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Commissioning and Managing the West Midlands Railway West Midlands Rail Proposition and Business Case October 2014

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Commissioning and Managing the West Midlands Railway West Midlands Rail Proposition and Business Case October 2014 Commissioning and Managing the West Midlands Railway West Midlands Rail Proposition and Business case October 2014 West Midlands Raiaill The WMR Proposition Contents Preface 1. Why Local? 7 2. Supporting Devolution 9 3. Our Strategies and Policies 10 4. Supporting Economic Growth 12 5. Re-mapping the Network 14 6. Accountable, Capable Governance 19 7. What We Want to Do 22 8. The Financial Structure 25 9. Renewal and enhancement 27 10. Working with Our Stakeholders 29 11. Procurement and Programme 31 12. Managing the Risks of Change 33 13. Five Stage Business Case Summary 35 The Business Case Contents Appendices 1. OVERVIEW Introduction 38 The West Midlands Devolution Proposition 38 The Strategic Case 39 The Economic Case 40 The Financial Case 40 The Commercial Case 41 The Management Case 41 2. THE STRATEGIC CASE Policy Context 42 Problems and Opportunities 48 Devolution Objectives 51 Measures for Success 51 Scope of Devolution 55 Alternative Strategic Options Considered 62 Conclusion 68 3. THE ECONOMIC CASE Introduction 69 Cost Impacts 69 Benefit Opportunities 70 Value for Money 72 Conclusion 79 4. THE FINANCIAL CASE Cost and Revenue Changes 80 Financial Scale of the Proposition 84 Funding Requirements 87 Financial Risk 88 Conclusion 91 5. THE COMMERCIAL CASE Introduction 92 Contractual Framework 92 Procurement 93 Approach to Developing an Output Specification 94 Conclusion 98 6. THE MANAGEMENT CASE Governance 99 Managing the Franchise 103 Conclusion 106 Appendices A Local Transport Plan Objectives 108 B Devolution Case Studies 115 C Services to be Operated by WMRC and WCC 124 D Proposed Stations to be Operated by WMRC 126 West Midlands Rail Proposition 2014 4 West Midlands Raiaill 4 Our Vision “Championing the needs of passengers and business, West Midlands Rail will manage local rail services as part of an integrated public transport network, directing future investment at“ increasing our economic performance 5 Preface Commissioning and Managing the West Midlands Railway The West Midlands local rail network is a key economic asset for the region and connects the 14 transport authorities that support this proposal. Experience from across the country demonstrates that better outcomes for passengers and taxpayers can be achieved with local control of rail services. We believe the West Midlands has a strong case for a transfer of responsibility from central to local government with wide-ranging benefits for government, taxpayers and, most importantly, passengers. Working together as ‘West Midlands Rail‘, Partner Authorities wish to take greater responsibility for specifying and managing local rail services in the region from 2017 in line with the Department for Transport’s refranchising programme for London Midland. Our proposition outlines how we wish to do this and describes the significant benefits we believe will flow from local control of local rail services and the associated re-mapping of services. We are seeking Department for Transport’s (DfT) agreement to this proposal in order that WMR can commence joint working with DfT to develop the proposed franchises and the associated legal and funding frameworks over the coming months. We look forward to actively working with government over the coming months to develop our proposals further. Councillor Roger Lawrence Councillor Mark Winnington Chair Vice Chair West Midlands Leaders Rail Group West Midlands Leaders Rail Group 5 6 1. Why Local? 1.1 The rail network matters most to local people and businesses, and should be commissioned to meet their changing needs, be affordable and easy to use, and attract people to the West Midlands. 1.2 As has been proven where responsibility for rail services has been devolved elsewhere, decision-making close to people and businesses who use West Midlands rail services would maximise the benefits from national and local investment in the existing network and HS2. 1.3 WMR reflects a substantial part of economic geography of the West Midlands Travel to Work area, enabling specification, management and investment in rail services to directly align with local economic, social, environmental and connectivity objectives. 1.4 WMR proposes therefore democratic local control of the West Midlands rail network, by taking direct responsibility for investment in its development and growth as a vital asset for the region’s economy, communities and environment. WMR would act as a focus to champion local passenger needs. 1.5 Devolving responsibility would offer many advantages over a centrally-led franchise: • Local - a locally-directed organisation for delivering a locally-developed Rail Vision, with local democratic accountabillity • Agile - swifter and more flexible in responding to changing local market conditions and investment priorities • Connected - directly engaged in active partnerships with local people, passengers groups, businesses, local authorities and Local Enterprise Partnerships (LEPs) • Informed - closely understanding the patterns of demand for local travel to meet and stimulate economic development and delivery of new housing and business capacity • Integrated - direct local capability to integrate rail, metro, buses, bicycles, pedestrians and roads in partnerships with local authorities, LEPs and the private sector • Balanced - understanding the local links between fares, service levels and passenger facilities with economic development • Targeted - rail investment closely integrated with wider economic and infrastructure development led by LEPs through their Strategic Investment Plans (SEPs) • Demanding - locally setting and scrutinising the highest commercial, operational, service quality and performance standards of the Contract Operator • Focused - a Contract Operator focused on the success and performance of local services 7 1.6 WMR believes it can, over the longer term, add even greater value as the body best able to understand and influence the patterns of local economic change, movement between communities and passenger demand; this may be a key lever in the transformative power of devolution. WMR is therefore seeking a long-term commitment from Government for rail devolution covering not only the 2017 contracts, but also subsequent contracts. 7 8 2. Supporting Devolution 2.1 WMR supports the Government’s aspirations to decentralise decision making to local communities. Our proposition is our response to the Department for Transport’s invitation to devolve West Midlands rail services. 2.2 The Government’s approach to devolved responsibility has been set out in a number of reports and policies : • The Coalition Agreement (2010) - “We will promote decentralisation and democratic engagement and we will end the era of top-down government by giving new powers to local councils (and) communities.” • McNulty Report ‘Realising the Potential of GB Rail’ (2011) specifically noted: “The advantages of greater local engagement in the regional railway are: better able to match demand and integrate with the local public transport network; more local market focus to target greater passenger numbers while reducing costs; stronger political and local enthusiasm for maintaining services that have been locally procured rather than the future being determined centrally and remotely; and greater encouragement of innovation in the type and nature of services to be provided.” • The White Paper ‘Reforming our Railways’ (2012) -“The devolution of more decision-making powers from central to local government … would give local, democratically accountable bodies a greater say over local services, allowing a stronger input from local passengers than may occur with central and more remote decision-making …. Deployed in the right place, devolution could enable better planning of investment.” • The Brown franchising review (2012)- “the specification and oversight of franchises should be managed by authorities that are closest to their communities and local economies” (with specific reference to re-mapping the LM franchise along the lines of our proposition). • The Brown review also recommemded that the Dft should look at opportunities to create smaller franchises as WMR proposes, commenting that “more, smaller franchises will be more attractive to the market than fewer, larger fanchises. Smaller franchises in particular are likely to be more attractive to new entrants. And most of the current owning groups would prefer a small portfolio of franchises, since this reduces the impact of failing to win a particular competition and spreads their risk.” 9 3. Our Strategies and Policies 3.1 WMR wishes to take responsibility for specification of the key things that matter to passengers – the timetable, fares, stations and car parks, trains, service quality and reliability (which we have described at Section 7 of this Proposition) 3.2 In ‘A Rail Vision for the West Midlands’, published by the West Midlands Regional Rail Forum on behalf of all the local authorities in the West Midlands Travel to Work Area, an action plan is set out bringing together the strategies and policies that support our growing railway. The high level objectives outlined in the Rail Vision document are: • Improving connectivity • Providing passenger and freight capacity • Effective local rail franchise governance, more closely aligned to regional priorities • Maximising regional benefits of HS2 3.3 Whilst devolution is only one element of a wider strategy for making the Rail Vision a reality, it is as an important mechanism that will help facilitate the delivery of these objectives. 3.4
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