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DfT: South Western Railway NOT Financially Sustainable

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That is the view, of Transport Secretary Grant Shapps, who has released the following statement this morning:

https://www.gov.uk/government/speeches/rail-update-on-south-western-railway

Under the Railways Act 1993, the Secretary of State for Transport has a legal requirement to ensure services that passengers depend on continue in any circumstance.

South Western Railway’s (SWR’s) recent financial statements have indicated that the franchise is not sustainable in the long term. Poor operational performance, combined with slower revenue growth, has led to the financial performance of SWR to be significantly below expectation since the franchise commenced in August 2017.

SWR have not yet failed to meet their financial commitments and my department will ensure that SWR are held to their financial obligations under the current franchise. However, as a precautionary measure, my department must prepare suitable contingency measures, under the Railways Act 1993. Such options include a new short-term contract with SWR, with tightly defined performance requirements; or transferring the operation to the Operator of Last Resort (OLR), a public sector operator wholly owned by the department. My department has issued a request for proposal to the SWR franchise owners (FirstGroup plc and MTR) and to the OLR, and will evaluate the responses to determine how best to secure the continuation of passenger services on this part of the network.

This will not impact on the railway’s day-to-day operations. The business will continue to operate as usual with no material impact on SWR services or staff.

Parliament will be kept informed of developments.

Across the country a number of franchises are failing to provide the reliable services that passengers require and there are legitimate questions on whether the current franchising model is viable. Keith Williams — who is leading an independent review into the railways — has already stated that franchising cannot continue in its current form. His review will propose sector-wide reforms which aim to put passengers at the heart of the railway.

Modernisation of the railways must come with reciprocal modernisation of the way the railway is operated. Passengers on SWR have already suffered significant disruption from industrial action by the National Union of Rail, Maritime and Transport Workers (RMT), and this week the RMT are balloting for further strikes.

These strikes are not about safety, accessibility or helping passengers. Driver controlled trains are perfectly safe, and have been operated elsewhere on the network for many years. These trains allow the guards to devote much more time to looking after passengers, which is of great benefit to those who need help with travel, like the disabled and the aged. This modernisation is essential if the future needs of this railway are to be met.

Whoever operates SWR services, I will remain committed to modernising services and improving support for passengers.

The railway is a public service. People rely upon it to support their way of life, livelihoods, education and healthcare, and it is why this government has committed to introducing minimum service levels during times of strike action.

 
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DelW

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SWR have not yet failed to meet their financial commitments
They've failed to meet most of their other commitments though. (OK, the Desiro refurbs are finished at last, but around a year late).
I imagine the business driven away by the endless guards strikes is a significant part of the problem, so the RMT may feel they've "won" in possibly breaking another franchise. Long term, it may look different though.
 

Nicholas Lewis

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Its pretty evident OLR cannot handle all the TOCs either failing or in financial distress so this will be driven by political merits ie Northern to OLR and the rest through a multiplicity of direct awards to manage the transition to the new operating model for passenger services. With the concession model surely now seen as the best way forward i would suggest direct awards also allows the DofT, or whoever Williams promotes to administer the process, the base information to go out to the market for suppliers.
 

Monty

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They've failed to meet most of their other commitments though. (OK, the Desiro refurbs are finished at last, but around a year late).
I imagine the business driven away by the endless guards strikes is a significant part of the problem, so the RMT may feel they've "won" in possibly breaking another franchise. Long term, it may look different though.

The strikes are a symptom rather than a direct cause, when you discount them the punctuality is still horrendous. Most of it is because the infrastructure is in a right state, the South Western Division needs billions invested for upgrades and basic maintenance. Scheduling isn't great either, they are trying to squeeze more and more services on a network that just can't handle it. In addition they underestimated the numbers of staff they would need to implement their new timetable as well as the time it takes to train them.
 

Nicholas Lewis

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The strikes are a symptom rather than a direct cause, when you discount them the punctuality is still horrendous. Most of it is because the infrastructure is in a right state, the South Western Division needs billions invested for upgrades and basic maintenance. Scheduling isn't great either, they are trying to squeeze more and more services on a network that just can't handle it. In addition they underestimated the numbers of staff they would need to implement their new timetable as well as the time it takes to train them.
PPM on the floor again today due in part due to failed signalling at Hilsea which is relatively modern!
 

Monty

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PPM on the floor again today due in part due to failed signalling at Hilsea which is relatively modern!

It failed quite badly on Monday evening too causing all kinds of trouble. To my knowledge while the signaling down there isn't ancient it's not exactly cutting edge either. NR is struggling to keep up with all the issues we've been having and it shows.
 

pdeaves

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Its pretty evident OLR cannot handle all the TOCs either failing or in financial distress
That is true. If experienced teams are, apparently, no good at running one TOC there is no way inexperienced teams can handle multiple TOCs and achieve the utopia required of them. I predict a muddled mess as reality dawns and DfT et al try to make inconsistent decisions (required to make 'something' work) look fair and consistent. The trains will still run because those focused on making them run still get on with it despite, rather than because of, the political masters.
 

HH

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That is true. If experienced teams are, apparently, no good at running one TOC there is no way inexperienced teams can handle multiple TOCs and achieve the utopia required of them. I predict a muddled mess as reality dawns and DfT et al try to make inconsistent decisions (required to make 'something' work) look fair and consistent. The trains will still run because those focused on making them run still get on with it despite, rather than because of, the political masters.
The teams running the TOCs would be just as experienced as those running them today; indeed it is likely that some of the same people would be running them. The difference would be that they reported to the OLR rather than the rail board of the owning group. And, of course,the driving force would be good news for the politicos rather than maximising shareholder benefit.
 

thenorthern

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Given how many operators seem to be failing at the moment I think the DfT is making unrealistic expectations of train operating companies and something has to change there.
 

hwl

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Its pretty evident OLR cannot handle all the TOCs either failing or in financial distress so this will be driven by political merits ie Northern to OLR and the rest through a multiplicity of direct awards to manage the transition to the new operating model for passenger services. With the concession model surely now seen as the best way forward i would suggest direct awards also allows the DofT, or whoever Williams promotes to administer the process, the base information to go out to the market for suppliers.
There isn't just one OLR - DfT have many OLR companies set up...
 

HH

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Given how many operators seem to be failing at the moment I think the DfT is making unrealistic expectations of train operating companies and something has to change there.
The DfT has not put a gun to their head and told them to submit unrealistic bids. You could argue that DfT ought to reject those bids, but the problem is that if they do, then they get taken to court!

I do think that DfT is over-specifying and also requiring far too much from the bids, but then not allowing bidders either enough time or enough words to go into depth (this is a big issue - while the requirements have exponentially increased, the length of what can be submitted has shrunk considerably). This makes it very difficult to evaluate the bids and this in turn makes DfT even more nervous of challenging them.
 

HH

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There isn't just one OLR - DfT have many OLR companies set up...
Yes, but having companies set up is not the same as having people to run them. Apart from a core group, these have to be hired as required.
 

hwl

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Yes, but having companies set up is not the same as having people to run them. Apart from a core group, these have to be hired as required.
"Hired as required" - And that is where I suspect there may effectively be some double+ counting /assuming that most franchises can't be in trouble at once going on!
 

HH

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"Hired as required" - And that is where I suspect there may effectively be some double+ counting /assuming that most franchises can't be in trouble at once going on!
DfT will absolutely not have assumed that so many TOCs could be in trouble at once. Of course that causes issues about having the requisite number of suitable, senior OLR staff. Of course, if the department took decisions in a more timely manner, then the issue wouldn't be quite so large - e.g. Northern have been clearly failing for some time, and why did it take so long to cancel the SEF competition? When it cmes to making decisions the DfT's motto appears to be, never do today what you can put off until next quarter.
 

greaterwest

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It failed quite badly on Monday evening too causing all kinds of trouble. To my knowledge while the signaling down there isn't ancient it's not exactly cutting edge either. NR is struggling to keep up with all the issues we've been having and it shows.
Today is the third day in a row the same three signals have failed on the up line at Hilsea, with no resolution in sight.
 

infobleep

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The strikes are a symptom rather than a direct cause, when you discount them the punctuality is still horrendous. Most of it is because the infrastructure is in a right state, the South Western Division needs billions invested for upgrades and basic maintenance. Scheduling isn't great either, they are trying to squeeze more and more services on a network that just can't handle it. In addition they underestimated the numbers of staff they would need to implement their new timetable as well as the time it takes to train them.
The Office of Rail and Road criticised Network Rail for problems in the north. Are those worse than in the SWR region as I'm not aware of them critising Network Rail for this area, unless they already did so previously?
 

Monty

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The Office of Rail and Road criticised Network Rail for problems in the north. Are those worse than in the SWR region as I'm not aware of them critising Network Rail for this area, unless they already did so previously?

I can't comment on the state of the rail network in the North, but what I do know is that it's bad on the SWD.
 

JonathanH

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Scheduling isn't great either, they are trying to squeeze more and more services on a network that just can't handle it.

Yet again, a situation where we are going to have to stifle demand.
 

thenorthern

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What impact will it have on staff?

I would imagine very little, South Western Railway like many other "Essential services" is too big and important to fail, even if the company is taken over by the Department for Transport I can't see any redundancies happening as a result.
 

Dr Hoo

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