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1.1 The Vision for Scotland's passenger railway
We want the railways to play a full part in a sustainable, effective and integrated transport system. We want a railway network that is safe and accessible. We want a railway system that supports economic development, meets social needs and supports a better environment.
1.2 The Objectives
1.2.1 In pursuit of the Vision we will adopt the following objectives:
We want more people to use the railways
We want railways to play a full part in an integrated transport system
We want to secure more investment in the railway system
1.2.2 The rest of this section outlines the wider policy context within which we will set strategic priorities and develop directions and guidance for Scotland's passenger rail services. Subsequent sections discuss each of the objectives.
1.3 Railways in an integrated transport system
1.3.1 We want to see Scotland's railways at the heart of an integrated transport system. Our priorities for the development of Scottish passenger rail services take their lead from the underlying aims of our transport policy: economic development, environmental improvement, integration, safety and accessibility. These aims were set out in the 1998 Transport White Papers and have been reaffirmed in the Partnership Agreement and the Programme for Government.
1.3.2 On this basis we believe that passenger rail services should make a significant contribution to:
the provision of an integrated transport system which is essential to the sustainable development of Scotland's economy and communities;
relieving congestion, securing improvements to local air quality and reducing emissions of greenhouse gases by providing efficient, affordable and safe public transport as an attractive alternative to car use;
the promotion of social justice by improving accessibility to public transport for those without a car and by reducing peripherality generally;
securing an integrated rural transport system that maintains and promotes the growth of remote and rural communities.
1.3.3 In Sections 2 and 3 we have taken these themes and used them to help prioritise our broad, strategic expectations and aspirations for Scottish passenger rail services. We now want to consult with the rail industry and with stakeholders on these priorities so that when we come to draft our directions and guidance to the Strategic Rail Authority for the Scottish passenger rail service we can be confident that we have taken account of the full range of views on the future of Scotland's railways.
1.3.4 But this process will not be occurring within a vacuum. Much of the policy and administrative context has already been set, or is in the process of being established. In particular, the shadow Strategic Rail Authority (sSRA) has set out its policy in Sir Alastair Morton's speeches plus publications such as the Outline Guide to Franchise Replacement. The remaining parts of this section describes that context.
1.4 The Scottish Executive and Scotland's Railway
The Devolution Settlement
1.4.1 In pursuing our Vision and Objectives for Scotland's passenger railways we will exercise powers transferred to the Scottish Ministers as part of the devolution settlement. On 31 March 1998, Henry McLeish MP, then Scottish Transport Minister, announced in the House of Commons a number of measures that would transfer a range of important responsibilities for the operation of railways in Scotland to the Scottish Parliament and Scottish Ministers (this became known as the 'McLeish Settlement'). These are being delivered within the revised GB regulatory framework, which is being implemented in the UK Transport Bill, introduced in December 1999. The Bill includes provisions for the transfer of several functions to the Scottish Ministers. Most relevant for this exercise are the responsibilities for issuing to the SRA Directions and Guidance for the franchise providing passenger rail services that start and end in Scotland. Directions and guidance will also be issued by the Scottish Ministers for Scottish sleeper services provided by the same franchise. In addition, Scottish Ministers will have the power to fund the SRA to enable it to pay for the franchise providing Scottish passenger services. These responsibilities are to be exercised within a GB strategic context. The SRA will be expected to consult with the Scottish Ministers and to take into account our strategic priorities for Scotland's passenger railways when drawing-up its strategies.
1.4.2 The UK Bill also provides for the transfer to the Scottish Ministers of the administration of rail freight grants within the context of the SRA assuming responsibility for supporting the development of rail freight in general (Scottish Ministers already have responsibility for administering these grants within the current framework). Again, we would expect that our strategic priorities will be given proper consideration by the Authority when it sets out its own strategy for rail freight and develops new mechanisms for supporting its development.
1.4.3 Although this document deals principally with passenger services Section 3 addresses a number of related issues dealing with the development of rail freight in Scotland.
Part of a national network - working within the GB context
1.4.4 Scotland's railways are part of a GB network (see Appendix A). It is vital the same standards for rail safety and security, quality of services, performance, licence operation and regulation apply equally throughout the network. Scotland's railways will continue to benefit from being part of a GB system in terms of economies of scale, network-wide investment from both the private and public sector, through ticketing, common customer standards and common systems of enforcement and regulation.
1.4.5 However, we cannot look to the future without taking into account the present state of affairs. In addition to causing massive disruption to passengers across the country, it is clear that recent unprecedented events have exposed a number of weaknesses in the structures and management of Britain's railways. The aftermath of the tragic accidents at Southall, Ladbroke Grove and Hatfield has prompted wide-ranging reviews of the relationships between the different parts of the rail industry. Lord Cullen's enquiry is looking at the organisation of safety on the railways as well as at the relative merits of different safety systems. Sir Alistair Morton is leading an appraisal of how the rail industry can work together more effectively to deliver a safer and better performing service to customers. These processes and their outcomes will form the backdrop against which the Scottish Executive will pursue its priorities for Scotland's passenger rail system.
1.4.6 Prior to the recent crisis, much of the framework for securing significant progress was already in place. In its Ten Year Plan for Transport published in July the Government outlined the broad strategic direction for the development of the GB rail system. It identified a range of investments totalling £60 billion over the ten-year period, of which £29 billion would be public funding. The Plan reaffirmed that the responsibility for developing a GB rail strategy would be held by the SRA and announced that a Rail Modernisation Fund (RMF) would be administered by the Authority.
1.4.7 It will be within the context of this strategy that the SRA will use its own expanded funding powers to assist the growth of the railways, both passenger and freight. The SRA will apply these powers on a consistent basis across the GB network, with all eligible projects in Scotland being given equal consideration to those elsewhere on the network.
1.4.8 The UK Transport Bill provides for the enhanced powers of the SRA, including a wider range of funding mechanisms, and sets out inter alia the basis for the relationship between the Scottish Executive, the Authority and the Secretary of State.
Working with the SRA
1.4.9 In order to secure for Scotland the benefits of a growing and better performing railway system the Scottish Executive will work very closely with the SRA. They need to know what we want; we need to know what works well elsewhere in GB and what the market can deliver. This is happening at a number of levels and will need to be developed further.
1.4.10 We will be statutory consultees on the SRA's GB strategy for the railways.
We will collaborate with the Authority on the administration in Scotland of
its capital funding initiatives. We will provide advice to the Authority on
franchises supplying cross-border services.* We will collaborate with the Authority
on the administration of freight grants within Scotland.
*The Scottish Executive issued advice to the sSRA on the East Coast Mainline
franchise replacement on 26 June this year.
1.4.11 Most importantly, the Scottish Executive will outline to the SRA through statutory directions and guidance its requirements for the Scottish passenger rail franchise. It will be the SRA's role to draw up the detailed specification for replacing the existing Scottish franchise based on the broad set of requirements we supply. It will be the Authority that will manage the bidding process, have the principal responsibility for appraising the bids, in accordance with rigorous appraisal techniques, select the preferred bidder, and draw up the detailed franchise contract. During this process, it will consult with us regularly and in considerable detail.
1.4.12 It will be the Scottish Executive that will decide just how much it will be prepared to pay for a new franchise which will be set against what the market is prepared to provide. We will have to work very closely with the SRA to secure a contract that represents value for money, takes account of environmental costs and benefits and gives demonstrable additional benefits to Scotland's rail passengers in particular and to the country's transport system as a whole.
1.4.13 Once the new Scottish franchise is in operation the SRA will manage it. It will ensure contract compliance and will deal with any breach of agreement. The Authority will ensure that the operator meets, in common with all other operators of franchises, robust performance targets. The operator will receive incentive payments if it meets these targets or pay a penalty should it fail to do so.
1.4.14 In carrying out these tasks the SRA will have to report regularly to the Scottish Executive and will have to demonstrate that our expenditure on the Scottish franchise is being managed efficiently and with due probity. In turn, Scottish Ministers will be held to account by the Scottish Parliament in exercising this function as with any other responsibility.
Working in partnership with the rail industry
1.4.15 The Scottish Executive wants to work collaboratively with the rail industry and with key stakeholders to achieve our Vision and Objectives. Within a relatively short space of time we have built constructive links with the industry, developing a better appreciation of our respective roles and priorities. We aim to develop these links further for the benefit of those who use the railways.
1.4.16 In Scotland the rail industry has made welcome efforts to work in partnership on a wide range of matters. Railtrack Scotland has developed a sound working relationship with the existing Scottish franchise operator, ScotRail, and with the operators of the cross-border franchises. The current Scottish franchise holder has invested in new trains and expanded services generating new demand. Despite recent set-backs, GNER has improved significantly the quality of services between Scotland and England and Virgin Trains is committed to a complete overhaul of its services to and from Scotland. Both English, Welsh and Scottish Railway (EWS) and Freightliner have worked hard with Railtrack to secure incremental improvements across the network. Both rail freight companies have benefited from freight grant awards from the Scottish Executive for innovative projects for transferring goods from road to rail.
1.4.17 We would expect such partnership working to be continued by any future holder of the Scottish passenger rail franchises and other franchises which serve Scotland.
1.4.18 This co-operative approach to the running of Scotland's railways has undoubtedly contributed to the development of one of the best passenger rail services in GB. Much still needs to be done, but we want to build on what we already have rather than dismantle or restructure it. We recognise the advantages of having a coterminous Railtrack zone and primary passenger rail franchise in Scotland. The sSRA has reaffirmed the strength of this arrangement by confirming the boundaries of the Scottish franchise in the recently published franchise map.
Working with passenger representatives
1.4.19 Our relationship with the rail industry is very much premised on our desire to secure increased benefits for passengers. But the Scottish Executive is not best placed by itself to appreciate fully what those benefits might look like. We will look to those who promote the interests of passengers, and of course the passengers themselves, to articulate the range of benefits they expect from the rail industry.
1.4.20 To this end we will develop our constructive relationship with the Rail Passenger Committee for Scotland (RPC-S), formerly known as the Rail Users Consultative Committee for Scotland. Under provisions in the UK Transport Bill the RPC-S will acquire a strengthened role in representing and promoting passengers' interests as part of a GB network of Committees, themselves headed up by the Rail Passenger Council.
Working with local authorities and SPTE
1.4.21 We will work with local authorities and the Strathclyde Passenger Transport Authority and its Executive (SPT) to secure the development of Scotland's passenger railways.
1.4.22 SPT is a co-signatory of the existing Scottish franchise and through this exercises considerable influence over the type and level of service supplied across the 12 local authorities in its area. Its aspirations for the development of services will be reflected in the PTE's contribution to the process for replacing the Scottish franchise. Improvements secured must be consistent with our strategic priorities for the Scottish passenger rail network as a whole.
1.4.23 Local authorities and SPT have extensive responsibilities for the development of the transport system and these will be expanded with the passage of the Transport (Scotland) Bill. It provides additional powers for the development of an integrated transport system allowing for the development of joint transport strategies, quality contracts and partnerships, the introduction of road user charging, and improvements in concessionary fares. All these powers will have an impact in planning and delivering rail services.
1.4.24 Without exception all local authorities with rail links (and a number of those without) have expectations of how they would like to see the railways develop. Some of these aspirations have become the basis for successful bids to the Public Transport Fund (PTF), others are longer term and require detailed appraisal and planning. We want to work with local authorities to ensure that expectations are prioritised and fully appraised before they become the basis for detailed consideration for development. We also want to be sure that such proposals work with the grain of the development of the network as a whole and with the wider regional priorities for the development of the economy and of communities.
1.4.25 Section 3.6 explains in greater detail how we expect local authorities and SPT to work with us and the rail industry.
1.5 Next Steps: Towards Directions and Guidance
Replacing the Scottish Franchise
1.5.1 Sir Alistair Morton, Chairman of the sSRA, has said that the Authority is seeking to replace most of the seven year franchises as soon as possible. The sSRA wants the replacement process to secure increased growth in passenger rail services through increased investment. The new franchises will require operators to deliver additional capacity and better performance, sustained and cost effective benefits for passengers, and improve integration. In return the sSRA has said it will grant longer franchises providing greater certainty for those that want to invest in the railways.
1.5.2 The sSRA's approach is summarised in its 'Franchise Replacement - an Outline Guide'. It is an approach we endorse and will want to see applied to the Scottish franchise. We will work with the SRA to this end.
1.5.3 The current franchise was let to the National Express Group (NEG), who took over Scotrail in 1997, and is due to run until 2004. Much has already been secured under the terms of the contract, but this was compiled in circumstances very different from those that prevail today. Although the contract required some new investment in new trains (to replace older ones) and some expansion of services, it never envisaged the present growth in passenger numbers and the attendant requirement for additional investment. The franchise was born out of the policy climate of the day, which had limited aspirations for expansion.
1.5.4 The climate has changed. We now have a policy that actively encourages people to use all forms of public transport and is creating an environment to facilitate such a transfer through increased capital and revenue expenditure. Franchise replacement is an integral part of that new policy. Many of the old short-life franchises are not fit for the new purpose they are expected to play.
1.5.5 Against a trend of increasing growth in demand on parts of the network, coupled with a justifiable increase in passenger expectations, the Scottish Executive and the sSRA want to secure sustained growth in Scottish services and continued improvement in quality. Only in this way can rail be expected to play a full role in an integrated transport system. It is for this reason that we share the sSRA's desire to replace the present franchise well before its finishing date.
1.5.6 Whether the new franchise is to last 15 or 20 years, we and the sSRA would expect it to deliver a number of specified improvements to services within the first 5-7 years, backed up with an agreed set of performance targets. For the remainder of the franchise we would want the operator to outline at the outset of the contract a set of broader priorities and aspirations that would be the subject of detailed appraisal and feasibility analysis prior to consideration for implementation in the medium or longer term.
1.5.7 The end of the first period of the franchise would be marked by a thoroughgoing review of past performance and future intentions of the operator by the SRA in collaboration with the Scottish Executive. This would allow for adjustments to targets and objectives to accommodate developments in the operational and policy fields.
1.5.8 To demonstrate that their franchise plans are credible, bidders for the franchises currently being replaced have been told by the sSRA that they must show evidence of detailed discussions with Railtrack, transport authorities, the rolling stock companies, and passenger representatives. In Scotland, these will require to be complemented by discussions with the Scottish Executive.
Directions and Guidance for the Scottish franchise
1.5.9 The Scottish Executive's directions and guidance to the SRA will set out our strategic priorities for securing a new franchise that will operate those passenger services that start and end in Scotland. The directions and guidance will be published and be available to all those who may wish to bid for the new franchise. They will form the basis of the SRA's detailed instructions to bidders and will be drafted to reflect the GB strategic policy context for railways.
1.5.10 Our directions and guidance will not provide project-specific instructions, nor will they seek to prioritise between projects. It will not be the role of the Scottish Executive to undertake detailed evaluation of bids. This is the function of the SRA under the terms of its reserved statutory functions and within the context of a GB strategy for passenger railways, itself based on directions and guidance from the Secretary of State in the UK Government. However, since the Scottish Executive will be funding the public cost of the Scottish franchise, we will expect to be closely consulted by the SRA during the appraisal process. In this respect the Scottish Executive will hold a unique position in the franchise replacement process and we intend to use the position to secure improvements to the Scottish passenger rail network.
Consulting on the way ahead - process, timescale etc.
1.5.11 The publication of this consultation paper marks the start of the process for replacing the Scottish franchise. The consultation will last twelve weeks. The responses received will influence our directions and guidance for the SRA. Our aim will be to communicate these to the Authority in the Spring. We would then expect the SRA to initiate the detailed procedures of replacement sometime thereafter. Should a number of outline bids be lodged with the sSRA it is expected that a minimum of two will be selected to submit more detailed bids and best and final offers. Once a preferred bidder is selected, detailed negotiations will commence on heads of terms followed by the drawing up of the detailed franchise contract (see Appendix B).
1.5.12 At each stage in the process the Scottish Executive will be in close touch with the SRA. In this way the SRA will be confident of reflecting our expectations and aspirations in its consideration of bids and in its negotiations with the preferred bidder.
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