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The Department of Transportation (DfT) says that rail franchises have “ended” as it seeks a new model for the rail network in the wake of the coronavirus crisis.
On Monday morning it was confirmed that the emergency measures, introduced to keep the trains running after the outbreak of COVID-19, had been partially extended for up to 18 months pending the introduction of a “simpler and more efficient structure” that is being developed.
The department has borne revenue and cost risks for franchise holders since March, at a cost to taxpayers of at least £ 3.5 billion.
Train services are still much less busy than before closing
The DfT said “significant” financial support would still be needed as operators moved into new “transition contracts” that will see the public purse continue to pay companies to operate the services, but at a slightly reduced rate.
New Emergency Recovery Management Agreements (ERMAs) ensure that companies are not exposed to changes in passenger demand, kept low by pandemic restrictions and reluctance to return to offices.
Transportation Secretary Grant Shapps promised that the upcoming reforms will eradicate the complex nature of the franchise setup.
“The privatization model adopted 25 years ago has seen significant increases in passenger numbers, but this pandemic has shown that it no longer works.
“Our new rail deal demands more for passengers. It will simplify people’s travels, ending uncertainty and confusion about whether you are using the right ticket or the right train company.
“It will retain the best elements of the private sector, including competition and investment, which have helped drive growth, but will offer strategic direction, leadership and responsibility.”
“Passengers will have reliable and safe services on a network totally built around them. It is time for Britain to get back on track.”
The RMT railway union responded to the announcement by demanding that the network be fully public property again.
FirstGroup, which currently manages the Avanti West Coast, Great Western, South Western and TransPennine Express franchises, was among the operators who welcomed the ERMAs.
Chief Executive Officer Matthew Gregory said: “We are pleased that the vital nature of rail services to local communities and economies is being recognized.
“Passengers can trust that public transportation is safe and on our rail networks we have increased service levels to provide more capacity as schools restart and many more workplaces and other facilities reopen.
“We are now operating about 90% of the rail services that we were before the pandemic. We will continue to bring all of our experience together with government and industry partners to deliver the next phase of recovery of the rail network.”
Its shares, which are down more than 60% so far this year, fell nearly 3% when it opened on Monday.
Go-Ahead, the publicly traded company behind Govia’s joint venture franchises, including Southern, saw its shares fall 5%.
