Contact: Martin Robertson, ext 6997

1. Summary

1.1 The following decisions are sought:

(i) That the County Council supports the retention of the Waterloo-Exeter services and stations in the South West Trains franchise.

(ii) That the County Council supports the combination of the Thames Trains and Great Western franchises.

(iii) That the County Council asks the Strategic Rail Authority to consider attaching the Cardiff-Portsmouth/Waterloo and Bristol-Southampton/Weymouth routes to South West Trains, and the remainder of `Wessex Trains' to Great Western, but stresses the need for local `business units' to ensure that these large franchise are responsive to local markets.

2. Reasons

2.1 As part of a process of simplifying the rail industry structure, the Strategic Rail Authority has issued a consultation document asking for views on the future of three rail franchises serving Hampshire. These relate to Thames and Wessex franchises, and the Waterloo-Exeter `West of England' route. Responses are required by 4 June 2002.

3. Other Options Considered and Rejected

Waterloo-Exeter: Other Options

3.1 Combining South West Trains (SWT) Waterloo-Exeter services and stations with Wessex Trains would achieve better coordination at Salisbury. However it would undermine service coordination between Basingstoke and Waterloo, remove the economies of scale currently associated with investment and result in two incompatible sets of station systems.

Thames Trains: Other Options

3.2 Retaining Thames Trains as a separate franchise would allow the company to continue to focus on its customer base, but miss the opportunity for greater coordination at Reading and Paddington. It would also be deprived of a greater revenue base to fund investment and more management resources available for partnership and development schemes.

Wessex Trains: Other Options

3.3 Retaining the existing Wessex Trains franchise as a stand-alone is likely to result in a franchise needing considerable subsidy and unable to invest from its own resources, as it has a great many staff and stations for the size of its revenue streams. Attaching it in its entirety to either Great Western or SWT would produce an unwieldy franchise and miss opportunities for coordination, particularly at regional hub stations.

4. Conflicts of Interest Declared by the Decision Maker or a Member or Officer consulted - Not applicable.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason(s) for the Matter being dealt with if Urgent - Not applicable.

Approved by: Date:

Councillor K B Estlin

7. Background

7.1 The consultation document seeks views on:

(i) retaining the Waterloo-Exeter (and Reading-Brighton) services, plus stations from Overton west to Pinhoe, within the SWT franchise, or attaching it to the newly-established `Wessex Trains' franchise (as its `flagship' route);

(ii) combining the Thames Trains and Great Western franchises; and

(iii) considering options for the remaining `Wessex Trains' organisation (which it considers too small to be viable). It lists these as: combine with Great Western, combine with SWT or split between `other franchises' (Great Western or SWT are the only real options).

7.2 A detailed summary of the consultation document is attached as an appendix.

8. Route Details

Waterloo-Exeter

8.1 The Waterloo-Exeter route is an established part of SWT. Operational and support staff are available at SWT depots and stations such as Woking and Waterloo. The stations west of Basingstoke are equipped with SWT information and security systems. The services are integrated with other SWT services to maximise seating and track capacity on the busy route between Basingstoke and Waterloo and to provide an all-day Reading/ Basingstoke-Brighton service. As part of a successful franchise, this route benefits from large-scale investment programmes, funded from the entire franchise, which it would need to justify on a stand-alone basis if it were the main income-earner of a small franchise.

Thames Trains

8.2 The majority of Thames Trains' services share routes with Great Western, including operating from the same London terminus (Paddington) and through Reading. The combined franchise would have simpler interfaces with the Railtrack region and with customers. It would have large revenue streams to fund investment, and have greater management resources for partnerships with local authorities. Experience has been that Thames Trains has great difficulty finding management time to work with local authorities on new stations and other improvement schemes.

Wessex Trains

8.3 The existing Wessex Trains franchise shares many routes with Great Western around Bristol, Exeter and into Cornwall, where the benefits would be similar to combining with Thames around London and Reading. Similarly, there could be greater coordination around Salisbury if Cardiff-Portsmouth/Waterloo and Bristol-Southampton services were run by the operator of Waterloo-Exeter trains, producing better links from Andover to Bath and Bristol and the south coast to the West Country. Combining Wessex services through Salisbury with SWT, and the remainder with Great Western would simplify the franchise map and produce greatest coordination along more routes and at regional hubs than other options. It would also mean that the Hampshire stations of Dean, Dunbridge and Romsey would be nearer their operational and staffing base at Southampton or Salisbury, rather than Westbury as now.

7149/MF

APPENDIX

STRATEGIC RAIL AUTHORITY CONSULTATIONS

West of England Line, Wessex Franchise and Thames Trains

On 12 March the Strategic Rail Authority (SRA) issued a consultation document covering the future of the Thames and Wessex franchises, and the Waterloo-Exeter `West of England' route. Responses are invited by 4 June 2002.

The consultation follows from the SRA's new policy on rail franchising (December 2001) which set out proposals to simplify the railway by reducing the total number of franchises. The SRA sees this as offering benefits to passengers through better coordination of service planning, information and `presentation of the railway'.

The SRA is consulting on three questions:

Paddington Services - The Great Western and Thames Trains Franchises

Aside from Heathrow Express and a small number of Virgin Cross Country and Chiltern Trains services, the great majority of trains from Paddington are operated by Great Western and Thames Trains. They also share the route through the Thames Valley to Bedwyn, to Oxford and Worcester, and provide the majority of services to and from Reading. The SRA is seeking views on whether there would be benefits in combining these two franchises.

Waterloo Services - Waterloo-Exeter Services

When the South West Trains (SWT) franchise was re-let, bids were invited both with and without the Waterloo-Exeter services. It was envisaged at the time that these would combine with the English routes from the former `Wales & West' franchise to form a new `Wessex' franchise. Currently SWT runs all but four trains a day into Waterloo (excluding Eurostar). Following the transfer of the West of England line to Wessex around 4% of services into Waterloo would have been operated by Wessex. The SRA is now reviewing this decision, that is proposing to retain these services within SWT.

The Wessex Trains Franchise

The Waterloo-Exeter route would have accounted for just over 50% of passenger revenue for the Wessex franchise. Without it the franchise is unlikely to be commercially viable without large amounts of subsidy. The SRA is therefore seeking views on the future for the existing `Wessex' routes. It lists the options as:

(i) combining with Great Western, which could also include Thames Trains. Views are also sought on how best to serve the interests of the different markets and regions served by this large franchise (216 stations: 2,380 million passenger miles per annum);

(ii) combining with South West Trains to produce a larger franchise (301 stations: 2,850 million passenger miles per annum); and

(iii) splitting Wessex services between more than one operator - the only real options are Great Western and South West Trains.

Competitive Bidding

The SRA stresses that the combination of Thames and/or Wessex with Great Western would be part of a competitive process (which could take place when the Great Western franchise expires in 2006) rather than a `take-over' by one of the incumbents. It does not make this statement with reference to the retention of Waterloo-Exeter in SWT (although all the bidders for SWT did include plans for this route), or for the inclusion of some Wessex routes into SWT. The last may be a drafting error, but in any event it is not clear how competitive bidding could be achieved in splitting the Wessex routes. Competitive bids could be invited from Great Western and SWT, but this would not be an equal contest, with SWT having a new 20-year franchise and Great Western having only another four years.

Background Data: Current Franchises

Comparison of the Options

The SRA sets out the advantages of the various proposals. These are summarised below, with officer comments in italics.

(1) Combining Great Western and Thames Trains

(2) Waterloo-Exeter (South West Trains/Wessex Trains)

(3) Options for Remaining Wessex Trains Routes