Bill could force TOCs to spend NR delay payments on improvements

[whole diary]

[Rhydgaled]

Only as it needed extending owing top the DfTs^» (Department for Transport - about) inability to run franchise competitions!

Thameslink was still a franchise competition wasn't it, because First lost it to the pepole who previously ran Southern. If I recall correctly it was the review following the ICWC^▸ (InterCity West Coast) failure that recomended Thameslink and Great Western should be let as management contracts given the major infrustructure work ongoing on both routes, which made forecasting costs/revenues even less reliable than normal. I'm not sure if the recomendation was followed in the case of both franchises though, one may have been let on a traditional franchise model.

[ChrisB]

I think GTR won this as a franchise, didn't they, when the DfT^» (Department for Transport - about) combined the Thameslink, Southern & Gatwick Express operations (into this one franchise)?

[stuving]

I think Rhygdaled is referring to this - from Government Response to the Brown Review of the Rail Franchising Programme (July 2013)

TSGN

1.7 We announced that the competition would resume with a revised ITT^▸ (Invitation to Tender) to be issued to existing short-listed bidders. The new franchise is planned to start in 2014, and is expected to be more of a management-style contract ^ all as the Review had recommended.

...

Use of management contracts

2.10  The Review considered the case for widespread use of management contracts or  operating concessions, where the franchising authority takes the revenue risk  rather than the franchisee. The Review rejected this case, but did concede that there may be a better case where a franchisee is facing major and sustained disruption due to infrastructure works.  The TSGN franchise was cited as being likely to be most suitable for such an arrangement.

2.11  We broadly accept this recommendation.  The presumption is that in normal circumstances the risk around protecting and growing revenue is best left with the franchisee. In the case of the TSGN franchise, we accept that the Government is best placed to take much of the revenue risk given the large scale disruption planned over the next few years. In conjunction with pre-qualified bidders we are currently developing the specification, ITT, evaluation process and franchise agreement documents that will give effect to this revised approach.

But really all these contracts, whether called franchises, direct awards, or whatever, are much more prescriptive than a true franchise. They vary in the amount of profit going to the contractor, but even the "franchises" split that with DfT^» (Department for Transport - about), and I'd be surprised if TfL^» (Transport for London - about)'s contracts don't have a bit of profit or revenue going to the contractor as an incentive.

[JayMac]

The Thameslink, Southern & Great Northern (TSGN) franchise award to Govia Thameslink Railway Ltd (GTR) is indeed a a management style contract.

The Department for Transport (DfT^» (Department for Transport - about)) are paying GTR a fixed fee of ^8.9bn over the seven years of the award. The DfT get all revenues. Those revenues are forecast to be ^12.4bn.

Risks on costs to the business remain with the operator. The DfT will profit or lose on fluctuations in revenue.

[John R]

Maybe that's why they are taking a more aggressive line, as the govt are trying to push the issue generally, and it is easier to start with a management contract.

[stuving]

If you put the TSGN Franchise Agreeement (its official title) up side by side with another "proper" franchise, you'd struggle to find any differences. That's partly because they are all very long and complicated, with several complicated bits for calculating sums of money to paid one way or the other. But, in the case of the profit share, it's terms are secret. But there is one.

PS: The text behind the link of DfT^» (Department for Transport - about)'s franchising pages is a draft - the "execution version" is available, in edited form, if you ask Google nicely where it is.