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![]() Railhub Archive | ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() Shadow Strategic Rail AuthoritySir Alastair Morton spells out plans for franchise replacement
completed his unveiling of the SSRA's plans for the replacement of the existing passenger rail franchises in a speech to the Institution of Highways and Transportation 's Presidential Conference in Chester today. He confirmed the SSRA's invitation to existing and would-be franchisees to negotiate for the replacement of existing franchises which have less than five years to run by longer franchises, "in which there will be value for the franchise owner, derived from longer terms and modified subsidy, in return for commitments to high levels of investment and service." He pointed out that, "existing franchises are the property of existing franchisees, so long as they do not default on their obligations. Any new, stronger and longer franchises will therefore require franchisees to agree to give up their existing franchises to permit their development by the new franchisee. Either they will do that when they conclude a satisfactory negotiation with new investors and the Franchising Director or when the existing franchise runs to expiry." He stressed that the SSRA would decide the sequence of negotiation and that it would be likely to start with a few franchises and accelerate the process next year, but with no deadline. Bids could come from incumbent franchisees bidding for the same franchise, with either the same or modified geography; existing franchisees bidding for other franchises; or new entrants to the industry. New franchises would be likely to have a term of between 10 and 20 years, with termination possible after reviews every five or seven years or in the event of default. The SSRA must conclude that the new terms offer value for money, or there would be no agreement and the existing franchise would run to expiry. For existing franchisees, the credibility of their bids would depend on current performance. Sir Alastair also spoke about the importance of a proper process for capital investment. Referring back to the poor structuring of the Channel Tunnel project, which caused enormous management difficulties, Sir Alastair warned that passenger train operators, freight companies and Railtrack must prioritise their long list of investment projects and structure each one appropriately. He said that the operators must be less passive and, "must demand without fear that their monopoly supplier, Railtrack, deliver all their reasonable requirements. It is the operators who have to satisfy the ultimate customers." He concluded by once again spelling out his message to the industry: "It's all about investment, investment, investment!"
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