The death of Southeastern as franchising ends? No
News out today has announced the death knell for franchising across the country after nearly 25 years. Does this mean the end of Southeastern, Thameslink and others and thus the return of British Rail? In a word, no.
One thing to get out the way straight off is the privatised system has never really been out of the reach of Government. Under British Rail, the organisation was given funds by central Government (often not much) and the company operated with it’s own management structure on how the network should run.
Under the franchise system, the system was fragmented with civil servants in Whitehall deciding what fares should be, timetables, rolling stock numbers, staffing levels and much else. Government control was if anything stronger than it ever was before privatisation. It’s amusing to see some say this is the end of private control, as if franchises ever really made most decisions.
The franchises were handy whipping boys taking the blame for many issues out of their control (great for Government) in return for around a three per cent profit margin.
The system was on its knees anyway even before this year. Bidders for future franchises was minimal. The last Southeastern competition collapsed.
Franchises were supposed to be able to innovate and retain additional income from extra services beyond a minimum standard set out by Government though it never really worked. How could they run more services when most lines and terminals are already at maximum capacity? New stock was needed to increase capacity – and that is down to Government when it comes to Southeastern and most other franchises.
Franchises did make money from car parking and concessions at stations, but even then the convoluted nature of the system shows its hand. Central London termini are operated by Network Rail – and they would often pay for car perk expansion.
The other model is concessions or fixed-fee contracts. Thameslink has operated on a fixed contract for years whereby central Government pay an operator X amount to run X services. It’s a simpler system.
London Overground also follow that model with operators paid a set amount to run services with certain targets to be met. The brand stays the same, the fares are set by TfL and a private company runs them.
As a passenger very little will change. Franchises have gone and concessions look likely to become the norm. It may end the expensive franchise bidding process whereby companies would bid around £10 million a time before the endless repainting of stations in latest corporate colours would begin.
Expect less of that, but when it comes to services, fares and trains, I wouldn’t expect any great improvement or change if the Department for Transport see their power grow further. And especially not if the Treasury are able to have greater impact on spending. They’ll be no splashing the cash in the mid-term once some sense of normality returns.