LIVERPOOL CITY REGION COMBINED AUTHORITY To: The Chair and Members of the Transport Committee Meeting: 9 August 2018 Authority/Authorities Affected: All districts EXEMPT/CONFIDENTIAL ITEM: No REPORT OF MERSEYTRAVEL WEST COAST PARTNERSHIP FRANCHISE UPDATE 1. PURPOSE OF REPORT This report summarises officer engagement with the bidders for the West Coast Partnership franchise and outlines the forward timetable for franchise award and future engagement activities. Work has been ongoing for several months, culminating in ‘letters of support’ being submitted to the bidders during week commencing 2 July 2018. 2. RECOMMENDATIONS It is recommended that the Transport Committee: (a) Note the content of the report; (b) Endorse the proposed future approach for officers to engage with the bid process and successful bidder; (c) Endorse the continued lobbying by Merseytravel and the Combined Authority for 2 trains per hour between Liverpool and London; (d) Seek the support of the Metro Mayor for the submission of a letter to the Secretary of State for Transport, highlighting the need for an improved service between Liverpool and London as soon as possible. 3. BACKGROUND 3.1 The West Coast Main Line provides important rail links between Liverpool City Region and other major cities in the UK. Significantly, Liverpool to London services provide direct business and leisure links between the two cities, in addition to providing connectivity to intermediate locations such as Crewe, Stafford and Milton Keynes. 3.2 The ability to reach London in just over 2 hours from Liverpool has helped the City Region to grow economically, with an ever increasing number of conferences held in the city and very positive trends in GVA growth, job growth and tourism. Intercity West Coast services play a vital part in supporting the economy of the City of Liverpool, and the wider City Region. Rail is now the mode of choice for many long distance journeys beginning or ending in Liverpool, enabled by fast, high quality inter city services on the West Coast Main Line. 3.3 The West Coast Partnership franchise is an opportunity to further enhance Liverpool’s rail links to London and other destinations on the West Coast Main Line. With HS2 on the horizon, the economic geography of the UK is about to undergo a radical change, which Liverpool City Region needs to be at the forefront of to ensure continued growth and prosperity. 3.4 The Liverpool City Region Long Term Rail Strategy identifies the need for a second direct hourly service to London, in addition to enhancing connectivity to Milton Keynes and exploring opportunities for other City Region locations to gain direct connectivity to London. Connectivity provided via the West Coast Main Line at locations such as Crewe helps to address the general connectivity gap for Liverpool when compared to many other UK towns and cities, so it is also important that such links are enhanced where possible within the West Coast Partnership franchise. During the engagement with bidders to date (and during the earlier franchise consultation with the DfT), officers have made the need for a second hourly service between Liverpool and London a primary aim of the City Region. 3.5 Engagement commenced with bidders in October 2017 with high level meetings between bid teams, Mayor Steve Rotheram, Councillor Liam Robinson and Combined Authority and Merseytravel officers. Detailed meetings and workshops were subsequently arranged with the respective bid team throughout 2017 and 2018 to discuss technical matters in more detail, covered by non-disclosure agreements with each bidder. 3.6 The three consortia bidding for the West Coast Partnership franchise are: (a) First Trenitalia West Coast Ltd, a joint venture between First Rail Holdings Ltd and Trenitalia SpA; (b) MTR West Coast Partnership Ltd, a joint venture between MTR Corporation (UK) Ltd and Guangshen Railway Company; and (c) West Coast Partnership Ltd a joint venture between Stagecoach Group plc, Virgin Holdings Ltd and SNCF C3. 3.7 Areas of discussion with all bidders included: (a) Train Service Provision – frequency, calling patterns etc; (b) Ticketing and Fares – ticket types, SMART ticketing, fare integration; (c) Future Partnership Working – marketing, event planning; (d) Anticipated Stakeholder Engagement arrangements; and (e) The structure of the Franchise. 3.8 The West Coast Partnership franchise will be structured differently compared to other franchises, as the successful bidder will operate services on the West Coast Main Line and provide a ‘Shadow Operator’ function in preparation for the commencement of High Speed 2 services in 2026. 3.9 The successful bidder will operate services on the West Coast Main Line from 2019 and will operate High Speed 2 services from 2026. The franchise has been designed and specified to ensure integration of services across the two routes to enable a smooth transition of long distance high speed services from the West Coast Main Line to High Speed 2. 3.10 The franchise will be awarded later this year, with commencement of the new franchise expected in April 2019. The contract is planned to end in 2029, with an option retained by the Department for Transport for a two year extension. 3.11 The Department for Transport’s latest specification for High Speed 2 services proposed two trains per hour between Liverpool and London from 2026, serving Runcorn and Liverpool Lime Street. Services are also expected to stop at Crewe, which will enhance connectivity for Liverpool City Region via interchange at the proposed ‘Crewe Hub’. 3.12 Engagement with all three bidders has been very positive, with discussions covering several areas of mutual interest and each bidder suggesting exciting and potentially transformative initiatives for the franchise. 3.13 Letters of support have been provided to all three bidders, signed by Steve Rotheram (Metro Mayor), Councillor Liam Robinson (Transport Portfolio Holder) and Frank Rogers (Interim Head of Paid Service/Lead Officer:Transport). 3.14 Once the successful bidder has been announced by the Department for Transport, detailed engagement is expected with the future operator in order to progress the various aspects of mutual interest. 3.15 There will be a need for officers in a wide variety of disciplines to be made available to contribute and participate in any workstreams that commence during the franchise mobilisation period up to September 2019 and beyond once the franchise has started. 3.16 To date, officers from Rail, Policy, IT and Rolling Stock have been engaged with the bidders. A similar level of engagement is likely to be required with the successful bidder, so there are likely to be some resource implications in affected service areas. 3.17 It is also likely that legal agreements will need to be in place to cover commercial and contractual matters, particularly in relation to integrated ticketing and any working arrangements. 3.18 In the meantime, it is proposed that the Rail team continue to lead on engagement with the bidders and the franchise process. 3.19 In order to achieved the aims of the Liverpool City Region Combined Authority, it is proposed that a letter is prepared, led by the Metro Mayor, to state clearly to Government (via the Secretary of State for Transport) the requirement for enhanced Liverpool – London services before the commencement of High Speed 2 services in 2026. 3.20 For information, the key dates associated with the bidding process for the West Coast Partnership franchise are shown below: (a) Bids submitted to the Department for Transport: Friday 13 July (b) Evaluation of bids: commenced on Monday 16 July (c) Secretary of State to seek approval from HM Treasury to award the franchise: April/May 2019 (d) Planned Franchise Award: May to September 2019 (e) Preparation for Franchise Commencement: From Award date to September 2019 (f) Commencement of West Coast Partnership Franchise: 15 September 2019. Please note: The above information is taken from the West Coast Partnership Invitation to Tender document, dated 27 March 2018. 4. RESOURCE IMPLICATIONS This paper does not have any direct resource implications at this time 4.1 Financial There are no direct financial implications arising from this paper at this time. 4.2 Human Resources There are no Human Resource implications arising from this report. 4.3 Physical Assets There are no implications/impacts on Merseytravel physical assets arising from this paper. 4.4 Information Technology (a) There are likely to be IT implications arising from the Invitation to Tender issued by the Department for Transport, specifying requirements for Smart Ticketing to be implemented for no less than 50% of passenger journeys by December 2020. (b) Officers will endeavour to work with the successful bidder to attempt to achieve harmonisation and compatibility of SMART ticketing solutions. 4.5 Programme Management Office (PMO) There are currently no implications for the PMO in this report. 5. RISKS AND MITIGATION 5.1 At this time, there are no known risks to Merseytravel with regard to the activity undertaken to date and proposed and possible future activities. 5.2 In the event Merseytravel is unable to proactively engage with the successful bidder, there are potential risks to achieving the aspirations for long distance connectivity as established in the Long Term Rail Strategy. Other service groups could be prioritised over Liverpool services as a result of not sharing intelligence and data with the future train operator. The ability to mitigate this is very limited without proactive engagement. 6. EQUALITY AND DIVERSITY IMPLICATIONS 6.1 There are no direct negative equality and diversity implications arising from the recommendations set out in this paper. 6.2 Equality and Diversity implications will be considered as part of any future work with the successful bidder, particularly considering: (a) Network Accessibility – physical, covering disability and pregnancy and maternity.