Rail franchising hits the buffers thanks to coronavirus

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Rail franchising has been “ended” by extending measures introduced to keep trains running after the coronavirus outbreak, the Department for Transport has announced.

Operators have been moved to “transitional contracts” ahead of the creation of a “simpler and more effective structure” which will be developed over the coming months, the DfT said.

Today Transport for the North said it would do everything possible to ensure it meant an improved service for long-suffering passengers in the North.

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The DfT has taken on franchise holders’ revenue and cost risks since March, at a cost to taxpayers of at least £3.5bn.

Train Operating companies will be bailed out with taxpayer money amid the coronavirus crisisTrain Operating companies will be bailed out with taxpayer money amid the coronavirus crisis
Train Operating companies will be bailed out with taxpayer money amid the coronavirus crisis

“Significant taxpayer support” will still be needed under the new Emergency Recovery Management Agreements, the DfT said.

It went on: “Ministers today ended rail franchising after 24 years as the first step in bringing Britain’s fragmented network back together.”

Rail firms will continue to be paid a management fee for running services, but under the ERMAs it will be a maximum of up to 1.5 per cent of the franchise cost base, rather than two per cent under the Emergency Measures.

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Transport for the North has confirmed that it remains committed to putting passengers at the heart of rail reform as it pushes for better services and a more reliable railway.

David Hoggarth, Strategic Rail Director for Transport for the North, said: “This is a significant moment for our railways with franchising as we know it ending after 24 years.

“We have seen significant progress towards greater oversight in the North, both since the timetable crisis of 2018 and throughout the pandemic.”

TfN, which has played a key part in the new process, will continue to jointly oversee the performance and development of rail operator TransPennine Express with the Department for Transport .

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Transport Secretary Grant Shapps said the virus has “proven” that the existing franchising model “is no longer working”.

He did not set out exactly how control of rail services will be determined once ERMAs expire, but described how the new system will “keep the best elements of the private sector” such as competition and investment.

But Labour’s shadow rail minister, Tan Dhesi, claimed it was “completely unacceptable” that taxpayers will continue to pay “hundreds of millions of pounds” in management fees to private companies.

He added: “These agreements paper over the cracks of a broken rail system. It’s time to put passengers before profit and bring our rail franchises back into full public ownership.”