Christian Wolmar
With incumbent operator Arriva withdrawing from the competition, and the Welsh Government under close scrutiny from the local media, complications have set in that could disrupt the entire process, says CHRISTIAN WOLMAR
Welsh franchise concerns.
“It is no exaggeration to say that the very fate of the Welsh Government rests on the future of the franchise. If it all goes pear-shaped, it will be a very big story in Wales and may well affect the stability of the Government.”
few weeks ago, I wrote that Scotland is very different from the rest of the UK in terms of its railways. So too is Wales, which is embarking on a unique franchising process on which a lot rests - perhaps, indeed, the very fate of the Welsh Government.
It is different because of devolution and the way that the franchise has been structured, but also because of the high stakes involved for local politicians. The English media ignores totally what is happening on the railways in Wales. But the Welsh media covers every grisly detail of a franchise process that is immensely complicated, and which faces the risk of descending into total chaos unless there is very careful handling from the politicians.
The history of franchising in Wales is not a happy one. In 2003, Arriva was granted a 15- year franchise to run the Wales and Borders contract, and it was very much a plain vanilla deal.
There were few baubles for passengers, and the expectation was that the growth spurt in passenger numbers at the time would fizzle out, especially in rural areas. As we know now, the opposite happened. There has been virtually unfettered growth in Wales, as with the rest of the UK network.
Therefore, because of the lack of capacity as a result of the low growth expectations, while passenger numbers have soared satisfaction has dropped. Indeed, the latest figures from the National Rail Passenger Survey show a further 3% reduction in satisfaction, bringing the overall score to below 80% - near the bottom of the league table, because of unreliability and (especially) overcrowding.
The Welsh Government, keen to improve rail services, launched an ambitious franchise process that involved what was termed a “competitive dialogue” ( RAIL 813). Rather than specifying precisely what was needed, especially in relation to the Cardiff Valleys lines, the Government asked bidders to put forward plans on how to improve the infrastructure. Therefore, bidders were required to have an engineering company as a partner.
Now, though, it gets complicated in two ways. Firstly, originally there were four bidders who qualified, which was considered fine. However, there is a risk that only two will be left standing.
For starters, Arriva (the incumbent) made history by being the first holder of a franchise to throw in the towel, withdrawing its bid with little explanation. The more Machiavellian thinkers in Wales reckon that Arriva’s withdrawal may be in the expectation that the whole process will collapse, which would mean that the Welsh Government would be forced to give it an extension.
In fact, Arriva might have been bowing to the inevitable, given that it might have been politically impossible for the Welsh politicians to have sanctioned its continued tenure.
Indeed, Arriva’s departure has been widely welcomed, as its reputation is at rock bottom after 14 years of doing very little to improve services, while making handsome profits. For most of the franchise, the company refused either to put on extra services or (in particular) to find additional rolling stock to reduce overcrowding. And it has not escaped the notice of the eagle-eyed Welsh press that the
company has meanwhile increased its profits from £6 million annually to £20m, and built up a nice little next egg of a reported £70m.
The fact that the franchise contract did not anticipate much growth, and therefore made it difficult for Arriva to provide any additional capacity easily, has elicited little sympathy from the travelling public, who just see a poor service provided by a company happily filling its coffers.
Then there is the possibility that Abellio’s bid will also have to be withdrawn. The Dutch railway company had the bad luck of choosing Carillion as its partner. Its bid is therefore in jeopardy, because it is not simply a matter of finding another partner - the engineering company was an integral part of the bid.
Therefore, four may have turned into two (Keolis with Amey, and MTR with Bam-Nuttall). One more mishap, and the whole process will likely have to be rerun. As one insider put it: “Finding an engineering partner is not like going to Checkatrade for the local plumber.”
The concept of competitive dialogue is a good one. The bidders have come up with innovative plans to improve the Cardiff Valleys lines, with light rail being the favoured option - although there are issues about sharing the line with the remaining freight services. Electrification would be required, and here it gets complicated because the European Union was going to fund the improvement, which makes the Welsh people’s decision to vote for Brexit all the more baffling.
Then there is a further complication… a lack of clarity about precisely who will be able to make the final decision on the allocation of the franchise. While the Welsh Government has been running the franchise process, it has effectively acted as an agent for the Department for Transport, and Secretary of State for Transport Chris Grayling is likely to have the final say. For a time, he was being conciliatory towards the devolved government, since there was the expectation that there would be substantial gains for the Conservatives in the 2017 General Election, but the opposite proved the case
It is no exaggeration to say that the very fate of the Welsh Government rests on the future of the franchise. If it all goes pear-shaped, it will be a very big story in Wales and may well affect the stability of the Government, whose political make-up is on a knife edge (Labour holds just 29 out of the 60 seats, and depends on the sole Liberal Democrat for control).
It is not often that railways determine elections, but in Wales this is quite likely to be the case, although the Assembly is not up for re-election until 2021.