Media Release

PRESS RELEASE: New report calls for radical reform of rail franchises

A new report from the Social Market Foundation (SMF) think-tank calls for radical reforms to Britain’s rail franchises – including far-reaching plans to fine them to the value of all unclaimed compensation payments, a measure which could generate up to £1 billion in fines over the course of a Parliament.

The report is published on the morning at that the new Transport Focus National Rail passenger survey shows that:

  • Almost a third of passengers (31%) are dissatisfied with the value for money offered by rail ticket prices
  • One in five (21%) are unhappy with the amount of room to sit and stand
  • Over a fifth (23%) are unhappy with how train companies deal with delays

The new SMF report, Back On Track: Reforming rail franchising, finds that:

  • Levels of dissatisfaction are unacceptably high on several measures: more than a third of passengers are dissatisfied with ‘the value for money of the price of your ticket’, one in five are unhappy at the amount of room to sit and stand and three in ten are unhappy with how companies deal with delays.
  • ‘Overall satisfaction’ has flat-lined and even dipped in recent years. The same is true for satisfaction with punctuality and reliability.
  • Satisfaction scores vary markedly between Train Operating Companies (TOCs) and some operators are performing far below others.

The report’s co-author SMF research director Nigel Keohane said:

“Despite modest improvement, today’s new rail passenger satisfaction survey results show that almost a third of passengers (31%) are dissatisfied with the value for money offered by rail ticket prices, one in five (21%) are unhappy with the amount of room to sit and stand, and over a fifth (23%) are unhappy with how train companies deal with delays.”

“Radical reforms to rail franchising are needed to ensure that efficiencies are unlocked and so that services are responsive to what passengers want. In particular, operators have too little flexibility and incentive during the life of the contract to encourage necessary quality improvements or cost reductions.”

The new report makes a number of recommendations to improve performance, including:

  • The report recommends that new measures should be introduced to clamp down on delays and on the failure to pay compensation to passengers. It finds that, while the total paid out by TOCs in compensation in 2014/15 was £25m, only one in ten of passengers claim compensation for delayed journeys. These figures suggest that some £1bn of compensation from operators will go unpaid over the course of Parliament.
  • The Department for Transport should develop a single measure of overall satisfaction against which it would score operators. Set this goal, companies would then have the flexibility and incentive to target the aspects of quality or cost of service that affect passenger satisfaction the most. For example, depending on passenger demands, some franchisees could choose prioritising additional services over punctuality (or vice versa), increasing the quality of trains, or improving station facilities.
  • Satisfaction scores would be used to determine rewards and penalties for train providers during the contract, and in particular to determine whether additional flexibility should be awarded to the train operating company.
  • High-performing operators that over-achieved on their targets would be awarded additional flexibility. Additional flexibilities could include the ability to vary fares as long as total fares remained the same; relaxation in specifications on timetabling. To keep these privileges, operators would have to continue to meet stretching satisfaction targets.
  • Poor performing operators would by contrast have to pay penalty charges for low overall satisfaction scores.
  • The House of Commons Transport Select Committee should institute an ‘Annual hearing into rail performance’.  This would be an opportunity to regularly audit whether passenger services have improved over the last twelve months. As a rule, senior representatives from the operators that score worst on overall passenger satisfaction should expect to be called as witnesses.

The report’s co-author Nigel Keohane said:

“Passengers are often unaware of their rights to claim compensation and find the process too onerous, and operators benefit because of this. Instead, operators should be given a strong incentive to compensate delayed passengers by fining them to the value of all unclaimed compensation payments.

“This would encourage them to make the processes simpler and to boost take-up of compensation. The money raised by these fines should be distributed as additional reward payments to the operators that over-achieve on overall satisfaction. 

“Operators should pursue the reimbursement of failed passengers as eagerly as they pursue payment of tickets.”


Notes to editors:

  • The Social Market Foundation is an independent, cross-party think-tank which seeks to marry pro-market solutions with social justice. Our website is
  • A copy of Back On Track: Reforming rail franchising is available here.


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