Franchises ‘cost UK railways £25 million a year’

03 March 2010

A question in Parliament on 3 February has revealed that the rail franchising system could be costing the industry over £25 million a year. ‘Over the last four years over £100 million that could have been used to improve our railways has been utterly wasted and lost to the industry forever by rail franchising,’ says ASLEF general secretary Keith Norman. ‘It is incredible that anyone still clings to this profligate and discredited system.’

In response to a question from Liberal Democrat Norman Baker MP, transport minister Chris Mole conceded that in the four years between 2005-09 the Department for Transport spent £33.8 million to ‘design and tender’ rail franchises.

This was made up of £15.3 million for departmental staff, administration and advisers to ‘review documentation’ and £18.5 million in fees paid to ‘external advisors’

In addition to this, each company bidding for a franchise spends between £1million and £4 million. Given that eight franchises were let - Southeastern, Greater Western, South Western, London Midland, East Midlands, Cross Country, Intercity East Coast and Southern – and that each attracted three or four bidders, franchise expenditure rockets to over £100 million.

‘It is the policy of both the Labour Party and the TUC that rail franchising is ended. The information we now have proves that it needs to be done urgently before more millions are haemorrhaged from the service,’ Keith concludes. ‘It is a scandal that necessary improvements to rail – like upgrading carriages - are being held back on cost grounds while millions are lost by a foolish and inefficient system that benefits no one in the industry.

‘Franchising might be good for accountants and consultants – but it is a disaster for passengers and staff.’

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