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Creating an integrated rail network for London

National Rail conference 20125 July 2012Geoff Hobbs, TfL Rail & Underground

Rail franchise reform and devolution are both recommendations in the McNulty study

• Railways matter a lot to London

• McNulty asked how to get a better railway for less so it can “earn a licence to grow”

• Move towards longer franchises and less prescription by DfT, more commercial freedom for TOCs

• Momentum for devolution in the Northern cities

• Rail policy paper published and extant consultation on ‘rail decentralisation’ and ‘fares and ticketing’

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The Mayor agrees there is no one size franchise that fits all

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• The purpose of longer, less prescriptive franchises is to improve TOCs’ incentives to invest and value for money

• For some London routes, commercial incentives will always be weak:

• Longer-distance services tend to have much stronger incentives

• Inner suburban routes relatively neglected

• Yet these 600+ million trips support the wealth creating London economy and are key to wider transport objectives

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Devolution helps both DfT and TfL achieve objectives better

• Revenue in London is largely a function of macroeconomic factors and fares policy

• Private sector takes these risks only at a price

• Gross cost contracts fit London market conditions better, so offer better value

• Makes residual longer distance DfT franchises more homogenous and more appropriate for a less prescriptive franchising model

• Consistent with the broader localism agenda

• Reduces the perception of DfT micro-management

Devolution addresses some of London’s systemic rail problems

• Ten London TOCs, wide variations in quality

– Fares and ticketing issues are hard to resolve

– National Passenger Survey scores in London vary from 77% to 92% for overall satisfaction

– TfL and National Rail networks divergent too

• The increment / decrement process hard to make work well with less prescriptive franchises

• The less prescriptive model risks reduction in off-peak frequencies, station services and facilities

• Without a ‘single till for transport’, little incentive to find synergies or cost savings between TfL and National Rail networks

• London Overground is just 15% of London journeys, so devolution to date in London is niche

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Q4 07/08 Q4 08/09 Q4 09/10 Q4 10/11 Q4 11/12

LSE Rail LSE Overground LO no ELL

Look what devolution has achieved on the London Overground

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National Passenger Survey

Public Performance Measure

Ticket Irregularity Survey

2007 2008 2009 2010 2011

2004 2006 2008 2010 2007 2008 2009 2010 2011

Ticketless Travel Survey

Passenger journeys

This five point devolution plan can be put in place for relevant forthcoming franchises

1. The Mayor allocated a rail budget for certain inner suburban passenger services

2. When Anglia and Kent franchises come up for renewal, inner suburban services specified to Overground standard with the same performance indicators

3. TfL needs proper accountability for contract management, such as ‘breach’ and ‘default’

4. At least regulated London fares would be set by the Mayor

5. ...and with the above, inner suburban services could be branded ‘London Overground’

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TfL has addressed the “frequently asked questions” associated with devolution

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1. Do users outside London and freight operators lose out as London rail capacity is scarce?

2. Is there a deficit in democratic accountability for rail users living outside of London (yet having to be users of the Mayor’s rail services)?

3. Is TfL acceptance of revenue risk credible?

4. Would a TfL concession abstract revenue from a franchised TOC?

5. More fragmentation adds to costs?

TfL welcomes the direction of travel for fares and ticketing

• Refresh regulation by loosening inflexible distinction between regulated and unregulated fares

• Regulate instead on the basis of fares yield per trip

• Unify fares regulation within London– Enables simplification, e.g. PAYG could have a

unified tariff– Simplified concessions

• Smart ticketing can enable change:– The customer experience of ticket retailing– Peak spreading, which reduces costs, though

the impact is unlikely to be large– Better fit for part-time workers

• Wave and pay ticketing with contactless bank cards can extend this functionality

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The DfT’s consultations closed on 28 June 2012

• The Mayor’s response on rail decentralisation is available at: http://www.tfl.gov.uk/assets/downloads/corporate/Part-1-Item08-DfT-Paper-and-Consultations.pdf

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