Welsh rail franchise & Metro: Still on track?

The current franchise to run passenger trains in Wales and English border counties – presently held by Arriva Trains Wales – expires in October 2018. For the first time, the Welsh Government will award the new franchise, which will include the South Wales Metro.

The Economy & Infrastructure Committee reported on their inquiry yesterday (pdf). Committee chair, Russell George AM (Con, Montgomery) said:

"This report examines the various challenges facing the Welsh Government and others as we approach a crucial point in the history of the railway network in Wales. It highlights our concerns in a number of areas, and sets out how the growing mass of organisations involved in running rail services in Wales and the Borders need to work together if the people....are to receive the 21st Century rail services they demand."

Key Recommendations:

• Confusion over devolved powers for the rail franchise should be cleared up as a matter of urgency, alongside clarification on the capital funding package for upgrading the Valley Lines.
• The Welsh Government should ensure:
• the right people and skills are in place within Transport for Wales to assess bids and manage the new rail franchise.
• a watertight agreement with Network Rail and the UK Government to mitigate any risks in transferring control of the franchise.
• the terms of the new franchise incentivise the chosen operator to innovate, invest in and work to grow passenger numbers over the 15-year term. Contingency plans should be put in place should the operator fail to comply.
• A rolling stock strategy should be drafted to take into account projected passenger numbers and needs for 25 years, including low-carbon solutions such as hydrogen fuel to replace diesel on non-electrified routes.
• Urgent clarification should be sought from the UK Government on Cardiff-Swansea and north Wales coast electrification, as well as a redevelopment of Cardiff Central station.

In what should come as no surprise, the required powers haven't been devolved yet, putting pressure on the Welsh Government to get everything in place with less time available. While Scotland is able to use a public sector operator to run rail services, Wales can't because a necessary amendment to Railways Act 1993 hasn't been made – de-legitimising Transport for Wales (a body set up by the Welsh Government to oversee the franchise).

Four companies have bid to run the franchise: Abellio, Arriva Trains Wales, KeolisAmey and MTR. A final contract specification is due to be published in July 2017, but there were criticisms of a lack of engagement with passengers, as well as concerns that Transport for Wales doesn't have the experience to manage a complicated project in a short timeframe.

Following public consultation, the Committee drafted 10 key priorities for the new franchise:

(Click to enlarge)

As funding will be drawn down before Brexit, EU contributions to the Metro are uncertain. There's also a £125million commitment from the UK Department for Transport (DfT) towards Valleys electrification, but the Welsh Government still expect that investment to come regardless of whether there are overhead wires or not.

Views were mixed on whether both the Metro's infrastructure and trains should be maintained and run by the successful bidder (known as vertical integration); at the moment Network Rail maintains the railway while train operating companies run the trains. Prof. Stuart Cole believes Network Rail provides better insurance against risks, but the Cardiff Capital Region believes vertical integration provides better long-term value. The Committee cautiously supports vertical integration, and while they accept Network Rail's performance in Wales has often disappointed, also welcomed their desire to work more closely with devolved bodies.

Likewise, there were mixed views on whether the franchise should be a standard franchise (where train companies collect fares and accept commercial risk), or a concession model (where the train company is paid a fee to run services, but fares go to the authority that owns the franchise). The Welsh Government prefer the concession model, with Transport for Wales confident they've come up with a "best of both worlds" solution.

Trains were a major talking point, with clear dissatisfaction amongst passengers. All trains need to be disability compliant by 2020, with Prof. Cole suggesting 70% of Arriva Trains Wales' fleet fail to meet this. Adding further problems, new trains can't be bought and constructed that quickly and the Welsh Government don't have the powers to do it themselves unless they consider establishing a rolling stock company and buying trains at a potential cost of hundreds of millions of pounds (see also: Making sense of the Sardine Express).

Clearly, improvement to existing infrastructure is vital - and witnesses provided the Committee with ideas for reopenings and new stations. However, there's no firm date for Cardiff-Swansea electrification, only an "assumption" it'll be carried out between 2019-2024 - similarly the north Wales coast mainline.

Outline proposals exist for a redevelopment of Cardiff Central station to cope with major events, but the DfT don't see it as a priority for investment at this time.

Why should this matter to you?

It's obvious that if you use railways within Wales (or the English border counties) this is a big deal and will help decide how you use trains in the future, what those trains will be like and even whether you'll be able to take a bike or find a seat during rush hour; but some of the evidence from the inquiry is worrying.

There are so many things that need to be done in such a short space of time I'm losing confidence it can be completed. The UK Government have foot-dragged for so long on ensuring the Welsh Government have the right powers to award and run the franchise successfully, it's making me wonder whether the process has been deliberately set up to fail.