British rail franchising model is "broken" -UK parliamentary committee

LONDON, April 27 (Reuters) - Britain's model of contracting companies to run rail services is broken and the government should review it before awarding any more franchises, a parliamentary committee said on Friday.

It highlighted recent problems with two franchises - one in London and southeast England, the other linking London and Edinburgh - to illustrate what it called the government's "completely inadequate" management of rail contracts.

"The franchising model is broken and passengers are paying the price," said Meg Hillier, chair of the cross-party Public Accounts Committee (PAC).

"If taxpayers are to have any faith in government's ability to deliver an effective passenger rail network then it must conduct and act on a thorough review before any further franchises are awarded," she added in a statement.

Passenger and freight rail services in Britain were privatised in the 1990s, when routes were grouped into franchises and operators bid to run services for a set number of years. The network infrastructure like track is owned and managed by the government-owned Network Rail.

The Thameslink, Southern and Great Northern franchise, operated by British company Go-Ahead and France's Keolis, was beset with delays, cancellations and strikes in 2016-17, prompting huge criticism from passengers and lawmakers.

On the East Coast line between London and Edinburgh, the government could end up taking over running services from Stagecoach after the UK transport company got its numbers wrong, forcing it to want to pull out early.

That particular franchise has already failed twice, in 2006 and again in 2009, when the government stepped in to run the line.

In a report, the PAC report criticises the Department for Transport (DfT) for being unrealistic on several fronts, awarding contracts to bidders who had over-promised and failing to recognise the impact of complicated rail upgrade projects.

Another problem was the small number of potential bidders for contracts, it added.

The PAC asked the DfT to write to it before it awards any other franchises to explain improvements it has made to its understanding of passenger demand, and to explain how its approach to managing franchises has changed, to reduce the risk of future failures.

The idea that the franchising model is "broken" plays into the hands of the opposition Labour party who have pledged to nationalise industries like rail and water .

"It is now clear that public ownership is the only sensible option for the future of rail," said Andy McDonald, Labour transport spokesman.

Last November, transport minister Chris Grayling proposed a shake-up of the franchise system, saying he was considering making some contracts smaller.

The next rail contract due to be awarded is for the South Eastern franchise, expected later this year. (Reporting by Sarah Young; editing by Stephen Addison)