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In brief: Issue 592 16 Mar 2012

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Railways, England

Ministers consult on five options for decentralising local rail services

The DfT has outlined five options for giving local authorities and Passenger Transport Executives in England influence over the operation of local rail services.

The models are outlined in the Rail decentralisation consultation paper published last week. They  are:

  1. Co-signatory status: the North of England PTEs are already co-signatories to the Northern franchise. Although the Railways Act 2005 removed the PTEs’ right to this status from future franchises, the Secretary of State can still invite organisations to become co-signatories.

  2. One franchise, one specification: PTEs and other local authorities buy enhancements to the DfT’s base specification or reduce services/increase fares and retain the funding.

  3. One franchise, multiple specifications: one operator for the whole franchise but PTEs or local authorities take responsibility for specific service groups. The franchise would be tendered as one but bidders would have to price devolved service groups separately. The DfT would devolve funding to local bodies for the relevant services.

  4. One principal franchise, one or more micro-franchises: the DfT would procure and manage the principal franchise. However, operationally self-contained service groups or routes could be separately tendered and managed by PTEs/local authorities or other bodies as ‘micro-franchises’. Micro-franchising could happen at the same time as, or more probably, after, the main tendering process was complete. The plan to convert the St Albans Abbey to Watford Junction line to light rail operation, with Hertfordshire County Council tendering the line’s operation, is an example of this model.

  5. Entire franchise devolved to a grouping of PTEs/local authorities: a group of local authorities and/or PTEs would form a consortium to take responsibility for specifying, funding and managing a wider network of services. The DfT would allocate a grant to fund the devolved services.

The Department says the most appropriate time to consider decentralisation is when franchises are being re-tendered. The Great Western, Northern, TransPennine and Greater Anglia franchises are the first for which decentralisation is likely to be applied.

Rural services, such as those in Devon, Cornwall, Lancashire, Cumbria, East Anglia, Lincolnshire and North and East Yorkshire could be the most suitable for decentralisation “given the predominance of local interest and their operation being largely independent of other services”.

But the Department says there are also “some attractive arguments for local responsibility for services in major conurbations outside London”. It is also “open to considering proposals for devolution of specific services” in the London area.

The DfT says that, for any  proposal, “the Government would expect that the level of funding devolved would fully reflect the efficiency improvements that can reasonably be expected, as well as any extra cost required to respond to growth where this represents value for money”.

Before approving a devolution plan, the Government would have to satisfy itself that the body is capabile of taking on new responsibilities and able to bear risk, primarily the financial risk of the devolved network.

Although under models 4 and 5 local authorities could procure a franchise themselves, the DfT suggests that it could still procure  franchises on behalf of local authorities.

The Department suggests there could be synergies between the rail devolution plans and the proposals for local transport bodies and local transport consortia to manage the local major transport scheme pot. “It may be worthwhile considering whether the area covered by a consortium of local authorities and PTEs should be the same as that established by them and LEPs for the purpose of taking responsibility for a local major transport scheme budget,” it says.

Many infrastructure enhancements to local rail networks will have to be funded from the local major transport scheme pot.

“In cases where devolved bodies and the rail industry identified the need for an infrastructure enhancement to deliver connectivity improvements, a devolved major transport schemes budget appears to be the appropriate source of funding,” the Department states.

But capacity enhancements driven by a range of different services (e.g. also freight and long distance services) would continue to be funded by Government through the High Level Output Specification process.

Consultation closes on 28 June.

Discuss this and more at LTT Devolving Rail to the Regions conference on the 17th May

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