Lack of competition in rail franchising a cause for concern

A committee of MPs has warned that a lack of competition between companies bidding to operate rail routes could mean that it could cost the tax payer more.

The Public Accounts Committee report looked into how the rail franchising system has recovered since the West Coast debacle at the Department for Transport in 2012, discovering that there remains gaps in the department’s ability to manage the process effectively.

A lack of interest was highlighted on 4 February when the government announced that only two train companies had bid to take over South West trains franchise, Britain’s most lucrative commuter network. One of those shortlisted was Stagecoach, the incumbent operator which has run it for 20 years.

MPs have noted that the Department for Transport (DfT) requires at least three bids per franchise to ‘create competitive tension’, but amid dwindling interest, has insisted it is ‘working to actively seek’ bidders.

MPs also expressed growing concern about the DfT's competition-led approach to franchising, claiming there was ‘a real risk to value for money’ if the interest declined further still.

Committee chairwoman Meg Hillier said: "This hardly inspires confidence and highlights the urgent need for the department to develop new approaches it can draw on when there is a risk competition will not deliver the result rail users and the wider public deserve."