The UK's rail franchising system has ended, as the government announced an extended rescue deal for train operators. Emergency “recovery contracts” will keep the railways running during the pandemic while the industry moves towards a long-term overhaul. The Department for Transport (DfT) said the new contracts, which would last six to 18 months and help operators through the Covid-19 crisis were a better deal for taxpayers. Unions and Labour, however, criticised the move as “papering over the cracks” and handing more money to private firms.
The government has so far spent up to £3.5bn covering train companies' losses since the pandemic started. It in effect nationalised them in March when rail franchise agreements were suspended. Under the old system, companies bid to run services on routes on multiyear contracts. Rail travel decreased to just 5 per cent of pre-pandemic levels during the lockdown in late March and April. Numbers are still only at 30 to 40 per cent of those in 2019.
The DfT, under new emergency arrangements, will continue to cover rail companies' losses and pay them a fixed fee of up to 1.5 per cent of the operating costs before the pandemic. Transport Secretary Grant Shapps said, “The model of privatisation adopted 25 years ago has seen significant rises in passenger numbers, but this pandemic has proven that it is no longer working. Our new deal for rail demands more for passengers. It will simplify people's journeys, ending the uncertainty and confusion about whether you are using the right ticket or the right train company.”
The new agreements “represent the end of the complicated franchising system, demand more from the expertise and skills of the private sector, and ensure passengers return to a more punctual and coordinated railway.” Chief executive of the Rail Delivery Group, Paul Plummer said, “These transitional contracts should be a stepping stone to a better railway.” Shadow rail minister Tan Dhesi said the announcement was a welcome admission that privatisation had not worked, but added, “Taxpayers are set to continue paying hundreds of millions of pounds in profit to private rail companies to run the network. This is completely unacceptable. These agreements paper over the cracks of a broken rail system.”
