INTRODUCTION
1. Two part rail franchise
This franchise has been split into two parts. The south Wales Metro (Metro) which has the highest risk and the remainder of the franchise which is a conventional rail franchise with a train operating company (TOC) running trains and Network Rail. The first covers 80% of Wales’ land area with about 35% of the population; the latter 20% of the land and 65% of the people. The passenger trips are split approximately 50 – 50. Despite much of the public discussion being centred on Valley Lines with its infrastructure implications and higher risk; full cognisance must be given to the remainder of Wales and Borders rail franchise services.
The ‘rest of Wales element is familiar ground for letting a rail franchise. Not so in the competitive dialogue and transfer of track / signals from Network Rail (NR) which is one possibility for Valley Lines and is relatively unknown waters. WG has to be clear on what is affordable, what is being promised and what passengers want the outcome to be.
There are therefore quite different needs and possible service levels. The railway in west and north Wales provides for mobility and with the TrawsCymru network, the core public transport network much of which is subsidised (both buses and trains). The proposed Metro in its widest sense of both buses and trains must provide mass transit provision especially in peak periods into / out of major centres. Without a significant transfer of motor car users to the rail network, road congestion in the south east will continue to worsen and have an adverse effect on economic efficiency.
2. Radical Change
A change in culture / ethos and the degree of expertise available in the public sector decision making process (WG / TfW) is the biggest challenge facing the successful franchise bidder (or grant bids as WG now refers to the funding process). The Welsh Government’s (WG) concept of an Operational Development Partner (ODP) is the way forward with far more collaboration with a far closer relationship between WG and the TOC / OpCo / ODP. Passengers will expect cleaner stations and trains; less overcrowding in peak periods; more frequent trains; electric trains throughout the network – but this is a major challenge.
WG has to be looking for radical change with more innovation compared with the old system. The competitive dialogue process should identify what the market has to offer and it has been suggested that WG can then cherry- pick the best aspects.
The timescale is intended to fit the current franchise termination in October 2018. There is the possibility of an extension subject to an agreement between Arriva Trains Wales (Deutsche Bahn) and WG. This may however lead to a legal challenge by other bidders and may not be perceived as the best outcome for passengers.
The process has to be watertight particularly from now on as bidders prepare detailed proposals. A repeat of the WCML challenge by Virgin Trains when the award was made to First Group cannot occur. WG must have the ability to prove its decision was right at any possible judicial review.
3. Bids
The bidders now (February 2017) have to consider whether to follow through with their bid. The costs and timespan are higher and longer than for a DfT bid process. At W&B the success odds are 4:1; at south west England they are 2:1. The costs may be £12m compared with £7m - £9m for a more lucrative bid in England – e.g. East Midlands, WCML + HS2 (which is also very exciting).
The Wales Audit Office report on Welsh Government investment in rail services and infrastructure (6 September 2016) provides a useful insight into the contractual arrangements WG proposes to fund.
SECTION 1- WELSH GOVERNMENT APPROACH TO THE DEVELOPMENT, PROCUREMENT AND DELIVERY OF THE W&B FRANCHISE AND SOUTH WALES METRO
EFFECTIVENESS, KEY RISKS, DELIVERY
4. Implementation
WG set up Transport for Wales (TfW) in January 2016 along with a strategic advisory board to manage and advise on procurement. Its primary role at present is to re – let the Wales and Borders (W&B) rail franchise
The Government will have provided the Committee with its proposed structure of the InfraCo (infrastructure and the OpCo / TOC (train operating company)
The InfraCo would only apply to that part of the Valley Lines commuter network where electric traction would be introduced and in particular a tram / light rail option. Elsewhere the track and signals would be provided by Network Rail as at present.
The Pre – qualifying process should have identified that all the bidders on the short list have satisfied the selection criteria
Currently (14 February 2017) the outline solutions from bidders are with TfW. It will process and assess these
5. Process – Summary note
TfW would have put high level questions (for outline solutions) to all bidders on how they would approach aspects such as:
· Bidders to indicate investment levels
o Inside Metro
o Outside Metro (e.g. NWML, community rail e.g. Heart of Wales line; Marcher line)