Rail firms urge extension to £900m-a-month emergency funding

THE Government is under pressure to extend emergency rail funding, as operators warn that without further support they will be forced to “hand back the keys”.

Even after the pandemic, industry insiders are expecting a long-term reduction in passenger numbers of around a third as a result of an increase in home working. Latest figures from the Department for Transport reveals that rail usage is at 33 per cent of precovid levels, leaving many firms fearing they will not be able to survive without ongoing support.

Ministers have until Sept 20 to extend the emergency measures agreements (EMAS), believed to be costing taxpayers £900million a month.

One rail industry source said: “The situation is fairly bleak. If we don’t continue to receive support, it will be impossible to survive and it will basically reach the point where we will have to hand back the keys to the Government.”

Ministers hope to replace the current arrangements with “management contacts”, where rail companies are rewarded on the basis of performance.

Grant Shapps, the Transport Secretary, said the Covid crisis had provided opportunities to establish a “different type of railway”, with the Government expected to centralise control. Under the system, train operators would receive a fixed fee from the Government which would essentially own all routes and collect fares. However, temporary transition deals of up to 18 months are expected to be put in place until the new measures are introduced.

A transport source said that the new arrangements would send “pretty clear smoke signals” about the Government’s plans to reform the franchising system. Under the current EMAS, the Government pays train firms a management fee equivalent to a 2 per cent profit margin on pre-pandemic operating costs.

The source said: “Going forward, we don’t want to see very tightly specified concessions where the private sector is basically paid to empty the bins out. We know that the franchising system isn’t the future but there is still scope to have sizeable incentives for the private sector to grow revenue.” Meanwhile, Transport Focus called for an extension of EMAS in order to keep trains running, but urged the Government to consider flexible season tickets to help drive demand.

Mike Hewitson, head of policy at the independent watchdog, said: “We welcome the extension of the EMAS if it keeps the rail network running.”