Presenting a consultation document, John MacGregor, the Secretary of State for Transport, said competition was the best guarantee on fares: 'We will end the political constraint on fares.' This would open the way to price wars if operators were competing on the same lines but he emphasised that private operators who had a monopoly would be subject to control by the new regulator.
On loss-making lines, operators would receive a subsidy, whereas on profitable routes they would have to pay a premium.
The Government has accepted that there is 'unlikely' to be any competition on BR lines which are loss-making since the available subsidy will be paid to only one operator. In other words, most lines will still be regulated.
While the franchise contracts will set out a series of obligations for the operators on frequencies of train and type of service, the franchisee will be able to 'reduce services to a specified level in the event that the demand for passenger services declines' for reasons 'outside the franchisee's control'.
On ticketing, ministers expect most stations to sell tickets for the whole network even if they are operated by rival companies. Smaller stations would not have to provide the full range of tickets.
Mr MacGregor said there was considerable interest from the private sector, both in Britain and abroad, in taking over train services from BR. Mr MacGregor said that 50 companies had expressed interest in running trains but declined to name any.
The consultation document leaves open many questions about the shape of BR when the franchises start operating. According to Mr MacGregor, this will be in 1994 if the legislation, due to be introduced into Parliament this year, is passed. The franchising of lines would not be 'one big bang' but would take place over time.
Mr MacGregor sees the document as a way of firming up private sector interest to see what kind of services companies are prepared to provide rather than offering a blueprint. It avoids setting out exactly how BR will be packaged up for franchising, but ministers reiterated earlier statements that there would be 30 to 40 lines or groups of lines on offer.
He said: 'Through the responses we receive to this exercise we will be able to ensure that the franchising system maximises private sector interest in bidding competitively for franchises'.
Jimmy Knapp, general secretary of the Rail, Maritime and Transport workers' union said: 'There are still vital questions outstanding in areas like safety, track costs, timetabling, ticketing and pensions which have to be resolved.
'There is a central contradiction at the root of the privatisation proposals. If they have an open lines policy, then nobody will want to take on franchises because the figures on revenue set out in the consultation paper will be blown out of the water if another operator comes on to cream off the profitable parts of the service.'
The Franchising of Passenger Services; Department of Transport.