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4.1 The Challenge
4.1.1 We have set out our vision, objectives and priorities for developing Scotland's passenger rail services over the next 15 to 20 years and nested these with the wider priorities of the Scottish Executive's integrated transport policy. In doing so we are acutely aware that despite the recent commitment made by the Deputy Prime Minister, John Prescott, to increased public investment in Britain's rail network, we are going to have to make hard choices about what we can afford to support. Our priorities for passenger railways will have to compete effectively for resources with other legitimate claims on transport spending. These in turn will have to be considered by Scottish Ministers and the Scottish Parliament alongside other commitments across all portfolios.
4.1.2 The challenge is for the rail industry, in partnership with key stakeholders, to come up with a set of proposals for the development of Scottish passenger services that lever in growing levels of private investment in support of capital and revenue costs in return for long term public support.
Managing expectations
4.1.3 We will never satisfy all expectations or aspirations. However, we want to work with the SRA, the rail industry and key stakeholders to establish the basis for a fair and equitable system of evaluating proposals for enhancements or additions to the existing Scottish passenger rail network. We already scrutinise in great detail applications for the Public Transport Fund (PTF) on the basis of well-established transport appraisal criteria. The sSRA applies similar rigorous appraisal techniques when assessing bids to its Rail Passenger Partnership (RPP) scheme. The Authority is employing a similar approach when evaluating bids for new franchises across the GB network. When the SRA comes to evaluate bids for the Scottish passenger rail franchise the similar appraisal techniques will be applied in close collaboration with the Scottish Executive. This will ensure that the appraisal will reflect the priorities of Scotland's integrated transport strategy. We believe it is important for the appraisal system to be comprehensive, clear and consistently applied.
Need for a strategic view on investment opportunities
4.1.4 We cannot afford to view proposals for the development of individual passenger rail services in isolation from their relationship with the regional or Scottish (and in some cases, the GB) network as a whole. Before any commitment is made to support a particular project there will need to be verifiable assurances that it will not compromise the effectiveness of the wider network. Indeed, those projects that will generate wider network benefits are likely to be favoured, especially if those network benefits apply to the transport system as a whole.
4.1.5 Much of what has been said here has situated the role of passenger rail services within a wider policy context. We want the promoters of enhanced passenger rail services to demonstrate how their proposals fit with this context. The development of increased train capacity and higher line speeds has to be shown to work with the grain of the integrated transport policy and to demonstrate customer benefits based on clear demand. To this end the sSRA and ourselves will ensure that proposals will be appraised accordingly.
4.1.6 On this basis we will want work closely with the SRA and key stakeholders to develop a common understanding of how best to prioritise proposals for developing passenger services.
4.2 Alternative investment opportunities
4.2.1 Not all enhancements and additions to the passenger rail network in Scotland can best be secured via a new Scottish passenger rail franchise. The existing Passenger Service Requirement (PSR) is the starting point for any new contract. In addition, the sSRA has told bidders that they should expect to have to incorporate an appropriate range of the service enhancements introduced by existing operators, over and above the PSR, in their proposals for a new franchise. These would form the basis of an Additional Service Commitment (ASC). We agree that this augmented baseline is appropriate for any new Scottish passenger rail franchise.
4.2.2 We have indicated those types of service we would like to see developed as part of an integrated transport system. We would expect bidders for a new Scottish franchise to identify specific proposals that they believe meet our requirements and cost them accordingly. It would then be for the SRA, consulting the Executive, to conduct a detailed appraisal of their relative merits, viability and affordability. We will want to ensure that all such proposals are prioritised and phased, with short-term improvements occurring within the first five years of a new franchise. We would want to see assurances that such short-term developments are based on agreements in principle with Railtrack where its involvement is required for their delivery. We would also expect bidders to demonstrate that they are prepared to bear a degree of risk in developing new and expanded services on the understanding that they would be rewarded with an appropriate rate of return.
4.2.3 For projects not included within the early phases of a new franchise, but deemed pressing by their promoters, other sources of support will be worth pursuing. We intend that the PTF will still be available for passenger rail projects. It has already been used for a number of rail projects including the re-development of stations such as Partick Interchange and Stranraer Harbour, and the development of new facilities including Edinburgh Crossrail and Gartcosh Station. The sSRA's Rail Passenger Partnership is another source of funding that can be accessed and one award has already been made to Edinburgh for Crossrail. This last example demonstrates the potential for joint funding. Revenue support may also be made available for services provided in addition to the franchise requirements. Fife Council now supports enhancements to service levels in this way. We have yet to see the criteria for the SRA's Rail Modernisation Fund, to which the Ten Year Plan allocated £7 billion for the plan's duration, but we would expect Scottish proposals to be eligible. In most cases, it is likely that those proposals that can lever in private funding will be favoured.
4.2.4 Thinking is still developing about how best to apply models used successfully
in other sectors to the development of passenger railways. Public Private Partnerships
may be one method of accessing significant private sector funding by underwriting
some of the risk with public support. Single Purpose Vehicles* may provide a
suitable mechanism for the development of specific additions to the passenger
network, especially in those circumstances where the provision of a rail link
may be one part of an integrated development project, such as an airport connection,
a business park, or a major new residential development.
* Usually a joint venture between the public and private sectors as a mechanism
for funding specific capital rail projects.
4.2.5 Finally, the Scottish Transport Bill will give local authorities the ability to introduce urban congestion charging and workplace parking levies, where appropriate. It will also enable authorities to retain revenues raised from such schemes to reinvest in public transport projects (where these have net benefits). Local authorities will wish to consider whether such a revenue stream could be utilised to support the operational costs of enhancements to existing passenger rail services or service the capital funding of additions to the passenger network, or indeed a combination of both.
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