1 Our conclusions on whether the Department for Transport (the Department) is managing its rail franchising programme effectively, to drive value for money, were reached following our analysis of evidence collected between June and September 2015.
2 Our audit approach is outlined in Appendix One.
We examined whether the Department had clear objectives for the new rail franchising programme, including a focus on value for money.
• We undertook interviews with stakeholders, including: the Department (staff from the Passenger Services and wider Rail Executive functions); train operating companies and owner groups; Passenger Focus (the passenger representative organisation); the Office of Rail and Road (the regulator), and the Rail Delivery Group (industry body representing train operating companies).
• We reviewed documentary evidence on the objectives for the franchising programme, from the Department and other sources. We also reviewed the recommendations made following the collapse of the InterCity West Coast contract award in 2012, in the Brown and Laidlaw reports and in our own reports. We examined how these recommendations had been addressed in the objectives for the programme.
We examined whether the Department had designed the programme to meet its objectives.
• We discussed the design of the programme with key stakeholders as part of our interviews.
• We reviewed key documents that the Department published on the design of the programme, to assess how the objectives had been translated into the design.
• We reviewed documents on individual franchises, such as the Invitations to Tender for the franchises awarded to date and the franchise contracts, to assess how overall programme objectives were incorporated into the individual franchise agreements.
We examined whether the Department had got the programme on to a stable footing and was managing the programme effectively.
• We discussed stakeholders' experiences of the new programme as part of our interviews with them.
• We used the NAO audit framework on letting and managing complex contracts to help frame our approach.
• We analysed Departmental data on the three franchises let to date (Thameslink, Southern and Great Northern; InterCity East Coast; and Essex Thameside), including the Department's expectations for revenue from these franchises against the agreed levels in the contract.