TOCs 1997-2005: Strategic Rail Authority

Passenger Rail Franchising Companies in Great Britain (TOCs)

TOCs 1997 - 2005: Strategic Rail Authority

The Labour government elected in 1997 chose not to reverse the privatisation process, although they set out a number of reform proposals, including the setting up of a new Strategic Rail Authority (SRA), whose functions would absorb the responsibilities of the Franchising Director, as well as some duties previously performed by the Rail Regulator and the Department of Transport's Railways Directorate. Since this would take time as it involved legislation, in the meantime the SRA was established in 'shadow' form, in June 1999. Part of their brief was to ensure the railways operated as "a coherent network, not merely a collection of different franchises". Their goals were closely aligned with the government's wider objectives, set out in July 2000 as the ten-year plan, Transport 2010.

In 2000 the shadow SRA announced plans to use the re-franchising of the 18 shorter term (7-year) franchises expiring by 2004 to make various changes aimed at improving service grouping and lengthening franchises, with the aim of making them more robust and better able to invest in services. It aimed to have these proposals agreed by Autumn 2001, and published a timetable for the letting of 9 franchises in three tranches. These long-term plans were disrupted in 2001/2 by the impact of the Hatfield rail crash, which led to the nationalisation of Railtrack, the owner of the railway infrastructure, to create Network Rail. On 1 February 2001, the position of Franchising Director was abolished by the Transport Act 2000 and the passenger rail franchising functions were formally transferred to the SRA.

The SRA began to doubt its new long-term strategy as it failed to negotiate a 20-year franchise for the East Coast due to uncertainty over Railtack's ability to finance planned upgrades, and abandoned bidding negotiations in July 2001 after 21 months. Instead it elected for a short 2-year extension, hoping the situation would be clearer by then. Short-term extensions were also to be considered for other 7-year franchise renegotiations facing similar issues, which had not yet reached a finalised agreement.

By the end of 2002, the SRA had also changed its policy on Franchising Agreements to introduce various other performance criteria in addition to keeping to the PSR, aimed at raising the overall quality of passenger journeys. Franchise lengths would be kept to between five and eight years, but extensions would be permitted if Key Performance Indicators (KPIs) were met. It also changed the approach to risks in costs and revenues, and introduced incentive payments for performance and long term investment. The changes took effect after the awards for the Transpennine and Wales & Borders franchises, which were already too advanced. The tendering process was also simplified, giving more details up front in order to speed up the process and make bid assessment more robust. Through the use of tactical short-term extensions, the SRA planned to achieve the changes in franchise redesign and smooth out the timetable for re-franchising, aiming for two or three awards per year.

In February 2002, the Chiltern franchise became the first to be awarded for a 20-year duration, the winning bidder being Chiltern Railways, the incumbent franchisee since privatisation.

In August 2003, FirstGroup purchased GB Railways, the first time since privatisation that a TOC had been bought by another TOC.


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