Rail Franchising

Lord McLoughlin Excerpts

Thursday 20th December 2012 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

I would today like to give an update on the situation in relation to franchised train operator London Midland (LM).

Passengers who use LM trains may be aware that the operator has been experiencing difficulties recently, with a number of services being cancelled due to a shortage of driving staff

This situation has caused inconvenience and disruption, particularly to passengers in the west midlands, many of whom have expressed their dissatisfaction to me. I very much share their disappointment that they have not had the reliable service that they rightly expect.

However, although the recent levels of performance have been extremely disappointing, I am pleased to say that the measures that LM have put in place are beginning to work.

LM has implemented increases to driver efficiency to enable drivers to operate an increased number of routes during existing shifts, improved driver training processes, provided additional incentives for drivers to work overtime and put in place new measures that allow for drivers to cover shifts on other parts of the network where there are shortages.

This is in addition to the ongoing training programme that LM is undertaking to ensure that new drivers enter productive service as quickly as possible.

However, LM’s performance has been of such a level that they are now in breach of their contractual obligations. We have made London Midland aware that they must now take action to compensate passengers for the disruption caused. We have, therefore, agreed with LM that they will provide a substantial package of passenger benefits by way of compensation for the inconvenience that has been caused.

LM has agreed to spend an additional £4 million over the remainder of the franchise to put in place measures to ensure that these problems do not happen again. In addition, the package of passenger benefits includes the issue of five free rail day passes to London Midland season ticket holders, with an expected value of up to £3.5 million. We have also agreed that London Midland will invest a further £2.25 million in infrastructure improvement projects. We have required London Midland to discuss with Centro, the west midlands passenger transport executive, how the majority of this money will be invested for the benefit of those passengers who have experienced the worst disruption.

As a result of this consultation, LM has agreed that most of this money should be directed towards measures such as improvements to safety and security at stations and improving the reliability and efficiency of LM trains.

Lastly, we have also agreed with LM that they must make available an additional 500,000 advance tickets on key routes on the LM network, giving a net benefit of around £1.9 million to passengers who will be able to take advantage of these cheaper fares over the next two years of the franchise.

I hope that LM will be able to remain the operator of this franchise for the remainder of its contract—to September 2015. But London Midland will continue to work to challenging performance benchmarks for the remainder of the franchise, and we will take further action (including ending the franchise early and re-tendering it, if appropriate) in the event of any recurrence of performance problems.

In addition to the package of passenger benefits, we have agreed to revise the profile of performance benchmarks for the next year, to include additional measures that can penalise LM financially in the event of further poor performance. We have also agreed financial measures to ensure that the reduction in revenue as a result of the free and discounted tickets is borne by LM, and not by the taxpayer.

I am confident that this package, on balance, represents a good deal for passengers and taxpayers, and sends a message to the industry that this level of cancellations is unsatisfactory. I hope that LM can now put this period behind it, and continue to operate a good service for its passengers for the remainder of its franchise.