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London Overground: Why doesn't franchising affect Tfl Overground?

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Jorge Da Silva

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Why doesn't franchising effect London Overground? I am just wondering.

It is a concession by Transport for London. In otherwords TfL will let (as they did in 2007 and again in 2016) the concession as the DfT would do with a franchise. They then pick a winner BUT the parent company (currently Arriva) would be paid a fee to operate the service but all the risks, profits and specifications go to TfL. So it is let out but the brand does not change and all decisions are made by TfL.
 

Jack Wicket

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It is a concession by Transport for London. In otherwords TfL will let (as they did in 2007 and again in 2016) the concession as the DfT would do with a franchise. They then pick a winner BUT the parent company (currently Arriva) would be paid a fee to operate the service but all the risks, profits and specifications go to TfL. So it is let out but the brand does not change and all decisions are made by TfL.

Ok, thank you
 

DerekC

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Wikpedia has a good article on the development of London Overground. It was created in 2007 and initially took over the franchised Silverlink Metro services, expanding later to include East London Line when that was reopened after conversion from a London Underground line and then the South London services.
 

Jack Wicket

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Wikpedia has a good article on the development of London Overground. It was created in 2007 and initially took over the franchised Silverlink Metro services, expanding later to include East London Line when that was reopened after conversion from a London Underground line and then the South London services.
Yes, I am just very confused as franchising doesn't effect TfL and I think it is a bit unfair.
 
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swt_passenger

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Yes, I am just very confused as franchising doesn't effect TfL and I think it is a bit corrupt.
The concession operator contract is still competitively tendered periodically, I don’t see any evidence whatsoever that it isn’t all above board.
 

matt_world2004

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Yes, I am just very confused as franchising doesn't effect TfL and I think it is a bit corrupt.
Because the London Assembly franchises London Overground or lets it as a concession, not the DFT. The franchising process is let by the GLA who award the contracting process to TfL who awards it as a concession.
 

Brissle Girl

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Yes, I am just very confused as franchising doesn't effect TfL and I think it is a bit corrupt.
If you’re confused it means you don’t understand it. So how you can describe something as corrupt when you’ve admitted you don’t understand it I don’t know. As otherwise noted, there’s absolutely no evidence of corruption.
 

Chester1

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Merseyrail have operated as a concession for longer. It should be considered for local and regional operators like Northern
 

Jack Wicket

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If you’re confused it means you don’t understand it. So how you can describe something as corrupt when you’ve admitted you don’t understand it I don’t know. As otherwise noted, there’s absolutely no evidence of corruption.
Sorry, my bad.

For everyone wondering, I used the word 'corrupt' in the wrong way. I apologise about this.
 

samuelmorris

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GTR operates in a similar manner, does it not? The whole TSGN operation was a management contract, rather than a traditional franchise, hence GTR being basically immune to the problems the Southern strike action and the Thameslink programme issues caused.
 

hwl

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Sorry, my bad.
The LO concession model is very similar to the way TfL run the bus concessions, except that with the buses just a small number of routes are included in a group for tendering rather than everything as with LO. ( the actual buses are operated by abellio, arriva, go-ahead, first, stagecoach, Comfort Delgro, ratp and others)

The original LO concessions were operated by MTR who are regarded as doing it better than Arriva currently are. But arriva's bid this time round was more competitive.

The LO concession arrangement is actually copied from the Croydon trams concession model with First being the current operators.
 

LNW-GW Joint

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Yes, I am just very confused as franchising doesn't effect TfL and I think it is a bit unfair.

The Crossrail service is also contracted in the same way as LO (to MTR as TfL Rail currently, until the central section opens).
The concessions will both be re-let competitively in the 2020s, and so will Merseyrail (currently operated by Serco/Abellio).

Devolution will probably lead to more of these local types of "franchise".
Wales & Borders is not quite a normal franchise either, and procurement was by the Welsh Government, not DfT.
 

Harpers Tate

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It is a model that, should "they" so choose, could be applied to other parts of/all the network. Service patterns, fares, offers, fleet, all specified, but the day-to-day operation provided by a tendering 3rd party. Integrated, "national" but not nationalised.
 

DynamicSpirit

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It is a model that, should "they" so choose, could be applied to other parts of/all the network. Service patterns, fares, offers, fleet, all specified, but the day-to-day operation provided by a tendering 3rd party. Integrated, "national" but not nationalised.

Is there any point in it though? It seems to me that the (hopeful) benefit of letting private companies run things is that it allows those companies to innovate, so they can find better/more efficient ways to run the services, or take the initiative in providing service improvements. But if you've basically told the private company when to run what trains, what to charge, what tickets to accept, etc. the scope for the company to innovate must be virtually zero. Maybe they can play about a bit with staff rosters, but that's about it. There doesn't seem to be any significant benefit over just nationalising completely, and doing away with the need to negotiate contracts etc.
 

thedbdiboy

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Is there any point in it though? It seems to me that the (hopeful) benefit of letting private companies run things is that it allows those companies to innovate, so they can find better/more efficient ways to run the services, or take the initiative in providing service improvements. But if you've basically told the private company when to run what trains, what to charge, what tickets to accept, etc. the scope for the company to innovate must be virtually zero. Maybe they can play about a bit with staff rosters, but that's about it. There doesn't seem to be any significant benefit over just nationalising completely, and doing away with the need to negotiate contracts etc.
That's why there is a review of the whole national rail/network rail structure taking place right now. It's come a very long way from the original rather ideological structure which was based on a private infrastructure manager (Railtrack) selling train paths to train operators with a core minimum public service requirement catered for by franchises let by a separate franchising authority, and everything overseen by an independent regulator (ORR). Now, Network Rail (Railtrack's successor) is fully nationalised, there are a couple of open access operators running a handful of services but 'franchises' are let directly by government to cover pretty much 100% of the scheduled passenger service and everything is micro-specified by civil servants in the DfT, but funnelled through all these different processes leaving unclear lines of sight over who is in charge and what their priorities should be.
 

edwin_m

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It's interesting to note that the terms "franchise" and "concession" are almost swapped over in meaning on the railway compared with anywhere else.

If you look at the likes of McDonalds (an example from many) the franchise operator signs up to product, standards, prices and branding all of which are specified by McDonalds themselves. To a customer it's just a McDonalds except that there's probably a small sign somewhere naming the actual operator. This is much more like the TfL/Merseyrail/etc concession model with the exception that the McDonalds franchisee, like a rail franchise but not like a rail concession, takes the risk on number of customers and revenue and will go out of business voluntarily or via administration if the numbers don't add up.

A concession in general business agrees with a landlord or state body to perform a particular activity and some degree of protection from competition, such as the exclusive right to propsect for oil on a particular piece of land or run a bookshop within a station. But the details of how they do so are largely down to the concession holder.
 

theking

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The only reason mtr ran it better is because it was brand new and tfl kept chucking money at it.

Tfl are skint and their new baby is crossrail.

Wait a few years and crossrail will be the same.

Arriva have very little scope to change anything. Everything is decided by TFL and the maintenance is a bombardier contract.
 

Alfie1014

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One of the fundamental differences between a franchise and a concession is the former takes revenue risk whereas the latter does not.
 

thedbdiboy

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One of the fundamental differences between a franchise and a concession is the former takes revenue risk whereas the latter does not.
GTR is a non-revenue risk franchise. The term 'franchise' just about fitted the original contracts from the 1990s but isn't really the appropriate term for the contracts the DfT lets these days (or fails to, as the case may be....). 'Concession' really refers to the fact that under the Railways Act 1993 another authority has been granted the right to let the service. The actual arrangement that TfL enters into in respect of its concessions is....a contract!
 
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Is there any point in it though? It seems to me that the (hopeful) benefit of letting private companies run things is that it allows those companies to innovate, so they can find better/more efficient ways to run the services, or take the initiative in providing service improvements. But if you've basically told the private company when to run what trains, what to charge, what tickets to accept, etc. the scope for the company to innovate must be virtually zero. Maybe they can play about a bit with staff rosters, but that's about it. There doesn't seem to be any significant benefit over just nationalising completely, and doing away with the need to negotiate contracts etc.

This actually seems much more sane to me than the national franchising model – providing a defined service (running x number of train services) in exchange for a defined amount of money, with contractural agreements on the obligations of both parties. Companies are free to run those contracted services as appropriate – managing staff, contracts, IT, administration, management and so on as any other company would, and bringing in policies to make them work well and efficiently in order to make a better profit on the service they are providing.

Personally at least, I tend to be minimally interested in innovation in rail services. I kind of want trains to turn up on schedule and arrive at where they are supposed to be with reasonable levels of accuracy, speed and comfort. It makes far more sense to me for contracted-out services to be run in this way – soliciting bidders who can provide a defined service over a period of time in exchange for some sum of money, with reasonable contractural obligations associated with them. Like, it seems a bit batty to have 20 different operators running mostly-but-not-really independent ticketing systems, mobile apps, smart card systems and so on, especially when the customer environment is so heavily regulated anyway. You might as well go all the way, and run properly integrated national systems for core technology, with particular routes or regions operated by concession – instead of all these mad franchising payments.

(My personal conspiracy theory is that the main drive for franchising in government comes from the observation that it deflects public criticism of rail services away from government and on to a private entity. It's hard to blame government for bad services if there are massive VIRGIN adverts all around.)
 

DimTim

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The concession model in effect looks for the bidder with the lowest tender to provide the required service whereas the franchise model is looking for the highest return for the DfT. One drives up prices the other looks to keep costs down.
 
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