Enlarge imageBy Adrian Croft
LONDON (Reuters) - A parliamentary committee sharply criticised the way the country organises its passenger railways on Sunday, saying the system of awarding rail concessions to private companies is a muddle.
Britain’s railways were privatised in the 1990s under the previous Conservative government.
State-backed Network Rail is responsible for rail infrastructure while the government awards concessions or franchises to private companies to operate passenger services.
"More than a decade after rail privatisation and the introduction of franchising of passenger services, we remain to be convinced that the system has achieved its objectives, or that it is indeed capable of doing so," the House of Commons Transport Committee said in a report.
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"Passenger rail franchising, far from being a model capable of delivering quality rail services for the next half century, appears to be a policy muddle," it said.
It made no proposals for an alternative system but urged Prime Minister Tony Blair’s Labour government to carry out a strategic review of the long-term needs of rail passengers and "an honest appraisal of the structure best suited to fulfil these needs over the next several decades".
It made a series of short-term recommendations to improve the current franchising system in the meantime.
The government, which seeks to encourage people to use trains, is already due to publish a long-term strategy for the railways in the summer of 2007.
SAFETY FEARS
The death of 31 people when two trains collided near London’s Paddington station in 1999 and the death of four people in another accident a year later caused public alarm over the state of Britain’s crumbling railways.
The government has since poured billions of pounds into modernising the network. Rail travel is booming and passenger numbers are expected to grow by up to 30 percent in Britain over the next decade.
But railway operators now pay large sums to win the right to operate train services, raising concerns that operators could try to recoup the money by cutting back services, cramming more people onto trains or raising ticket prices.
In March 2005, GNER, a unit of U.S.-listed Sea Containers, agreed to pay 1.3 billion pounds to the government for the right to keep running the lucrative East Coast main line for 10 years, the most expensive rail concession in European history.
But GNER has since struggled, with passenger revenues falling 31 million pounds short of its plans in the first 14 months of the new franchise.
"The current franchising model has passed its sell-by date. The railways require a coordinated long-term strategy for development and investment to provide the capacity and service levels that future generations will demand," the Labour member of parliament who chairs the transport committee, Gwyneth Dunwoody, said in a statement.
The parliamentary committee said it was crucial for the government to resist any pressure to renegotiate franchise agreements if operators got into difficulties.
It said the absence of new entrants into the passenger rail franchising market was a clear indication of unreasonably high barriers to entry.
"We are deeply concerned that a small number of companies have come to dominate the franchising market," it said, urging the government to act to bring new companies into the market.
