What Counts is What Works? New Labour and Rail Franchising

The article examines the labor and rail franchising policy of the British Labor Government. In opposition, the Labor Party initially opposed rail privatization on principle. By 1997, however, its approach was that privatization could be made to work given stronger regulation and an element of strategic leadership. The Strategic Rail Authority (SRA) was created to provide strategic direction for the rail industry and, after its absorption of the Office of Passenger Rail Franchising in 1999, it also became responsible for the regulation of the 25 Train Operating Companies. Government efforts to improve rail performance through the franchising system have proved to be problematic. The reasons for this include a complex but ineffective system of incentives and fines, the poor performance of the infrastructure authority and difficulties in bringing new rolling stock into service. Given these problems, the ultimate regulatory sanction is to terminate a poorly-performing train operating companies' franchise. This has happened once so far, when in 2003 Connex South East's franchise was removed and passed to a new public sector company, South Eastern Trains, a subsidiary of the SRA. The performance of South Eastern Trains has improved for four successive quarters. Despite the substantial improvements made by the public sector company, in January 2005 the SRA issued invitations to tender for the new Integrated Kent franchise covering services from Kent and East Sussex. There are several grounds for keeping South Eastern Trains within the public sector. The company has succeeded in improving performance, and so has complied with the what works principle. Another argument for maintaining at least one franchise in the public sector is that it could provide the basis for a gradual integration of the rail network