PPIW Report Publication: Not-for-Dividend Rail Service Provision

The Welsh Government is in the process of procuring the next Wales and Borders rail franchise ahead of the end of the current franchise (2018) held by Arriva Trains Wales. It has a long-standing aspiration to create a service run on a not-for-dividend basis. Underlying this is a desire to increase value for money and limit the potential for ‘excessive’ profit making.

The former Minister for Economy, Science and Transport asked PPIW to provide advice on the future design of the Wales and Border franchise and, in particular, how the franchise could be designed to deliver not-for-dividend (NFD) passenger rail services. The PPIW brought together a group of experts to explore this.

The current powers available to Welsh Government, and the legal framework around franchising, make delivering a NFD service challenging.

The workshop explored options for stimulating the emergence of a suitable NFD organisation, although the group was divided about their potential.

Participants also discussed alternative franchising agreements, such as ScotRail, which seek to improve the quality of services, ensure value for money and limit private sector ‘rents’ through better contract design and more sophisticated monitoring arrangements. However, such an approach is unlikely to achieve the Welsh Government’s aims as fully as a NFD model

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