that some franchise agreements contain 'moderation of competition' clauses which effectively prevent private companies from providing services (one example being grand central wanting a Huddersfield to London service via Birmingham but who were blocked by Virgin).

3) Currently the franchises awarded to the rail operating companies are a mish mash extending as much as 25 years or as little as 2 years, we propose franchise periods of upto 6 years with reviews every 2 years and the revoking of said franchise if targets relating to punctuality, reliability or overcrowding are not met. This puts greater pressure on the rail operators to provide a service deemed to be acceptable.

4) In order to give franchisees greater powers to meet changes in demand from the consumer, regulation would be loosened so that rail operators would be allowed to purchase extra vehicles outright. This allows rail operators to increase capacity at will to meet the changes in demands of the consumer.

5) Current pricing mechanisms allow rail operators to increase fares using an an annual inflation index (RPI) twice per year at an average rate of RPI+3% across the franchise routes. Given that RPI is an annual measure and rail fares are already the highest in Europe the Conservative Party proposes that a single increase in rail fares take place of RPI+5% and capped at 10%. This will give greater protection to the consumer and force rail operators into efficiency savings (leasing a newer, more reliable vehicle for example to reduce the cost of maintenance).

[Morgsie]

Some things I do like,Removal of competition clauses and new stock.

Longer Franchises, 15 years. The Inter-City West Coast and Greater Western Franchises are for 15 years.

Veritical Integration, both operations and Infrastructure under a Company. South West Trains and Network Rail have formed an agreement recently as a pilot project. Rail Magazine, 688

Brace yourself for demands of Renationalisation.

Regarding rail fares, they are linked to RPI +1 and should be kept at this rate.

[MacDaddi]

Won't you have to repeal the Nationalisation of Railways Act?

[barnetlad]

RPI+5% per year would be politically unpopular.

[Morgsie]

(Original post by MacCuishy)
Won't you have to repeal the Nationalisation of Railways Act?

The Great Repeal Act did repealed the Nationalisation of the Railways Act

[MacDaddi]

(Original post by Morgsie)
The Great Repeal Act did repealed the Nationalisation of the Railways Act

Okayz

[Rakas21]

(Original post by barnetlad)
RPI+5% per year would be politically unpopular.

At the moment we have RPI+3% but twice per year which if we take inflation to be 5% means that fares go up by 16% on average.

RPI+5% capped at 10% only once per year protects the consumer during times of high inflation.

[Morgsie]

(Original post by Rakas21)
At the moment we have RPI+3% but twice per year which if we take inflation to be 5% means that fares go up by 16% on average.

RPI+5% capped at 10% only once per year protects the consumer during times of high inflation.

RPI+1%, Autumn Statement 2011

Did not filter through the system before January fare hike

[Rakas21]

(Original post by Morgsie)
Some things I do like,Removal of competition clauses and new stock.

Longer Franchises, 15 years

Veritical Integration, both operations and Infrastructure. South West Trains and Network Rail have formed an agreement recently as a pilot project.

Brace yourself for demands of Renationalisation.

Regarding rail fares, they are linked to RPI +1 and should be kept at this rate.

Thanks.

The idea behind six years was to give train operators a chance to recoup the cost of the franchise while at the same time encouraging competition. Long franchises invariably cost more which limits the number of train operators who could buy said franchises so that we do not end up with First and Virgin having an essential monopoly.

Will have a look into that.

Nationalization solves none of the fundamental miss-management problems and if anything amplifies the problems i have highlighted.

Did the coalition not increase them to RPI+3% (and this is twice per year). I believe the December RPI+1% was just a one time let off which we cannot really count on in the TSR realm.

[Morgsie]

(Original post by Rakas21)
Thanks.

The idea behind six years was to give train operators a chance to recoup the cost of the franchise while at the same time encouraging competition. Long franchises invariably cost more which limits the number of train operators who could buy said franchises so that we do not end up with First and Virgin having an essential monopoly.

Will have a look into that.

Nationalization solves none of the fundamental miss-management problems and if anything amplifies the problems i have highlighted.

Did the coalition not increase them to RPI+3% (and this is twice per year). I believe the December RPI+1% was just a one time let off which we cannot really count on in the TSR realm.

You forgot Stagecoach aswell.

George Osbourne:

Train fares are expensive – and they’re set to go up well above inflation to pay for the much needed investment in new rail and new trains.
But RPI plus 3% is too much.
The Government will fund a reduction in the increase to RPI plus 1%.
This will apply across National Rail regulated fares, across the London Tube and on London Buses.
It will help the millions of people who use our trains.

From the Autumn Statement

[Stricof]

Removal of barriers to entry? But the railway industry operates on a natural monopoly.

[Morgsie]

There are 2 stages of Franchise Bidding
Pre-Qualification
Invitation To Tender, 5 or 6 Bidders are shortlisted and make a full Bid which the DfT awards to a Bidder

[tehFrance]

(Original post by Morgsie)
Brace yourself for demands of Renationalisation.

From who? you

[Morgsie]

(Original post by tehFrance)
From who? you

Not me.

[Morgsie]

There has to be Accountability and Transparency with regards to Network Rail.

You fail to mention Franchise payments, Premiums and Cap and Collar support

[Rakas21]

(Original post by Stricof)
Removal of barriers to entry? But the railway industry operates on a natural monopoly.

That does not mean in this case that we cannot generate competition.

While it is true that the state must essentially own most infrastructure and invest in new railways and trains, allowing private sector railway operators to run services after paying an access fee to the DFT means that we have extra capacity where it is needed (the private sector will only want services on the busiest lines), gives more choice to the consumer (why get on a rust bucket when you can get on a brand new train) and also means that there will be a greater amount of offers available to the consumer in terms of price.

In this case all the natural monopoly means is that we cannot allow the private sector to have full control.

[tehFrance]

(Original post by Morgsie)
Not me.

I saw it was Labour (before you edited it)... oh why Labour do you have to be such PITA's!!! Privatisation is the way forward for everything this is not Europe... you cannot have anything like (my beloved) France or Germany!

[JPKC]

Increased competition will certainly help the current system, though I don't think that the Act does enough to ensure this competition - what guarantee is there against price-setting cartels etc? I also object to

(Original post by Metrobeans)
4. Greater freedom for rail operators
(a) Rail operators would be given greater freedom to purchase new trains/carriages outright provided they meet a standard set by the government

These franchises should only be allowed to purchase additional carriages/locomotives through the Department for Transport. Decisions regarding such appropriations can have a major effect on the British economy, and as such it is in the national interest that they have to be made. For example, if franchises choose to purchase from a foreign company instead of a British one on the basis of cost, then jobs and key skills could be lost permanently in the UK. I refer you to the recent drama involving Bombardier and Siemens.

[Morgsie]

(Original post by JPKC)
Increased competition will certainly help the current system, though I don't think that the Act does enough to ensure this competition - what guarantee is there against price-setting cartels etc? I also object to



These franchises should only be allowed to purchase additional carriages/locomotives through the Department for Transport. Decisions regarding such appropriations can have a major effect on the British economy, and as such it is in the national interest that they have to be made. For example, if franchises choose to purchase from a foreign company instead of a British one on the basis of cost, then jobs and key skills could be lost permanently in the UK. I refer you to the recent drama involving Bombardier and Siemens.

There is also a competition process for rolling stock. This is is the current system.

There should be some DfT involvement/oversight.

[Rakas21]

(Original post by JPKC)
Increased competition will certainly help the current system, though I don't think that the Act does enough to ensure this competition - what guarantee is there against price-setting cartels etc? I also object to



These franchises should only be allowed to purchase additional carriages/locomotives through the Department for Transport. Decisions regarding such appropriations can have a major effect on the British economy, and as such it is in the national interest that they have to be made. For example, if franchises choose to purchase from a foreign company instead of a British one on the basis of cost, then jobs and key skills could be lost permanently in the UK. I refer you to the recent drama involving Bombardier and Siemens.

Current regulation limits the level of average price increases on each franchise. While there is a danger that an open access rail operator could decide to charge stupid amounts, this would be counter-productive given that passengers could continue to use the franchised rail operator. The more likely scenario is that open access rail operators would charge around the same amount as the franchisee.

When you say through the DFT do you mean that the DFT buys them as current which causes long delays in getting new stock or do you simply mean that the company can pay out of their own pocket as i propose but just has to have the DFT order it?