In the foreword to the White Paper, New Opportunities for the Railways: ‘more competition, greater efficiency and a wider choice of services more closely tailored to what customers want’.
Competition usually either provides an increased customer experience for the same price as before, or provides the same customer experience for a lower price.
All true, but as I wrote the competition was
for the franchises, not
between the franchises after they had been awarded.
Franchise awards were made to the company offering to take on the operation of each TOC's services for the lowest subsidy, while committing themselves to a programme of service enhancements, improved reliability and punctuality performance and investment in trains and stations. Franchises committed themselves to accept a declining level of year-on-year support from OPRAF. Acceptance of this 'subsidy taper' reflects a general trust in the ability of private sector firms to achieve cuts in operating costs as well as to stimulate growth in business - often by unprecedented levels. In some cases, TOCs undertook to move to a reversal of the flow of payment, whereby they paid OPRAF a premium rather than receiving a subsidy.
The Act gave OPRAF the indirect ability to set fares and Salmon (the Franchising Director and head of OPRAF) later recalled:
I presented a package to Mawhinney and I told him if he wanted lower fare rises, count me in, that was great. He went to see Kenneth Clarke (the Chancellor of the Exchequer) and, slightly to the surprise of the Treasury officials, they did a deal, which was RPI for three years and RPI minus 1 per cent for the following four.
So fare levels were held and for a period trailed inflation. Don't forget the first franchising/privatisation model didn't last for more than a year until Labour replaced the Conservatives in government in 1997 at which point the ground rules changed. What we now have is a situation totally unlike that originally conceived.