Rail operators must pay for new carriages - report

LONDON (Reuters) - Rail operators will have to rely less on subsidies to increase train capacity and the transport department should require new operators to provide enough carriages for passengers, a report by legislators said on Tuesday.

The Committee for Public Accounts said operators were relying too heavily on government subsidies but with public spending cuts they had to become more efficient.

“At present there is no incentive for the rail industry to supply extra capacity without additional public subsidy,” committee Chairwoman Margaret Hodge said.

“The Department (of Transport) should for future franchises require operators to take measures themselves to avoid overcrowding and to meet the costs of doing so.”

Only one of the 15 rail franchises in England is currently required to meet passenger demand without excessive overcrowding, so taxpayers usually have to pay for extra carriages, the report said.

Arriva, Virgin Rail -- 49 percent owned by Stagecoach -- National Express, Firstgroup Plc and Go-Ahead Group operate on the rail network.

Transport Secretary Philip Hammond said in response to the report there were poor incentives to control costs across the industry.

He said his department was working on reducing costs, citing a study expected to be submitted in March 2011 by former chairman of the Civil Aviation Authority Roy McNulty of rail industry costs, along with a review of rail franchising by the transport department.

However, Hammond said the department would still have to ask passengers to pay more to help pay for any increase in train capacity.

“We have taken the tough decision to continue investing in the capacity of our railways to improve passenger experience, but have had to ask passengers to accept a higher level of rail fare increases in 2012 to 2015 to support this investment. That decision means we will be able to unveil details of our plans to reduce overcrowding in the coming weeks,” Hammond said.

The transport department is carrying out a five-year, 9 billion pound programme to improve rail travel, including increasing the number of places on trains, sitting or comfortably standing, by March 2014.

However, the Committee of Public Accounts said the department’s planned rise in train places would fall short of the number needed to limit overcrowding even to current levels.

It said that by 2014 morning peak trains in London would have 15 percent too few places, with places on services to other large cities falling short by 33 percent.

Editing by David Holmes