Press release

Hammond welcomes rail value for money report

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Reducing fares and costs on Britain's railways report released.

Inflation busting rises in rail fares could become a thing of the past if the £1 billion annual cost savings in the railways envisaged in a report published today (11 May 2011) are achieved, the government has said.

Responding to Sir Roy McNulty’s independent rail value for money study, Transport Secretary Philip Hammond welcomed the report and emphasised the need to reduce the cost of our railways.

The recommendations of Sir Roy’s highly detailed report entitled ‘Realising the potential of GB rail’ will now be considered and will feed into government proposals to reform the rail industry to be published later in the year.

Philip Hammond said:

I want to thank Sir Roy for the huge amount of time he has spent preparing this in depth report on why Britain has one of the most expensive railways in the world.

He warns that unless we get a grip and cut the costs of our railways, passengers could see services cut and fares rise. But, if we seize this opportunity, work together, and push through real reform in our railways we will be able to make savings for both taxpayers and fare payers.

If Sir Roy’s target of £1 billion per year of savings is achieved, over the next few years, our aspiration should be to put the era of the above-inflation average rises in regulated fares behind us, as well as reducing levels of taxpayer subsidy. If we are going to achieve this goal we will need everyone involved in the industry, Network Rail, train companies, unions and government, to work together and I look forward to beginning that process.

Last year Sir Roy McNulty was commissioned to conduct an independent study into rail value for money. His December 2010 interim report set out a preliminary assessment of the costs of rail in Great Britain and an estimate of savings of up to £1 billion that could be achieved without the need of cutting services.

Today’s (11 May 2011) final report sets out his recommendations for improved efficiency and value for money in the rail industry. The government will now consider which of Sir Roy’s recommendations to take forward and on what timescales, and is developing a wider package of rail reform to secure a sustainable railway at lower cost that delivers a better deal both to the taxpayer and to the fare payer.

As well as welcoming Sir Roy’s work, the government has also today outlined its intentions for the future re-letting of the Intercity West Coast franchise which operates services between London and Scotland, serving Manchester, Birmingham, Liverpool and North Wales.

The new franchise will run from 2012 to 2026, to align with the proposed opening of the first phase of High Speed 2.

The proposed Train Service Specification for Inter City West Coast represents a relaxation from the rigid timetable specification of the past, while retaining obligations that protect the key elements of service, such as principal first and last trains and minimum numbers of station stops per week and per day. This marks a significant shift from the micro-management that has prevented operators from maximising capacity and reacting to the changing demands of their passengers in the past.

A stakeholder briefing document for the Inter City West Coast franchise, detailing consultees responses, was published today along with an Invitation to Tender which has been published in draft format to allow a further consultation to take place on the train service requirement proposed.

The new franchise will start on 9 December 2012 and it will run until 31 March 2026 with an option for the department to extend up to 20 months.

In the meantime, the department is discussing with Virgin Rail the terms of an extension to the current franchise to 8 December 2012. If satisfactory terms cannot be agreed, DOR - the company which runs East Coast on behalf of the government - will be ready to operate the West Coast Mainline on a temporary basis.

Notes to editors

Report: Realising the potential of GB Rail

Document: Intercity West Coast (ICWC) franchise invitation to tender

Sixty per cent of journeys are on regulated fares. Regulated fares are either commuter fares or protected fares and they are regulated by capping the average increases in a basket or group of fares. For 2011, the cap is set at RPI + 1%, rising to RPI + 3% for 2012, 2013 and 2014.

Protected fares are a mix of standard weekly season tickets, saver fares and standard return fares.

The 4 shortlisted bidders to run the ICWC franchise are Abellio, First Group, Keolis/SNCF and Virgin.

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