rail network
Passenger trains operated by Southern sit at Selhurst train depots (file picture).Reuters

Britain's rail franchising system has "serious deficiencies" and is failing its passengers, MPs have warned.

In a critical report, the Commons Transport Select Committee said there was not enough competition among train operating companies (TOCs) and, as such, there is no incentive to invest in services they provide.

As a result, the report said, rail passengers are faced with higher costs and poorer services.

The committee's chair Louise Ellman, Labour MP for Liverpool, Riverside, said: "The premise behind franchising was that competition would increase efficiency, reduce the taxpayer subsidy, lower fares and improve services.

"While franchising has facilitated passenger growth and service improvements, it is clear that it has not yielded all the competitive benefits initially envisaged by the government in the early 1990s.

"Many metrics of performance are plateauing and the passenger is not receiving value for money."

The report stated that part of the problem was a lack of coordination between Network Rail, which owns and manages the rail infrastructure, and the TOCs.

"It is clear that that the relationship between Network Rail and operators is not as coordinated as it should be," Ellman added. "This is at the detriment of the passenger through higher fares and continued network underperformance."

The report stated it is down to the Department of Transport (DoT) to manage the contracts of TOCs and concluded the review process of those contracts was not good enough.

As a result, it was recommended that an independent review was carried out into the DoT's capabilities.

Ellman said: "Despite the recent efforts of the DoT to improve its franchising operations, there is extensive evidence pointing to serious deficiencies in its franchising capability and capacity.

"We are of the view that the DoT's progress since 2012 is insufficient to warrant proceeding with the current structures and personnel in place."

An earlier version of the report labelled the DoT as "not fit for purpose" but this appears to have been removed.

Chris Grayling, minister for transport, acknowledged the committee's findings and said it was down to the system "bursting at the seams".

Appearing on the BBC's The Andrew Marr Show on Sunday (5 February), Grayling said: "The number of passengers has doubled, trains are full [and] we've crammed as many trains as we can on as many lines. That's the big challenge we've got to address.

"Now, actually, I agree with a lot of what's in the report… it's made a series of sensible recommendations as about how to improve things, many of which I'm already doing."