Peace On Our Line? Devolving London’s Railways

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It is not often that rail consultations are greeted with unabashed excitement. In this the reaction to today’s announcement that Transport for London (TfL) and the Department for Transport (DfT) are to jointly consult on shared governance and standards for London’s rail network is a strange thing indeed.

That a simple statement of intent could provoke such a passionate response speaks volumes about the current state of commuter services within the Capital. Among regular travellers there is a perception that London is ill-served by the majority of the Train Operating Companies (TOCs) that run its railways, and it is a perception that is difficult for the TOCs to argue against. Just how low their stock has fallen in the eyes of many of their customers is perhaps summarised best by a recent ill-advised social media campaign by South West Trains. To mark the 20th year of the current franchise’s operation the TOC asked people to share their favourite memories on Twitter.

The results were perhaps not quite what the operator was expecting.

Bursting the bubble

In the face of this, the general reaction today is perhaps understandable, as is the reaction in the press. All suburban rail services in the capital will be rebranded as London Overground>TfL’s London Overground to take command of the capital’s entire suburban rail network proclaimed the Evening Standard. “All suburban rail services in the capital will be rebranded as London Overground” it continued. Others soon followed their lead.

Sadly this isn’t factually correct.

For making this mistake the Standard (and others) perhaps can’t entirely be faulted. Rarely has a consultation been presented quite so emphatically as an actual announcement, and several bullet points in the Mayoral press release practically leap off the page:

– introducing more frequent services, more reliable trains, better interchanges and increased capacity
– the creation of a London Suburban Metro service with the potential for more than 80 per cent of stations to have a train every 15 minutes, up from 67 per cent today, as well as the potential for more regular services via Clapham Junction, South East London and Kent.
– developing new rail lines to connect poorly serviced areas and to support new homes and jobs

There are, however, a couple of qualifiers in the statement before that list:

The new agreement will look at ways to give millions of rail passengers a better experience by examining the potential for a wide range of improvements.

Similarly it’s easy to see why a couple of other bullet points caused such excitement about takeovers and the timetable for action:

Under the proposals, TfL would become responsible for services mostly or wholly within the GLA boundary, with the DfT remaining accountable for outer suburban services.
– The first franchise coming up for renewal is South West services in 2017, followed by Southeastern in 2018 and South Central (Southern) services, as well as Great Northern services from Kings Cross and Moorgate currently operating as the Govia Thameslink Rail (GTR)  franchise, in 2021.

In that excitement though it is perhaps easy to miss that there is actually nothing explicitly linking those two statements together.

Indeed the contrast between the style of the press release and the consultation it is promoting becomes even clearer when one looks at the actual consultation document itself. The release is a breathless statement of apparent facts. The consultation is facts without a great deal of detail.

Staying grounded

There are an awful lot of genuine positives to be found in this consultation, which we will explore both here and in more detail shortly in LR Issue 3 (along with their wider context). First though it is very important to clearly establish what it doesn’t do:

  • It does not specify which franchises will pass to TfL for management, although it provides a general idea of the scope.
  • It does not say that all London’s railways will become part of London Overground.
  • It does not set out a timetable for the devolution of any services.
  • It does not commit TfL or the DfT to any specific improvements in service levels or quality of service.

What it does do is offer real options for both TfL and the DfT to take shared steps forward in all of those areas. Those shared steps are loosely defined, but that is to be expected in a consultation rather than an announcement.

Devolution to TfL

To understand what changes this consultation proposes one must first understand the differences between the way TfL manage their surface railway network and the way that the DfT manage theirs.

We have explored the different models in detail before. In the simplest terms, both bodies effectively subcontract the operation of the railway lines that they manage, but they do so in slightly different ways.

Very broadly, the DfT use a franchise model whereby – within limits – the operator is free to offer whatever service they feel is best at whatever price-point they feel the market will bear. Basic free market principles are intended to ensure that passengers receive a decent service, because otherwise they would simply vote with their feet and take their business elsewhere. Run a bad service and passenger numbers (and profits) will fall, run a good one and numbers (and profits) climb.

There is nothing inherently wrong with this model, but it only works when demand can rise or fall in response to positive or negative actions taken by the operator. Unfortunately, the explosive growth of rail demand in London over the last fifteen years (due to population growth and geographic shift) means that many trains are now operating at capacity. There is thus no incentive for the operator to deliver a good service, whilst the fragmentary nature of the contract distribution means that the cost of improving services beyond current levels is more than the profits any individual operator might make.

By contrast, TfL operate their own franchises on a concession model. Here, TfL set a specific level of service and quality they expect the operator to deliver, regardless of actual passenger numbers. This means that TfL carry all the risk, but it also means that the operator knows exactly what service they are expected to deliver. It also means that the responsibility (and the incentive) for improvement remains with TfL, who can take a wider view on what needs to be done.

In London, this has proven to be a very successful model indeed and for many years TfL has petitioned to be given the responsibility for more London franchises on which to operate it.

Franchising detente

It is on the subject of franchising that this consultation arguably represents the biggest genuine leap forward. Whilst it makes no promises on how franchises will be run, it strongly suggests that TfL and the DfT have agreed to better partition responsibility for running them. In this, it suggests adopting an approach which first appeared in a TfL-commissioned NERA report back in 2011. Existing franchises should either be split or remodelled into “Inner” and “Outer” London franchises. TfL will then be responsible for contracting operators to run the Inners – the lines where their concession model will work best – whilst the DfT will retain responsibility for the Outers.

Just how that breakdown will shake out is not defined here. This is important to state, as it demonstrates that there is still plenty of work to be done – and potentially plenty of disagreement. No franchises are explicitly named for transfer, although all of those lines specified in the press releases’ bullet points are listed as possible options. Of all of them, the most explicit suggestion is that all the inner London services which form part of the South West franchise will be passed to TfL – explicit because the consultation confirms that such a change cannot happen in 2017, but that a transfer in 2019 would be possible thanks to a breakpoint in the franchise, which is currently out to tender.

A question of timescales

Just as no specific franchises are mentioned, neither is any timetable for transfer or improvement. That the end points of existing franchises represent the earliest opportunity for such transfers to take place is relatively obvious, and those expecting an immediate impact as a result of this consultation would do well to remember that fact.

In this vein, it would seem that SouthEastern travellers would likely be the first to see their franchise change hands in some way, but even that wouldn’t be until 2019 and presumes that TfL and the DfT don’t decide to make use of the breakpoint in the South West franchise first.

This may seem a long way off, but realistically it is hard to see much happening before. This is not just a reflection of the contractual reality that already exists, but also of the complexities involved in taking over an entire line. This is something we’ll explore in more detail in our next issue, but the reality is that recent experiences on West Anglia have taught TfL that the logistics involved in taking over an entire line are considerable and cannot be rushed. Indeed sources suggest that, despite hints within the press release to the contrary, TfL themselves have made it very clear that taking over any new services before 2019 would be a considerable challenge, even if the opportunity to do so existed.

Towards a London Suburban Metro

Between the timescales involved and the proposed split between Inner and Outer services, the consultation effectively confirms that we can expect to see both TfL and DfT managed services running in London for the foreseeable future.

On a positive note though, what it also confirms is that the two bodies are looking to take a much more unified approach to specifying the minimum level of quality and functionality (in terms of people, stations and rolling stock) that they require from their respective operators. It is this that is meant by the concept of a London Suburban Metro. This isn’t the suggestion that everything should become one network (whether London Overground or something else), which other new sources seem to have mistakenly suggested. It is simply a term that TfL and the DfT are applying to their unified base specification concept.

Delivering real, noticeable improvement

Perhaps the most misleading element of the press coverage of this announcement so far has been the suggestion (explicit or otherwise) that passengers can expect to see a quick improvement in the quality of service they now receive. As the consultation makes clear, this simply isn’t the case.

A glance at its appendices shows that all of the specific short-term improvements passengers are likely to see are those that are part of the existing franchise agreements. New rolling stock, better staffing levels and station environment changes are all suggested as possible future improvements, but in nearly all cases sit firmly in either the “middle” or “longterm” columns. In reality, these two columns translate to about seven year steps in rail terms. This means that those expecting rolling stock changes on South London rail services will be waiting until 2026 at the earliest. The same applies to timetable or service frequency changes. Indeed in multiple places the consultation stresses that the majority of the improvements it also suggests are currently unfunded. Barring external factors coming into play, that is likely to remain the case.

It’s about housing. Again.

External factors, however, may well present themselves. Most notably the issue of housing. In the last few weeks we’ve looked at several ways that the demand for housing in London has begun to have a real impact on transport funding and the shape of the network, and the same holds true here. Indeed it is noticeable that the consultation makes heavy mention of the impact that Local Enterprise Partnerships (LEPs) might have on transport decision making, going so far as to highlight the coming extension of the Metropolitan line to Watford as an example of how things might happen in future.

The choice of this specific example may at first seem curious to those familiar with the project, which has seen both costs and timescales increase as well as the forced handover of the project from Herts to TfL. Viewed through the window of LEP contributions, however, the reason for its inclusion becomes clear, as a significant contribution to the cost of the extension’s construction has come from local developers.

A place at the decision table

One other external factor may simply prove to be TfL itself. The organisation has long sought a more influential place at the table where decisions on infrastructure improvements are made, and in effect this consultation offers exactly that. For it will be an inevitable consequence of the transfer of franchising authority. This translates to a greater ability to influence where Network Rail’s infrastructure efforts are aimed. Sole responsibility for certain parts of the network also increases TfL’s options for commissioning work outside of (but approved by) Network Rail where money allows – something TfL did to great effect during the work to expand the existing Overground network to 5-car length. Here external contracts, paid for directly by TfL, were used to extend the platforms at Brondesbury.

I have here a piece of paper…

What this consultation ultimately is, then, is a promise of cooperation yet to come. It isn’t confirmation that things are about to get significantly better for London’s commuters in the short term, nor a binding contract between TfL and the DfT on the future shape of London railways.

It should not be underestimated, however, just how huge a milestone a simple agreement to cooperate is. For almost as long as LR has existed we have been covering the complete contrast in opinions and approaches taken by the DfT and TfL to running London’s railways. TfL have long demanded more control and the DfT have long resisted those calls.

For a long time relations between the two bodies on this particular subject were decidedly icy, and whilst it is certainly true that in recent months this has shown signs of thawing such a dramatic u-turn is something few would have predicted.

Indeed so sudden a u-turn, at least from the outside, does this appear to be that it is tempting to wonder what outside effects came into play. Transport policy is never formed in a vacuum, and with a Mayoral purdah rapidly approaching and candidates such as Sadiq Kahn and Caroline Pidgeon putting rail devolution at the heart of their current campaign messaging, it is hard not to suspect that the current government may not have felt that taking some wind out of those particular sails wasn’t something of a potential bonus.

Whatever the reasons for today’s sudden announcement, ultimately it is almost certainly good news for London as a whole.

Those looking for quick changes, however, would do well to manage their expectations. Right now this is simply progress on paper. And good as that is, as Neville Chamberlain once discovered, that kind of progress can be very fragile indeed.

Written by John Bull