In September 2018, the Williams Rail Review was established. Chaired by former Chief Executive of British Airways Keith Williams, the review is dissecting the entire rail industry; particularly the way passenger rail services are delivered.
Later this year, the findings are set to be published, recommending the most appropriate organisational and commercial frameworks to support the delivery of the government’s vision for the railway.
One of the main items on the agenda is the rail franchising system.
The ORR is calling for “an end to short-term fixes, including the current one size fits all franchising system. Instead, we would replace it with different types of services designed to suit the needs of different groups of passengers.”*
A review of the current franchising system is long overdue, so it will be interesting to see what the committee recommend in the autumn. But in the meantime, there are a lot of train operating companies left unsure of their next moves.
With several franchises ending, or nearing the end of their terms, what impact has the Williams Review had on people in the rail sector?
1. No bidding. No work.
Currently there is no active franchise bidding taking place in the UK market while everyone eagerly awaits the recommendations. This is having a knock on effect across the entire sector.
Consultants and freelancers are seeing a distinct lack of demand as work has dropped off and many TOC’s have made redundancies from their bid teams. But as well as this, the natural flow of senior management between TOC’s created by the re-franchising system has slowed to a halt.
When franchises are re-let, the incoming TOC owning group will keep on average a third of the management team from the existing TOC. Most commonly, they will bolster the management team with a mixture of members of the bid team and from searching externally.
In turn, the outgoing management will look to other opportunities in the market; sometimes within the wider TOC group, sometimes externally.
While a decrease in turnover isn’t necessarily a bad thing, it does limit the opportunities and prospects for individuals within the market.
2. Direct Awards
In the meantime, something has to be put in place to keep the current system operating. For those franchises dangerously close to the end of their contracts, this means direct awards.
It’s looking like the DfT has extended the nationalisation of the East Coast mainline, keeping it in public hands until 2025. According to the DfT, this is to ensure a smooth transition for passengers and staff into the East Coast Partnership, and so that the recommendations of the Williams Rail Review can be implemented as quickly as possible. This extension is breaking new territory, with no direct award having ever been handed out when the line has been under public control in the past.
DfT and the Govia JV agreed in June a short-term extension to the South Eastern passenger franchise to November, with an option for a further extension to April 1 2020. It is also highly likely that Cross Country trains will receive a direct award to continue operating past their current end date in October.
The knock on effect of this, is that right now there is a huge lull in franchising activity, so staff are moving on to other projects, sectors or businesses; but down the line there will suddenly be a boom where masses of resources will need to pulled back in. Will they be available?
3. Alternative options
What we are starting to see is TOC groups exploring other avenues for business development, to keep their bid teams busy.
Virgin Trains announced this week their interest in moving in to the Spanish train operating market, declaring the UK system “uninvestable”.
Another option in the absence of franchises up for grabs, is to explore opportunities for open access contracts. Virgin has have also applied with Stagecoach, SNCF and rolling stock company Alstom to run an hourly service from London to Liverpool from May 2021 on the West Coast Mainline following the government’s rejection of its West Coast franchise bid earlier this year.
It will be interesting to see what the Williams Review comes up with and how well the industry adapts to change.
Have you noticed the effects of the stall in franchise bidding so far? Feel free to get in touch, I would love to hear your views!