Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Accepted
Develop a passenger-focused plan and resolve disincentives for sustainable rail subsidies.
Recommendation
There has been too little focus on passengers and taxpayers and how to get them a better deal. The Department claims that improving passenger experience is at the heart of its reform plans, but poor performance persists across the rail network. In 2022–23, 13.7% of trains were delayed and 3.8% were cancelled. While the Department is fully aware of what is important to passengers, it has not delivered on the basic things that matter most. Taxpayers also continue to subsidise passenger rail services at a level that the Department considers unsustainable (£3.1 billion in 2022–23). It is disappointing to hear that it took a pandemic to make the Department seriously focus on making efficiency savings and changes to improve services. The Department know it needs to increase revenues and reduce costs to get to a more sustainable position, but its focus is on managing costs, while revenue goes directly to HM Treasury, along with responsibility for making up any shortfalls. This means that the Department, train operating companies and HM Treasury have different priorities when making decisions which impact revenue, and the current set up does not create the right incentives to get the best value for money for taxpayers. Recommendation 2 a) The Department should commit to producing a specific passenger-focused plan that is clear to passengers what they should expect from travelling on trains following rail reform, including clear targets that train operators are expected to achieve. b) The Department should work with HM Treasury to resolve the disincentives in the system so that it can bring the level of government subsidy on passenger services to a sustainable level and improve value for money for taxpayers. The Department should set out in its Treasury Minute how it is addressing the disincentives ahead of the next Parliament and full rail reform.
Government Response Summary
The government agrees and commits to delivering the Great British Railways (GBR) model within this parliamentary term, which it states will address disincentives and aims to improve passenger services and financial sustainability. Interim actions include using annual business planning, resolving the ASLEF dispute, and mobilising shadow GBR.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. structure for the railways, alongside passenger train services under public ownership, with the objective of providing improved services for passengers and better value for money for taxpayers. This model will address current disincentives by ensuring costs and revenue across infrastructure and operations are aligned to optimise performance and drive efficiency. The department expects to see these reforms delivered over the course of this parliamentary term, as new legislation is enacted, and private train operators move into public ownership. During the transition to these new arrangements, the department will continue to use the annual business planning exercise with the train operating companies to ensure that costs are being closely managed, but also that opportunities for revenue growth are being considered. The department’s objective is to make the cost base as efficient as possible, increasing revenue and passenger numbers and reducing the net taxpayer subsidy. The department will work closely with HM Treasury to ensure costs and revenues are managed effectively. billion gross savings over the three-year Spending Review 2021 period (2022-23 to 2024-25) based on the previous government’s policy. As set out in the National Audit Office report, the department forecast gross savings across the Spending Review 2021 period to be around £2 billion. This accounted for estimated savings from workforce reform, fares, ticketing and retail reform and structural and commercial reform, some of which are non-cashable savings. 4.4 This government is now focused on delivering benefits for passengers and taxpayers ahead of legislation to establish GBR. Resolving the national pay dispute with Associated Society of Locomotive Engineers and Firemen (ASLEF) will reduce disruption due to industrial action linked to the dispute and enable operators to deliver more reliable services to passengers and recover lost revenue. 4.5 The mobilisation of shadow GBR will see an immediate focus on improving services for passengers, unlocking barriers to delivery and improving the financial sustainability of the railway. Through key organisations working in partnership as shadow GBR, we will harness the leadership of the whole system with a common goal of improving services for passengers and freight customers.