Wales and Borders rail franchise: on the right track

19 October 2016

Article by Katy Orford, National Assembly for Wales Research Service

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train-station

On 12 October the Cabinet Secretary for Economy and Infrastructure, Ken Skates, announced four Operator and Development Partner (ODP) bidders for the Wales and Boarders Franchise who have been chosen to progress to the next stage in the selection process.

In November 2014, agreement was reached with the UK Government that powers to award the next Wales and Borders franchise would be transferred to Welsh Ministers. The Welsh Government will become the official rail franchising authority for the Welsh franchise from early next year and preparations have begun for awarding the next franchise, which is due to start in October 2018.

At present, the majority of rail services in Wales are provided under the Wales and Borders franchise operated by Arriva Trains Wales (ATW). The contract was awarded in 2003 and is expected to end in 2018. A franchise agreement (PDF 3.7 MB) sets out the obligations of both ATW and Government. A Joint Parties’ Agreement (PDF 4.89MB) sets out how the Welsh and UK Government’s agreed to divide up responsibility for the franchise when the Welsh Government took over most franchise management obligations in April 2006.

This year, in preparation for the transfer of powers to Wales, the Welsh Government ran a consultation to establish the quality standards the public would wish to see for the next franchise. The 190 responses provided views on areas including reduced overall journey times, increased passenger numbers, reduced costs, capacity improvements, enhanced accessibility, better connectivity and improved punctuality, reliability and quality.

The next step is the procurement of an Operator and Development Partner (ODP) for the next franchise who will also take forward key aspects of the next stage of the metro system.

The selection process for the ODP has begun and is being undertaken by Transport for Wales, a wholly owned, not-for-profit company established by the Welsh Government (detailed below). On 12 October the Cabinet Secretary for Economy and Infrastructure, Ken Skates, announced four ODP bidders who have been chosen to progress to the next stage in the selection process. The four pre-qualified ODP bidders (in alphabetical order) are:

  • Abellio Rail Cymru
  • Arriva Rail Wales/Rheilffyrdd Arriva Cymru Limited
  • KeolisAmey
  • MTR Corporation (Cymru) Ltd

Bidders will now progress to the next competitive stage having demonstrated to the Welsh Government ‘a track record and appetite for providing high quality services as well as the financial standing and expertise to ensure delivery’. In his announcement the Cabinet Secretary stated that:

The priorities for the next franchise will include updated rolling stock, reduced journey times and the use of modern technology and approaches to deliver an improved service for passengers across Wales.

Transport for Wales will be publically consulting on proposals in early 2017, subject to that consultation process, it is anticipated that the final ODP contract will be awarded by January 2018.

This process is part of the Welsh Government’s stated ambition to deliver a new not-for-profit rail model similar to the way in which Transport for London manage public transport services. However, it is clear from the list of ODP bidders that, as in London, the companies delivering the services and Metro infrastructure won’t themselves be not-for-profit companies.

Transport for Wales

The relationship between the Welsh Government and Transport for Wales is governed by the following key documents as outlined in Wales Audit Office’s recent publication Welsh Government investment in rail services and infrastructure:

  • A delegation letter issued by the Permanent Secretary gives the Deputy Permanent Secretary for Economy, Skills and Natural Resources additional accounting officer responsibilities.
  • A Management Agreement between the Welsh Government and the company outlines the purpose of the company, its accountabilities and responsibilities.
  • A remit letter from the Welsh Government outlines the key objectives and outputs the company is expected to deliver (published last week).
  • A business plan, produced by the company, sets out the scope, the organisational structure, deliverables, timescales, costs and procurement programme for the Wales and Boarders franchise and south Wales Metro (published last week).

Transport for Wales’s board currently comprises of eight directors, (including the chair): five non-executive directors covering areas such as HR, finance, infrastructure delivery and governance, all of whom are Welsh Government employees; and three executive directors with expertise specific to their area of responsibility. The key objectives set out in the business plan are to:

  • Plan and propose the right mix of skills, experience and knowledge in the organisation required both to deliver franchise competition and in future to manage the franchise;
  • Develop proposals to enable the delivery of a significantly improved transportation system for the South Wales metro;
  • Advise on suitable and effective mechanisms for maximising the long-term efficiency of rail investment in Wales;
  • Advise on options for the next Wales and Borders franchise, so that the design of rail services better supports the Welsh Government’s economic and social ambitions;
  • Advise on investment options in terms of broader transport integration;
  • Assess the practicalities of a range of medium and long-term rail engineering investment options; and
  • To ensure that Welsh Government is fully informed on the progress against each of the KPIs on a quarterly basis.