1. The year 2014 is a milestone in the evolution of our railways, with both the contract for rail passenger services and the financial arrangements for Network Rail due for renewal. We are therefore considering how our railway and services should develop to meet the needs of passengers, so that we can put appropriate contracts and funding arrangements in place from 2014. This consultation is a crucial part of this consideration, and this document outlines the key facts about the railway today and sets out the questions and options which we have to address.
Setting the scene
2. In Section 1 we provide details of the Scottish rail network today, who is involved, how it is structured, and how much it costs. The Scottish rail network is extensive and diverse with around 2,800 kilometres of track, a quarter of which is electrified, and 350 stations. It is a mixed-use railway with both rail passenger and freight services. There are around 78 million passenger journeys a year on ScotRail services, with a further 6 million passenger journeys across the border to and from England. Demand for ScotRail passenger services has increased by 25.5% over the last 7 years and this demand is expected to continue to grow.
3. The Scottish Ministers specify and contract for ScotRail passenger services and fund the maintenance, renewal and investment activities delivered by Network Rail within Scotland. Recent additional investment to improve Scotland's rail services, along with rising costs in the rail industry, has increased the cost to the Scottish Government to over £700m in 2011/12.
4. Section 2 provides an overview of transport policy and how the rail industry is changing. Transport is key to the Scottish Government's Purpose of increasing sustainable economic growth and is an essential part of our Government Economic Strategy (GES). Our policy has been to further the aims as set out in Scotland's Railways.
5. Recent structural developments including Network Rail's decentralisation of activities to Scotland will need to be taken into account as we work out our future rail strategy for Scotland. We see a need for greater integration of the rail industry so that it improves its focus on delivering customer-outcomes at a lower subsidy cost.
6. Our ambitions are for a passenger-centric, cost-efficient, and significantly, better integrated railway. Our challenge will be to ensure that these key priorities can be balanced with enabling more people and freight to use the rail network, and encouraging more freight to be carried by rail, whilst making rail operations more cost-efficient.
Procuring rail passenger services
7. In Section 3 we consider the options around contracting for rail passenger services. We have concluded that at the current time we are limited to using the franchising mechanism, however we have flexibility over the model or form the franchise should take. We are considering a range of options including separate franchises for sleeper services and other elements of the network such as inter-urban lines, for example the main Edinburgh - Glasgow line. We are also looking at the option of having a single franchise for the whole network but operating under a dual-focus arrangement, with clearly defined economic and social routes.
8. This Section raises issues which influence the length of contracts such as industry investment, the efficiency challenge, future organisational and operational restructuring and possible constitutional change. The merits of providing opportunities for third parties to promote enhanced rail services and facilities are also discussed.
9. Once we have concluded our policy considerations we will be drawing up our High Level Output Specification for Network Rail and the specification for the next franchise contract. As part of that work there are a number of contractual issues that we will need to address and on which we would welcome views, including the amount of flexibility we give operators, how to assign risk, what incentives should be included, and issues around performance bonds and guarantees. It is our intention to adopt a more outcome-based approach to the franchise.
Achieving reliability, performance and service quality
10. In Section 4 we address one of the top priorities for passengers: that rail passenger services are reliable and punctual, in other words that they actually run and they operate to the published timetable. Reliability and punctuality require coordination across the rail industry. We are currently considering how to simplify the performance regime in Scotland and how to make it relate more to the actual impact on passengers, and to reflect the consequent economic and social cost of train delays. The issues we are looking at include: how to define whether a train is late; whether performance should be measured by individual route; how to reflect passengers interests, and what should be the relative priority of journey times and reliability.
11. This Section also discusses the appropriateness of continuing the Service Quality Incentive Regime (SQUIRE) which assesses station and train quality.
Scottish train services, fares and stations
12. In Section 5 we discuss the delivery of rail passenger services that are wholly within Scotland and are operated by ScotRail. We are considering how to address capacity issues within the urban areas and are particularly looking at how to encourage better use of the network in the off-peak periods and, more generally, on rural lines. We are also considering what criteria should be used to determine what rail services are required for the future franchise, and how to specify the services that need to be subsidised. We also raise the issue of increasing flexibility through greater use of interchange stations. Across Scotland we want to maximise growth and expansion on the routes where revenue generation potential is highest. We also want to continue to encourage modal shift in those parts of Scotland where the revenue on the routes does not cover costs, but where there are wider policy aims to be met.
13. Fares are a key lever which can help encourage modal shift to rail, but fares policy also needs to be considered in terms of ensuring the rail network remains financially sustainable for the Scottish Government. Currently, ScotRail passenger revenue meets only about one quarter of the total costs for the provision of ScotRail services on the Scottish network. In Section 6 we consider issues that need to be taken into account when developing the rail fares policy within Scotland, including regulated fares, capacity, season tickets and smart ticketing. We are considering what the appropriate balance should be between taxpayer subsidy and passenger revenue in funding rail operating costs.
14. A relatively high number of our stations currently serve less than 20 passengers per week. There are also a significant number of stations which are less than one mile from another rail station offering similar services. In Section 7 we discuss the issues surrounding the location of stations, the management of stations and the facilities that passengers require at stations. We do not intend to reduce the number of stations on the network. We are however considering the possibility of attuning the number and location of stations to provide improved services for Scotland. We are also considering whether we should enable proposals for new stations where they are to be both funded and operated by third parties.
15. In Section 8 we discuss how we might wish to re-configure the operation of cross-border rail services when they are in Scotland. Cross-border rail services, those which run between Scotland and England, are provided by train companies operating under franchises let by the UK Government through the Department for Transport (DfT).
16. While Glasgow Central and Edinburgh Waverley act as terminus stations for Virgin and First Transpennine services, a number of cross-border services operate beyond Edinburgh Waverley to stations in Scotland. Analysis of passenger numbers has shown, however, that the service capacity beyond Glasgow and Edinburgh on these cross-border trains is frequently underutilised. We are therefore considering whether services north of Edinburgh should be provided by the Scottish franchisee, with Edinburgh becoming an interchange hub for cross-border services in the east of the country in much the same way that Glasgow acts as a cross-border hub for the west of the country. Onward connectivity will be crucial to the success of the hub scenario and we would look for increased service frequency and journey opportunities, so that the maximum value could be obtained from this arrangement.
17. The current rolling stock fleet for ScotRail consists of 142 electric units (EMUs) and 155 diesel units (DMUs). Leasing the rolling stock cost ScotRail £86 million in 2010-11. In Section 9 we look at the issues surrounding the leasing, renewing, and purchasing of trains. A large proportion of the diesel fleet is expected to reach its withdrawal date between 2018 and 2020 and will need to be re-engineered, refurbished or replaced.
Passengers - comfort, security, information
18. Passengers will be at the heart of our considerations, and we need to continue to strive to provide a high quality passenger experience. We are already working with the rail industry to improve mobile communications, including Wi-Fi type services. A variety of passenger issues are discussed in Section 10 including on-train staff, travel information, passenger security, Wi-Fi and first-class services.
19. There are currently two rail sleeper services operating between Scotland and London. We are considering, in Section 11, a number of options for the future provision of sleeper services, for instance: removing or increasing financial support; and reducing the provision, either through removing the Highland or Lowland service, or by running the Lowland services to and from Edinburgh only.
20. Rail travel is considered as one of the greener forms of travel, and an integral component of Scotland's transport system. The transition to a low carbon economy is central to the Government Economic Strategy and we, and the rail industry, recognise that there are still many ways that rail can reduce its environmental impact. In the Section 12 we provide an overview of the environmental issues which will underpin our considerations on the future of rail passenger services.
The consultation process
21. The closing date for this consultation is 20 February 2012.
22. The outcomes of this consultation will be published later in 2012.