Transport Committee: Franchise Bids and Frank Comments

Last week saw the first meeting of the London Assembly’s Transport Committee since the elections. In front of the Committee were Transport Commissioner Peter Hendy and Isabel Dedring, Deputy Mayor for Transport.

Hendy and Dedring are generally two of the better performers in front of the Committee, giving full, well informed, answers with (relatively) little evasion. Last week’s meeting was no exception, and consequently the session provided some interesting insight into the current thinking within TfL on several key topics. Most notably, their comments on both Oyster and Franchising (including confirmation that TfL will register their interest in tendering for at least two upcoming Franchises) opened a rare window on the current state of the relationship between TfL and the DfT.

Those wishing to watch the full two hour meeting can find it on the Assembly website. A summary of highlights and some key quotes and transcripts can, however, also be found below.

Funding, Fares and Manifesto Promises

Given that it dominated much of the discussion during the electoral battle, the subject of TfL’s “surplus” – and whether that should translate to a fare cut – formed a key part of the Committee meeting.

Committee Chair Caroline Pidgeon asked Hendy to summarise in simple terms what the actual situation was. She also pushed Hendy to indicate just what money was available for any additional projects, in line with promises within the Mayor’s manifesto.

Hendy’s answer was relatively straightforward. In terms of repeating financials, TfL was currently seeing an annual improvement of £30m above their projected income. Mostly as a result of increased fare revenue and the recession not biting into transport usage as much as was projected. In addition to this a one-off saving of £130m was achieved last year, largely as a result of various savings initiatives that had originally been planned for this year being implemented a year early.

Hendy was keen to stress, however, that this did not represent a “vast hidden pot of gold to do things” and that decisions on both budgeting and how achievable any manifesto promises are would be made in the Autumn, as part of TfL’s normal planning process.

Hendy’s response to just what that planning process would bring in terms of meeting the Mayor’s manifesto promises was, it is probably safe to say, on the tactful side.

I’ve been here quite a long time now, and I’ve found that following every election that there are some things which the prospective Mayor has committed themselves to which are more difficult to do, and which at least need to be costed properly

His response to the overall question of whether the Mayor’s promise to “bear down on fares” would translate to lower costs for passengers, however, was considerably blunter.

There isn’t a large sum of money on a recurring basis that you can put towards a fares reduction and say “Ah! there’s a sum of money that’ll turn up every year! We can just reduce the fares by it!” And if there were, I can’t believe anybody wouldn’t use it.

Reducing Delays

One of the other key promises made by the Mayor during the campaign, and a hot topic given recent disruption, was to further reduce delays on the Underground.

Much of the discussion within the Committee meeting on this subject focused on just how practical a goal this actually is. Both Hendy and Dedring acknowledged that the majority of gains possible through making things “a bit faster and a bit better” had now largely been made. Instead, they argued, these savings would have to come through better anticipation (and avoidance) of potential issues and through faster service recovery afterwards. Both acknowledged though that what this meant in practice still needed to be defined.

Hendy also highlighted that entering the current period unburdened by the demands of PPP, with TfL in direct control of contracting and rolling stock, would also be a major help. Indeed his relief at seeing the back of the PPP setup was clearly apparent.

We are – thank God – over the nightmare of the very destructive nature of the PPP. So hopefully the next trains we buy will be neither ones which are so specific, as in the old Underground history, so that nobody else has ever seen anything like them, nor ones that the contractors thought they could give you because they thought it was the right thing to do.

We look enviously, for example, at my colleagues in Paris who have spent the last 50 years deliberately, step by step, improving the design of new trains on a continuous basis rather than reinventing both the train and the way you procure it every time you think you might have one. Which is what we’ve done in the last 20 years.

Lets put it this way. Now in three elections where I’ve been around no candidate has ever submitted their manifesto for approval from us. And sometimes with all the candidates you read it and you think… Wow. Wonder where that came from.

But actually in this case [30% disruption reduction], we agree, we can actually do 30%. We agree that now we’re back in control of the track, and the infrastructure, and the signals, and the trains, that we can do 30%. How we do it has to be worked out.

Crossrail and Crossrail 2

The Committee meeting also touched, briefly, on both Crossrail and Crossrail 2 (the Chelsea – Hackney proposal), on which London First have recently issued a report with backing from TfL. On the subject of Crossrail, it was confirmed that there has so far been no discussion of a station at Old Oak Common. This will not come as a surprise to those who have followed the project closely, but some confusion over the topic has manifested in recent months due to mixed messages on the subject coming from Kensington & Chelsea and thus it is good to have a definitive answer.

We will cover Crossrail 2 specifically (and London First’s report) in greater detail at a later date. Hendy did, however, make a number of comments on Crossrail 2 – particularly its relationship to HS2 – which are worth highlighting here, as TfL seem very keen to ensure that the project features on the Terms of Reference for HS2.

If the High Speed [2] line is built, and in particular if it is built beyond Birmingham, then certainly our very strong view is that you must have Crossrail 2 because otherwise all these people will turn up at this fabulous station at Euston and they’ll all have to walk down Southampton Row. Because they won’t get on the Northern Line or the Victoria Line because they’re both full already. So we believe that a necessary precondition for HS2 – and certainly the second part of it – is that Crossrail 2 gets on the agenda and is built.

It would be not much short of disastrous for the first part of HS2 to be developed without the necessary work at Euston to enable extra capacity at Euston, in due course, to be provided. And that’s the essence of that part of the Mayor’s very strong case [for Crossrail 2]. Which is that you can’t – well you could. You could be utterly myopic – say just “Oh well we’ll do it one day just not now.” But our point, of course, is that if you want to make adequate provision underneath the station, you better do it before you rebuild it – not after you did! Because after you did will be frankly a lot harder and maybe impossible.

We all hope that one of the consequences of the Government promoting HS2 now – providing that it’s successful – is that you can carry on with the accumulated expertise and learning from the workforce and so on from Crossrail without it all dispersing. There is, as you probably realise, a great history in the last 30 years of building up all this expertise then the projects run out and they all go abroad. And then, you know, you’ve got to start again.

I think that one of the things that is not lost – at least on Justine Greening – is the point that actually you do want to carry all this on, because not only does it make it easier to do and cheaper, but actually it saves you a hell of a lot of work in training people again.

Extending Oyster and Franchising

Arguably the most interesting part of the Committee meeting focused on both the issues associated with extending Oyster further outwards on the National Rail network, and on what TfL’s plans were with regards to Franchise reform and tendering.

Both are topics with which we are well acquainted. With the need for a reform of the Franchise process, and the form TfL would likely want that to take, both subjects we have written on before (and to which we will return in the not too distant future). Both subjects – particularly Franchise reform also have extensive cross party support within the Assembly, and seem likely to be battlegrounds between the DfT and TfL over the next five years.

Hendy’s comments in the meeting provided an excellent insight into TfL’s current thinking, and confirmed that there appears to be a growing gap between their position on both subjects and that of the DfT.

On the expansion of Oyster, for example, Hendy expressed disappointment at the DfT’s championing of ITSO over Oyster. The Betamax to Oyster’s VHS, ITSO is the DfT’s prefered standardised method for smartcard travel, but one that, despite many years of gestation, has barely made it beyond the theoretical. In the meantime, TfL’s own (incompatible) Oyster system has effectively become the defacto smartcard standard in the South East.

Reading between the lines in Hendy’s comments (included below) it seemed clear that TfL were less than impressed by the DfT’s decision to block a TfL/FCC proposal to take Oyster out to St Albans last year. That TfL felt that Oyster’s established presence in the marketplace meant it was the superior system in practice (if not in theory) was also clear.

We’ve been pressing the Department of Transport very strongly to allow the Train Operating Companies, and put in the Franchises, the extension of Oyster outside of London. It’s had some mixed results. There is some extension of Oyster outside of London on some Franchises and on others the Department appears to have decided that it doesn’t want to let that happen. It continues to rely on ITSO which is about a twenty year old idea for a common standard.

After being asked whether ITSO was still entirely conceptual, Hendy continued…

There is a bit of a product. Scottish pensioners have it, for example, on buses in Scotland.

We continue to believe that Oyster is a very practical way of paying for journeys in and around a conurbation, and we’re also in discussion with other commercial operators and bus operators outside of London who might want to use Oyster as a means of taking cash off their buses, and in some areas around London where actually some of those holders would actually be our passengers as well. We think that’s quite a practical thing to do, and would actually offset some of the costs of developing the Oyster system.

Suggesting that ITSO is confined to Scottish bus ticketing was perhaps slightly disingenuous, but Hendy’s comments did highlight the growing gap between TfL and the DfT on subject of smartcards. Hendy’s exchange with Richard Tracey on the subject was also simple, but very telling.

RT: It’s a proven product. I can’t believe they’re still clinging to this ITSO idea which has been in gestation for years?!

PH: Yeah. I couldn’t possibly comment.

Devolving Franchises

On the topic of Franchising, both Dedring and Hendy were also relatively candid. Dedring confirmed that TfL would be expressing interest in both the upcoming Anglia and Southeastern Franchises, and hinted at at least one more. She also suggested that TfL’s interest in the Franchises had not been welcomed entirely with open arms by the DfT.

We’re obviously putting in submissions on the broader concept of devolution, but obviously there’s limits to how much impact that can have. So clearly we should continue to make the case in those more general, slightly theological, exercises. But more immediately there are two Franchises that were identified for London specifically. Broadly speaking there’s six Franchises that are potentially relevant to us over the course of the term that are coming up for renewal. Out of those six there’s one that’s a possibility that’s coming later in the term, but there are two Franchises where expressions of interest need to be put in this year…

…For those two Franchises [Anglia and Southeastern] we will be putting in expressions of interest, and arguing that we should have a much greater role in those specific Franchises. I think it’s safe to say that the DfT are not… well… “lukewarm” would be an overstatement of the level of positivity they have about this.

“Is that the politicians or the officials?” Richard Tracey asked, prompting Dedring to indicate that taking the issue up with the Secretary of State for Transport was a Mayoral priority.

It’s hard to tell at the moment. This is one of the things that is on the urgent agenda to discuss with the Secretary of State.

Hendy then seemed to suggest that Thameslink may well be the other Franchise that TfL have an eye, of sorts, on – a proposal that’s not as strange as it might seem when one remembers that Crossrail, a line with a similar geographic spread, will be a TfL Concession.

The revised Thameslink Franchise takes over quite a large tranche of the current Southern Franchise. In that case, that’ll be quite interesting because in the current Southern Franchise we paid a relatively modest amount to have some of the conditions that the Mayor would want to see in future Rail Franchises incorporated within that Franchise in Greater London. So all the stations are staffed in normal hours and the service is better, so there would be a smaller increment to go to turn it into something different.

My belief would be that there would be a very strong case for the Mayor having influence over the Thameslink Franchise, only mitigated by the fact that actually those trains start a very long way away in one direction and go quite a long way away in the other.

Hendy’s own comments on precisely what makes the Overground model a success, and a better fit, for the likes of the Southeastern Franchise are also worth noting here.

The Overground is a fantastic model. I don’t think anybody expected the transformation of the Overground to be half as successful as in fact it’s been. And the reason for that is because we’ve correctly recognised it’s an urban railway serving Greater London in a similar way that the Tube serves it, and that some of the same conditions that you would then apply are the ones which greatly generate income. Like staffed stations. Like a frequent service. Like attractive stations.

One of the main differences is, and having been there and seen it, is that if you work for a major transport group and you take on a franchise which stretches to intercity services into the countryside then the proportion of revenue that is attributable to Plymouth or Exeter compared with West Drayton is so disproportionately great that that’s where you focus all your management interest. And I think if you’d given the Overground Franchise to the same people who ran trains to Norwich then you would have found the same condition. Which is that they wouldn’t have been interested in Hackney Wick. We are interested in Hackney Wick! So that’s the first thing.

And the second thing is that, bearing that in mind, you might as well – or rather you should have an economic model, one in which actually you’re not trying to incentivise the operator to build revenue on an incremental basis. What you’re in fact trying to incentivise them to do is to run a decent service. And the consequent revenue increase, which we’ve seen on the Overground, through that and more staffed stations, and more police and so on, then accrues back to the Mayor. So it’s a virtuous circle.

And that’s the strong argument on this, and anybody who travels on the Southeastern in the inner metro area will attest to the fact that if you could close your eyes and imagine it was run like the Overground then you might get a better service, you might have more customers, you might have more income – but that income ought to accrue to the Mayor to pay for the better service you’re operating.

Cycling and the London Cycle Network (LCN)

Another subject on which both Hendy and Dedring provided some interesting comment was that of the LCN and what the future might bring for regular cycling within the Capital. As Hendy admitted, TfL needed to address the problems of road junctions and apply some learnt lessons.

One of the things we have learnt dealing with cycle super-highways, and that we’re learning doing these 500 junction reviews, is a better way of dealing with some of these difficult junctions. Because clearly some of them weren’t dealt with in LCN terms. Whether at the end of the 500 you complete what the original concept of the LCN was, I can’t answer now – we can answer subsequently. But I think that one of the things we have learnt is that as cycling increases, since people cycle everywhere on all the roads then we better deal with some of these junctions so that actually they’re designed in the best way they can be. The LCN had a rather different concept originally I think.

The path that further development of the LCN should take was a point taken up by Dedring.

I’m sure you’ll find this unsatisfying, but my personal view is that we need to look at the network as it stands today. Look at the volume of cycling we’ve got on the network today, which is totally different from what we had ten years ago, when people conceived of the LCN, whenever that was, broadly on that timescale, and we need to treat those issues as we see them today.

I’m not sure the LCN necessarily helps that. In fact, if you look at the LCN as it was initially constructed, the view, I know the view of a lot of the cycling community now is that ideally you wouldn’t want to have the vast variety of markings and routes. It’s quite confusing for someone coming onto the network for the first time. It’s not as if every time you get to a junction there’s one of three things that’s going to happen. There’s a very wide range of dozens and dozens of different types of intervention strung together. Which was sort of where we were at that time in terms of necessity.

Now is that where we want to be today? If you look at a place like New York, for example, where they’re putting a lot of effort into upgrading their cycling provision, they’re trying to boil it down to “we will make one of three different types of intervention” and that’ll be a lot clearer to anyone using the network – both cyclists but also motorists. You will see one of these three things but not one of twenty four things, where people start to get quite confused about what level of protection they have, what their rights are, what they can expect motorists to do, and all those kinds of things.

So I’m not sure the historical perspective on this is necessarily so helpful in terms of where we are today. We’ve seen a step change in terms of cycling on the roads, we’ve seen a step change in terms of the political focus on this subject – we should take advantage of that! And sometimes looking backwards could potentially, I think, make us lose the momentum. That’s my own view.

Miscellaneous points

Beyond the above, there are a few final points worth highlighting from the Committee meeting. there was a short discussion over the current trials of the New Bus For London, but this did not yield much in the way of information worth repeating here.

There was, however, some discussion as to what “improving traffic flow” meant. As on previous occasions, Dedring stressed that as far as she was concerned, reliability was as important as speed.

One of the things that we focused on over the first term was reliability rather than time to get from A to B. What’s more important to people in all of the surveys I’ve seen and all the people I’ve spoken to – you know, if you just talk to the average person – they want to know that in getting from A to B that they can roughly predict how long its going to take. What isn’t acceptable is that four days out of five it takes me thirty minutes and then the fifth day it takes me fifty minutes so therefore, in going to work every day on the bus, I need to budget fifty minutes because I’m going to be sacked if I’m twenty minutes late one in five times. So that has to be the priority – to make sure it’s operating in a more reliable sense. No different from the Tube network. But then clearly once that box is ticked you want to get everywhere faster.

It is also worth finishing with Hendy’s thoughts on new river crossings. Delivered specifically in relation to a potential new bridge at Vauxhall/Nine Elms, something that was championed by the now defunct Battersea Developer Treasury Holdings, Hendy highlighted something that it is worth bearing in mind whenever crossing sites are proposed:

You do need two ends to a bridge, and the people at both ends have to be enthusiastic about where it lands…