Issues

Each year the rail industry pays over £1 billion to rolling stock operating companies (ROSCOs) to lease trains and carriages. The Department for Transport feels that there is a lack of effective competition within this market and is not satisfied that the prices are fair and competitive. It has asked the Office of Rail Regulation (ORR) to conduct a formal investigation (under section 131 of the Enterprise Act 2002).

Passenger Focus submitted evidence to the ORR on this subject. We believe the issue is of great relevance to passengers. Higher than necessary lease charges, for instance, reduce the amount of money available for investment elsewhere and will ultimately be passed back to passengers in the form of higher fares. Yet we know through research and through the National Passenger Survey that passengers already feel that they do not receive value for money. Failure in the rolling stock market also contributes to overcrowding – either as a consequence of additional stock simply not being available or through the prohibitive cost of leasing it.

On Thursday 26 April, the ORR announced that it had decided to refer the leasing of trains used for franchised passenger services to the Competition Commission. Passenger Focus welcomed this decision and hopes that the Competition Commission can resolve the issue as speedily as possible in order to remove the uncertainty for passengers.

The ORR’s consultation document of passenger rolling stock leasing markets is available to download from the ORR website and Passenger Focus’ response to this is available to download.

The Competition Commission has now begun its investigation. In early May Passenger Focus submitted copies of its earlier responses to the ORR’s inquiry.