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The First Scotrail Passenger Rail Franchise

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The First Scotrail Passenger Rail Franchise The First ScotRail passenger rail franchise Prepared for the Auditor General for Scotland November 2008 Auditor General for Acknowledgements: Audit Scotland prepared this report Scotland for the Auditor General for Scotland. We have had the generous support of The Auditor General for Scotland is the Parliament’s watchdog for ensuring the Scottish Government and propriety and value for money in the spending of public funds. Transport Scotland. In addition we would like to thank those who He is responsible for investigating whether public spending bodies achieve participated in the interviews for the the best possible value for money and adhere to the highest standards of study and the following organisations financial management. for providing data: First ScotRail, Passenger Focus, Strathclyde He is independent and not subject to the control of any member of the Scottish Partnership for Transport and the Government or the Parliament. Office of Rail Regulation. The Auditor General is responsible for securing the audit of the Scottish We would also like to thank the project Government and most other public sector bodies except local authorities and fire advisory group (Appendix 2), which and police boards. comprised a range of experienced individuals from the rail sector, for The following bodies fall within the remit of the Auditor General: providing valuable advice and a sounding board for the project team • directorates of the Scottish Government throughout the study. • government agencies, eg the Prison Service, Historic Scotland • NHS bodies • further education colleges • Scottish Water • NDPBs and others, eg Scottish Enterprise. Note: Prior to September 2007, the Scottish Administration was generally referred to as the Scottish Executive. It is now called the Scottish Government. When dealing with the earlier period, this report refers to the Scottish Executive. Recommendations for the future refer to the Scottish Government. Audit Scotland is a statutory body set up in April 2000 under the Public Finance and Accountability (Scotland) Act 2000. It provides services to the Auditor General for Scotland and the Accounts Commission. Together they ensure that the Scottish Government and public sector bodies in Scotland are held to account for the proper, efficient and effective use of public funds. The First ScotRail passenger rail franchise 1 Contents Introduction Recommendations First ScotRail has received a number Page 2 Page 16 of awards Setting the scene Part 2. The franchise extension Recommendation Page 3 Page 17 Page 29 About the study Key messages Appendix 1. Fares structure for First ScotRail passenger services Summary of key messages Key aspects of the original franchise Page 30 contract were no longer fit for purpose Recommendations Appendix 2. Membership of the Page 8 Transport Scotland’s appraisal process project advisory group was rigorous and has resulted in a Page 31 Part 1. Management of the guaranteed £73.1 million investment franchise by First ScotRail Appendix 3. Service QUality Page 10 Page 18 Incentive REgime (SQUIRE) performance areas Key messages Governance arrangements for the Page 32 review process could have been First ScotRail has received £864 million better managed in public funding from the start of the Page 21 franchise contract to March 2008 Page 11 Recommendations Page 22 Transport Scotland’s management arrangements are generally effective Part 3. First ScotRail’s performance Page 12 Page 23 Transport Scotland could improve Key messages some aspects of its management of the franchise First ScotRail’s train running and service Page 13 quality performance has improved Page 24 Current performance measures are generally effective but could benefit Passenger satisfaction has increased from review Page 26 Page 14 Safety performance has improved Stakeholders cannot access information about the contract and Passenger growth has exceeded franchise performance from a single targets source Page 27 There may be some risks to the Most capital improvements have success of the franchise been completed ahead of schedule Page 15 First ScotRail’s good working relationships with key rail sector bodies has also contributed to improved performance Page 28 2 Introduction First ScotRail provides most passenger rail services in Scotland through a franchise contract with Scottish ministers, and will receive £2.5 billion in government subsidy during the contract term. Introduction 3 Setting the scene Exhibit 1 1. Rail transport is a vital service First ScotRail 2007/08 operating statistics for Scotland, providing access to employment, education, services and Statistic British context leisure activities. Most passenger rail Provided 81 million passenger 6.6% of Britain’s passenger journeys services in Scotland are provided through journeys a franchise contract between Scottish ministers and the private train operating Passengers travelled 2.5 5.1% of Britain’s passenger kilometres company First ScotRail Limited. The First billion kilometres ScotRail franchise covers more than 95 per cent of Scotland’s passenger train An average of 31 kilometres An average of 40 kilometres travelled services and the long distance sleeper travelled per journey per journey service between Scotland and London. Covers 3,032 route kilometres Highest of all British franchises First ScotRail operating statistics for 2 2007/08 are set out in Exhibit 1. Manages 341 stations Second only to Northern Rail’s 471 stations 2. The franchise is in its second term Notes: following privatisation of passenger 1. Twenty franchised and six non-franchised train operating companies provide passenger services in 1 Britain. The data in this exhibit do not include the non-franchised train operating companies. rail services in Britain in 1993. The 2. Northern Rail provides train services in the north of England. Northern Rail covers 2,696 route franchise was operated by National kilometres, the second highest after First ScotRail. Source: National Rail Trends 2007-2008 yearbook, Office of Rail Regulation Express from 1997 to 2004. Following a tendering process, the Strategic Rail Authority (SRA) and the then to the Scottish Government, a 6. The Office of Rail Regulation Strathclyde Passenger Transport number of rail functions for Britain are (ORR) is responsible for setting Executive (SPTE), in consultation with reserved to Westminster, for example, and monitoring targets for Network the then Scotish Executive, awarded health and safety and Disability Rail, including setting station access the franchise to First ScotRail Limited, Discrimination Act compliance. The charges and track access agreements. a subsidiary of FirstGroup, in August 2, 3 relevant British bodies consult with ORR is also responsible for ensuring 2004. First ScotRail began operating Transport Scotland on reserved that Network Rail, train operating the franchise in October 2004. matters where they affect Scottish companies (including First ScotRail), railways. Exhibit 2 (overleaf) illustrates and rolling stock companies comply 3. In November 2005, the Scottish the structure of passenger rail service with rail specific health and safety Executive took over responsibility provision in Scotland. regulations and that First ScotRail from the SRA and SPTE for letting, and Network Rail comply with their subsidising and managing the 5. Network Rail owns and operates operating licences. The Department franchise and monitoring First most of Britain’s rail infrastructure for Transport oversees Britain’s ScotRail’s performance. These (tracks, signals, bridges, tunnels compliance with European Union rail responsibilities were transferred and stations), and receives funding strategies and safety standards and to the Scottish Executive agency from the Scottish Government to the Disability Discrimination Act 1995. Transport Scotland when it was maintain and improve Scotland’s The British Transport Police (BTP) established in January 2006. rail infrastructure.4 First ScotRail is the national police force for the leases the stations it manages from railways, with its services in Scotland Responsibilities for rail services in Network Rail, its trains from rolling largely funded by First ScotRail and Scotland are complex stock companies, and secures the Network Rail. 4. Although most of the funding, use of tracks through a track access strategic planning and management agreement with Network Rail.5 of Scotland’s rail industry is devolved 1 The rail network and passenger services in Northern Ireland remain state owned. 2 The Transport (Scotland) Act 2005 dissolved the Strathclyde Passenger Transport Executive (SPTE), transferring its rail functions to Scottish ministers and remaining transport functions to the Strathclyde Partnership for Transport (SPT), established by the Act. 3 Prior to September 2007, the Scottish Administration was referred to as the Scottish Executive. It is now called the Scottish Government. When dealing with the earlier period this report refers to the Scottish Executive but in all other instances it refers to the Scottish Government. 4 In 2007/08, Transport Scotland provided £365 million in capital and resource grants to Network Rail for the operation, maintenance and renewal of the rail infrastructure network. 5 First ScotRail manages most stations in Scotland except for: Edinburgh Waverley and Glasgow Central stations, which are managed by Network Rail; Dunbar station, managed by the National Express East Coast franchise; and Glasgow Prestwick station, which is privately managed by
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