Uncertainty Following West Coast Partnership Award

The award by the Department for Transport (DfT) of the West Coast Partnership to First Trenitalia has been met with some surprise in the rail industry, in particular around the timing of DfT’s announcement.

Only a week before the West Coast announcement, DfT cancelled the South Eastern franchise process. Pre-qualification documentation for this franchise was published by DfT in February 2017, with the new franchise originally due to commence in December 2018. The current South Eastern franchise had been extended by DfT, prior to the cancellation, through the direct award process.

British Class 390

The new franchise First Trenitalia will take on the rolling stock from the current operator, Virgin

The main concern cited by DfT in relation to the cancellation was that “continuing the competition process would lead to additional costs incurred to the taxpayer, with no certainty that this would deliver envisaged benefits for passengers in a timely fashion”. However, it seems that another reason for the cancellation is to “ensure that the recommendations of the Williams Review can be implemented”.

With these factors in mind, one could have assumed that the West Coast decision would likewise have been postponed until after the Williams Review had been published.

The fact that DfT has chosen not to delay the West Coast competition brings with it several observations, including: first, that DfT is confident the West Coast franchise will align with (or can easily be brought into alignment with) any outputs of the Williams Review, and second, that there is a more important political and/or practical imperative in consideration.

In relation to the first point, the West Coast decision has clearly been made with Keith Williams’ support.

Mr. Williams

“This West Coast Partnership delivers for passengers. It is a step forward that is firmly in line with the review, introducing benefits for passengers today and capable of incorporating the reforms needed for the future.”

 

In relation to the second point, the most likely reason for the West Coast Partnership project not being delayed is perhaps its importance to the HS2 project. It is critical that the operator of the West Coast services is involved in the project as early as possible, to ensure that it is a fully engaged partner from the outset with a genuine ability to participate in service specification and to shape the future of HS2. This announcement may therefore send a positive message about the Government’s intentions for and commitment to the HS2 project.

However, with the current political uncertainty and Prime Minister Boris Johnson’s apparent lack of commitment to the project, this is by no means certain. Mr. Johnson has already ordered a review into the HS2 scheme by HS2’s former chairman, Douglas Oakervee, to be completed by December.

The Government might well be nervous about any further legal challenges in light of historic and ongoing action, including by Stagecoach in relation to its disqualification from the West Coast Partnership competition.

The decision by the Government to proceed with the West Coast Partnership, rather than cancel the competition, as it did with South Eastern, therefore must be indicative of its view that the risk of proceeding outweighs any benefits of cancellation.

In terms of what the new franchise will deliver, the West Coast Partnership announcement shows there is a clear prioritisation of the customer (in line with likely Williams Review recommendations) and a commitment to the green agenda.

However, most of the initiatives referenced in the media are similar to those being introduced in other franchises. On the whole, they also represent only an incremental improvement to what is, relatively speaking, a strong base, or are a necessary consequence of the current technological age and associated customer expectations. As such, whether or not this Partnership will represent a true step change – which is what many are hoping the “root and branch” Williams Review will deliver – remains to be seen.

On the other hand, if the recommendations of the Williams Review are evolutionary rather than revolutionary, then maybe the West Coast Partnership agreement in its current form will already align with the next developments in rail franchising.

One thing is for certain, and that is that under the current political climate, nothing is certain.

By Sarah Keir, Lawyer, Regulatory, Fieldfisher

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