18 January 2018
On Tuesday 23rd January the Cabinet Secretary for Economy and Transport, Ken Skates, will make a statement on Transport for Wales. Although the content of the statement is unknown, the final tender process for procurement of the next rail franchise and Metro operator closed on the 21st December 2017, with tenders currently being assessed by the Welsh Government and Transport for Wales. Also, the Welsh Government is currently considering how the organisation’s role might develop in future.
The role of Transport for Wales to date
While rail franchise procurement is not currently devolved, the Welsh and UK Governments reached agreement on the devolution of executive powers to procure the next Welsh rail franchise in November 2014 (devolution is expected to take place in 2018).
Subsequently, in 2015, the Welsh Government established Transport for Wales (TfW) as a not-for-profit company wholly owned by the Welsh Government. The current Welsh rail franchise expires in October 2018 and TfW is currently undertaking the procurement process for the next franchise and Metro on the Welsh Government’s behalf.
TfW is working to procure what is being described as an Operator and Development Partner (or “ODP”). The ODP is expected to operate rail services across Wales, and also to develop plans for, and subsequently implement and operate, electrified Metro services on what are now being called the Core Valleys Lines.
The Welsh Government held a public consultation, Setting the Direction for Wales and the Borders Rail, between January and March 2016. Following this, the procurement was announced in the Official Journal of the European Union on 19 July 2016. Four “pre-qualified bidders” were announced in October 2016. The bidders were provided with the Welsh Government’s priorities for the franchise (PDF 190KB) at the start of the process, which then moved to a “competitive dialogue” phase. A further consultation, this time led by TfW, was opened in February 2017 to inform development of the tender specification.
For more information on this innovative procurement process, including the competitive dialogue process, you might want to read our blog, “What does the Welsh Government have in store for Welsh rail services?”
Organisation/Governance of TfW
TfW’s “core objectives, outputs, activities and resources” for the current year are set out in its 2017/18 business plan, which is accompanied by a remit letter from the then Cabinet Secretary for Economy and Infrastructure (now Economy and Transport).
At time of writing the business plan and remit letter are unpublished but are available to Assembly Members from the Research Service on request.
The remit letter describes the governance arrangements for TfW:
“The contract between…[TfW] and the Welsh Government is composed of the Agreed Articles of Association and the approved Management Agreement, together with this remit letter and the associated Business Plan prepared by the Company and approved by the Welsh Government.
This remit letter sets out the operational remit for the Company for 2017/18 and the level of funding available for the year from the Welsh Government to support achievement of that remit. The letter also sets out the business planning and reporting requirements that the Company should fulfil”.
The business plan sets out the organisation’s statement of purpose:
“We are Welsh Government’s not for-profit adviser on the delivery of a ‘transformational integrated transport system, providing high-quality, safe, affordable, accessible and sustainable transport that the people of Wales are proud of”.
This is in line with, and supportive of, the Welsh Government’s vison for delivering a transformational integrated transport system for Wales, providing high quality, safe, affordable, accessible and sustainable transport for all.
TfW’s key objectives for 2017/18 are aligned with the Welsh Government’s Programme for Government, Taking Wales Forward 2016-2021 (PDF 117KB), to ‘build a united, connected and sustainable Wales’. Section 3.2 of the Business Plan sets out how TfW will support and promote the “14 objectives of the Wellbeing of Future Generations Act” – presumably referring to the Welsh Government’s initial 14 well-being objectives, subsequently revised to 12 objectives.
The Assembly’s Economy, Infrastructure and Skills Committee undertook an inquiry into the Welsh Government’s plans for the next Wales and Borders Rail Franchise, and the next stage in development of the South Wales Metro.
The Committee questioned the governance arrangements for TfW, with Railfuture Cymru highlighting the risk that TfW will have “indistinct links with government, local authorities and local communities as it has no clear democratic accountability” However the published inquiry report ‘On the right track? The Rail Franchise and South Wales Metro’ (PDF 1 MB), in June 2017, made the following conclusion:
“While the governance arrangements for TfW are unusual, the Committee consider them to have been appropriate to this stage of the organisation’s development where it is effectively an advisory body. However, they will not be suitable in the longer term”.
The inquiry also highlighted concerns around TfW’s skills and capacity to undertake the innovative procurement process. However, the Cabinet Secretary told the Committee that TfW is designed to be an agile and flexible resource, developing skills and capabilities as it grows. The 2017/18 business plan requires the development of temporary and longer term organisational structures alongside the structure that is already in place in TfW.
The future role and development of TfW
As procurement of the ODP progresses, TfW’s website indicates that work is now underway to procure an Infrastructure Delivery Partner (IDP):
Transport for Wales is developing a framework of suppliers to work with us not only to improve transport connectivity but also to provide wider benefits for Welsh communities. Our desire is to develop a long-term plan that’s focused on sustainable transport infrastructure enhancements right across the length and breadth of Wales, beginning with the South Wales Metro.
With a longer-term pipeline, suppliers will be able to plan more effectively. This gives them the best opportunity to exceed the sustainability targets set by us, including carbon reduction, training and skills development, shared apprenticeship schemes, SME development and other community benefits.
The future role of TfW in the management of the rail franchise is also yet to be confirmed. In an October 2016 article in the Western Mail the then Cabinet Secretary for Economy and Infrastructure outlined a potentially enhanced role for TfW in franchise management of the franchise,
Further, he has said previously, for example in Plenary on 18 July 2017, that his long-term ambition is that TfW will develop on a model similar to Transport for London.
Transport for London (TfL) is a statutory body with a general duty to develop and apply transport policies, from and within London. Currently, TfW acts in a professional advisory and consultancy capacity, with no ability to initiate or engage with policy work (see Business Plan, section 5.2).
Article by Lorna Scurlock, National Assembly for Wales Research Service