SWR contract

DfT decision to delay timetable changes will force South Western Railway to renegotiate its franchise contract.

LESS than a year after launching, South Western Railway faces unavoidable renegotiation of its contract with the Department for Transport.

The latter’s decision to delay essential timetable changes in December 2018 has made SWR’s franchise delivery impossible.

In response to the chaotic meltdown in Northern and Govia Thameslink Railway services following the May 20 timetable upgrade, Government announced in early July that eight franchises - including SWR - would not now be permitted to carry out essential enabling changes to their timetables this December ( RAIL 857).

However, SWR’s contract committed it to delivering 30% more seats on trains into London Waterloo.

The company, owned by FirstGroup and MTR, promised more, longer, better and faster services beginning from December 2018. Every train on every route would gradually be replaced or refurbished. A major re-writing of the December timetable was an essential requirement of this plan.

Did the DfT not fully appreciate the unintended consequences of its decision?

For example, at Eastleigh works a fleet of 90 Class 442 vehicles is being refurbished for the Portsmouth route. The work includes new motors, as well as revamped interiors. These ten-car formations are shorter than the newer 12-car Class 450 trains they will replace and offer fewer seats. They can only provide similar capacity by running one extra train an hour between Portsmouth and London.

Following DfT’s rejection of its proposed timetable, SWR cannot now run the full fleet of extra trains without causing unacceptable overcrowding. In turn, the trains they were due to replace cannot now be cascaded to deliver the promises made on other lines out of Waterloo.

The DfT’s decision to delay these timetable changes has therefore made it impossible for the train operator to deliver its contracted franchise commitments.

The DfT has only said that these changes will be put back to an unspecified “later date”.

In a careful statement, FirstGroup said: “The decision to defer the new SWR timetable plans has been confirmed as a change under the franchise agreement. We will work through the commercial and contractual implications of this under agreed industry mechanisms.

“We look forward to realising the planned benefits for passengers at a later date.”

The company says it still aspires to deliver some of the promised improvements within the confines of the existing timetable.

Talks have begun between the two sides. SWR had been due to pay £2.6 billion to the Government over the seven-year franchise.

In June, the Government had to return Virgin Trains East Coast to the public sector because its operator was unable to keep up payments promised to the Treasury.

Rail industry sources say the East Coast and SWR franchises were both structured to encourage over-optimistic bids in which all risk relating to growth in passenger numbers was transferred to the operator.

Performance on Waterloo routes has been in decline for six years, and the takeover from Stagecoach in August 2017 has not reversed the trend. SWR has also been subject to a large number of costly infrastructure failures, particularly on track and signalling on the approaches to Waterloo. With 100,000 passenger journeys a day, it is Britain’s busiest station.

The operator has also been affected by long-running RMT action over the role of guards. Eight strike days are scheduled for this summer.

It is likely SWR will seek substantial changes to a contract that was predicated on an increase in capacity which will now not be achieved on the anticipated timescale. Even if it is delivered one year later, it represents a significant change to the seven-year franchise.

Industry sources suggest SWR has been handed the equivalent of the ‘Get out of jail free’ card in the game of Monopoly.

Network Rail had advised the DfT that FirstGroup’s ambitious increase in services would be challenging to deliver on restricted infrastructure, with an extra hourly Portsmouth train placing particular strain on capacity. The approaches to London Waterloo were described as operating under similar pressure to Heathrow’s two runways, with no room for recovery when services run less than perfectly.

Passenger numbers on what has historically been the country’s most profitable franchise are falling, with the number of season ticket holders dropping by 11% last year.

Partly that is because fewer workers in this prime commuter belt now sit at the same central London desks from nine to five, Monday to Friday. Work patterns are becoming more flexible.

For months, rumours had been circulating suggesting the franchise was not going well for its owners. Now the Government appears to have made its own contract unworkable and undeliverable.

Official investigations into the causes of the chaotic timetable collapses, conducted by Office of Rail and Road Chairman Professor Stephen Glaister, are ongoing.