1. Portfolio/Number/Name:T/C3 - Rail Franchise - Introduction of
ticket machines |
2. Programme/Activity: Please
include a short description As part of the new trains procurement,
the Executive secured the commitment of the
then franchisee to introduce automatic
ticket barriers at Waverley, Haymarket and
Queen Street stations by March 2004.
Together with the installation of 10 ticket
vending machines, these measures will
reduce fare evasion. The barriers were
forecast, by the then franchisee to
increase revenues by around 1.5m per year
(net of equipment leasing costs). This has
been realised in the new franchise, with a
positive impact on the rail franchise
subsidy requirement from the Executive
although the savings realised have been
slightly less than anticipated. |
3. Planned Savings | | 2005-06 | 2006-07 | 2007-08 |
Cash (m) | 1.5 | 1.5 | 1.5 |
Time Releasing (m) | 0 | 0 | 0 |
4. Accountable Officer for
delivery | Eddie Frizzell |
5. Project Manager | Jonathan Moore |
6. EGDG account manager | Iain Dewar |
7. Quality Impact | Describe any impact on the quality
of service delivery. Be specific and
explain if the expectation is positive,
negative or neutral. The ticket vending machines and barriers
were expected to make positive impact in terms
of service delivery. The ticket vending
machines reduce the queues that build up at
ticket offices at peak times. The ticket
barriers can also reduce the time spent
inspecting tickets by on train conductors, who
are then able to deal with other duties
including better revenue collection from people
boarding at intermediate stations. |
8. Dependencies | Explain if your savings are
dependant on legislation or other
structural changes. Savings are not dependant on
legislation or other structural changes
being achieved - this was solely introduced
through a contractual mechanism. |
9. Description of efficiency and
actions to be taken | 9.1 How will the saving be made? Be
specific about number/size of contracts,
staff, posts dates etc. The saving is to be made by reducing
the number of travellers that can board or
leave a train without a ticket, this
including attempts at deliberate ticket
fraud. |
9.2 What action is critically
needed to secure delivery of this saving?
Be specific, and name the key action
managers if they are outwith your immediate
management chain (e.g. in an
NDPB.) The ticket machines and barriers need
to be in working order to ensure that the
savings are made. This is a responsibility
for the franchisee. |
10. Impact on Staffing to achieve the efficiency
gain | If there are to be any changes in
staff numbers (at activity level) to
achieve the efficiency gain, please
indicate how many full time equivalents and
how far you expect savings to be achieved
by natural wastage (show additions as + and
reductions as -). |
| 2005- 06 | 2006- 07 | 2007- 08 |
+ | 90 | 90 | 90 |
- | 0 | 0 | 0 |
Net | 90 | 90 | 90 |
Explanation | First Scotrail has recruited an
additional 90 ticket examining staff. |
11. Benefits | In general, the benefits of the
Scottish Executive Efficiency Plan are the
enhanced outputs from the resources
Ministers have been able to allocate in
SR04. But if there is a direct connection
between this efficiency saving and the
enhancement of a particular service please
describe it here. N/A |
12. Gross/Net Cash Savings | 12.1 Please set out the gross
recurring saving and any offsetting
recurring expenditure. The gross recurring saving is estimated
at 2.2m, the recurring costs, captured
within the franchise subsidy requirement
are 1m.. |
12.2 Against what budget does this
expenditure and saving fall? Transport Budget: Rail Services in
Scotland All costs associated with the
procurement, maintenance and operation of
the ticket barriers and ticket machines
procured under the new trains deal are
borne by the franchisee, financed from the
subsidy requirement. |
12.3 Has this saving been built
into your budget? Yes |
12.4 If so, what is the maximum
allowable expenditure against the budget
data, in each year, for that saving to be
delivered? The recurring costs of 1m are the
maximum allowable expenditure for the
saving to be delivered. The saving from the
barriers and gates is captured over the
coming seven years as a commensurate
reduction in the subsidy requirement of the
franchise. |
12.5 If not, how do you propose to
invest the additional cash back into public
services? N/A |
12.6 What plans do you have to
exceed the required saving? Explain by how
much in each year. We funded an additional 5 ticket
machines at stations which were unmanned.
The sales per machine is anticipated to
exceed 5k per week. The initial estimate of the value of
this efficiency saving, at the time of
preparation of the relevant business case,
was circa 1.5m. Due to the nature of the
re-franchising process, it is the new
franchisees view of the likely revenue
generated which has been contractualised.
The new franchisee reckons that the actual
additional revenue collected will be closer
to 2.2m, with an offset of 1m for recurring
lease costs meaning the actual saving to
the subsidy requirement is 1.2m for each of
the years in question rather than
1.5m. It is worth noting that actual revenue
growth during the first year of the new
franchise has been higher than anticipated.
This means that the Executive will benefit
from the revenue share mechanism in the
franchise agreement so that, to the extent
the franchisee may have underestimated the
level of revenue generated, the Executive
may be capturing up to 80% of this
additional revenue via the revenue share
mechanism. |
13. Time - release savings | 13.1 Please explain any
time-releasing savings indicated at
question 3. N/A |
13.2 Please describe the method you
plan to use to calculate the cash
equivalent of those time release
savings. N/A |
14. Measurement and
Monitoring | 14.1 How are you proposing to
measure the expected efficiency benefits
(e.g. in terms of costs, level of output or
quality of service)? The franchisee is now at risk on
realising the savings anticipated as the
forecast savings formed an element of their
fixed price bid for the franchise. The
quality inspection regimes in the franchise
will however check that the franchisee is
using the ticket machines and barriers
effectively and will fine them (at a rate
of up to 150k per four week period) if they
fail to do so. |
14.2 What monitoring &
reporting procedures will be put in place
to measure the efficiency savings (How
often will progress towards the target be
monitored? Who will have lead
responsibility for reporting progress and
what procedures will be in place?) Currently, First ScotRail have to
report to the Strategic Rail Authority on a
monthly basis. These reports identify
current performance levels. At the same
time, SPTE acting on their own behalf and
on behalf of the SRA will manage the
quality inspection regime. There is,
strictly speaking, no "progress" to measure
beyond this. |
14.3 Monitoring Data: Sources,
validation and risks - What data will be used to
measure progress? Is all the required
information quantifiable and readily
available? If not what action will be
taken to rectify this?
All the required information is
both quantifiable and readily
available.
- What measures will be in place
to validate the accuracy of the data?
Who will take responsibility for
this?
The fact that SRA and SPTE check
and may audit the reports of the
franchisee, and that the franchisee is
incentivised (through for example
appealing penalty notices) to check the
operation of the quality inspection
regimes should help ensure the accuracy
of the data.
- Are there any issues or risks
relating to how you plan to use the
data? (e.g. accuracy, difficulties in
collection)
The quality inspection regimes,
and the operations of the SRA and SPTE
are both well established. No
difficulties in accuracy or reliability
are foreseen.
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