All aboard £2bn bailout express! Taxpayers to fund railways till 2022

TAXPAYERS face paying billions more to keep trains running after the Government yesterday extended financial support for rail firms for 18 months.

Emergency contracts signed at the beginning of lockdown to help Britain’s rail network survive the coronavirus pandemic will be extended until at least March 2022.

The extended financial assistance amounts to an extra £130million for each of the 16 rail firms – more than £2billion altogether. About £3.5billion of taxpayers’ money has already been spent to plug the shortfall in ticket revenues from the huge drop in passenger numbers.

Although some routes are now busier than at the start of lockdown, trains are still only carrying about a third of the commuters seen before the crisis.

The extension of the emergency measures means the Department for Transport will continue to take responsibility for the financial risks involved in running the rail network. Yesterday’s announcement marks the end of the rail franchising system, which was introduced by John Major’s government in the mid-1990s and led to the privatisation of British Rail.

In the biggest shake-up of the railways for a quarter of a century, Transport Secretary Grant Shapps announced a move towards a system where train companies are paid a fixed fee to run services, with financial penalties for poor performance.

By scrapping the complicated franchising model, the hope is to get more trains running on time and to introduce a simpler fare system to prevent passengers from paying too much for tickets.

Mr 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.’

He insisted the move would keep ‘the best elements of the private sector – including competition and investment’, but would also deliver ‘strategic direction, leadership and accountability’. But the announcement was notably light on detail and there is still no consensus within Government over what the railways will look like after the pandemic is over.

Rail expert Sir Michael Holden, who used to run South West Trains, told BBC Radio 4’s Today programme the emergency measures were ‘the worst possible arrangement to run the railways’.

He added: ‘We’ve got the dead hand of the Government on the helm... and yet, they’re still paying for public sector operators to run the railway for them.’

In March, the franchise contracts – in which private companies took on the revenue risk to run a line for up to a decade – were replaced with ‘emergency measures agreements’.

The move effectively led to the partrenationalisation of the network and kept trains running, making it possible for key workers to get to work. These agreements expired on Sunday. The Government said they would be replaced with ‘emergency remedial measures agreements,’ lasting until next year. Fees handed to private companies to run services will be capped at 1.5 per cent of total costs, with sources saying between £2.3million and £6.8million will be spent every four weeks.

Tan Dhesi, Labour’s shadow rail minister, welcomed the extension of emergency funding but said it was ‘completely unacceptable’ taxpayers will continue to hand ‘hundreds of millions of pounds’ in management fees to private companies.

He said: ‘It’s time to put passengers before profit and bring our rail franchises back into full public ownership.’

Mick Cash, Rail, Maritime and Transport union general secretary, said ‘private rail companies are a waste of time and a waste of money’ and that ‘public ownership is the only model that works’.

Matthew Gregory, chief executive of FirstGroup, which owns four franchises, called for ‘a more appropriate balance of risk and reward for all parties’ and said it looks forward to ‘working constructively with the DfT to make this a reality’.

‘Worst way to run the trains’