Operators ‘need more incentives to invest in stations’
Greater incentives are needed to encourage train operating companies to invest more money in station upgrades during a franchise period, say rail chiefs in the North.
David Hoggarth, Director of Transport for the North, said that in Northern’s case it is an unattractive proposition for the train operating company (TOC) to spend money on upgrades “when it is on a journey of turning what is quite a big subsidy into premium payments”.
Speaking at a conference in London dedicated to discussing station improvements and regeneration, Hoggarth said: “That is why we made a really strong case of securing investment through the franchise agreement, but what’s the incentive to go beyond that?
“Clearly if there’s an opportunity to make a return the TOCs are interested, but in that environment it’s hard work.
“The things that are commercial are done as part of a franchise bid, and the things that are more economic and broader that might be important for local authorities are hard to do.
“But it isn’t just the TOCs, it’s Network Rail as well. It’s good to see comments about Network Rail being ‘open for business’, but the reality is it’s hard-going to secure investment.
“That’s not to criticise TOCs and NR, that’s the structure of the industry incentives that make it difficult to do additional things other than what’s in the franchise agreement.”
Simon Elliot, senior project manager at Transport for Greater Manchester, said the short nature of franchises prevents TOCs from making bigger investments.
“Incentivisation is an issue,” he said. “Ultimately, Northern have invested in the stations, but when it comes to more large-scale bricks and mortar investment I don’t think they are incentivised to do that. The franchise cycle of change is an inherent barrier for the TOCs to look at large-scale funding in stations.”
However, Claire Kingswood, head of commercial and HLOS development at Great Western Railway, rebuffed suggestions there were not enough incentives for TOCs to pay for upgrades.
“I don’t think it needs radical change for us to be more engaged with station improvements,” she said.
“Clearly there are some constraints, but every TOC has an obligation to act as if they are the future TOC and that’s something we take incredibly seriously.”