Government takes greater control over services
New contracts reflect continuing weakness in demand for rail travel.
THE Department for Transport instituted Emergency Measures Agreements with the franchised operators at the start of lockdown in March 2020 that were due to last six months, but rail demand did not recover in that timescale. As it became clear that a return to any sort of normality would not happen soon, and new Emergency Recovery Measures Agreements were instituted from September 20, 2020 that resulted in the termination of most franchise contracts.
Controversially, to allow a transition to the ERMAs, the DfT asked for franchise termination payments from the owning groups, which were seen as inconsistent with the purpose of these deposits. This was particularly controversial where the financial performance of a franchise had been in line with expectations before restrictions on the use of public transport were put in place.
A number of agreements have since been reached. First
Group settled the termination arrangements for the South
Western Railway franchise with a payment of £33.2 million to reflect the poor financial outlook and the prospect of significant future losses. No payment was required for Avanti West Coast as its financial performance was consistent with the franchise terms. ERMA contracts will now run until March 2021 for SWR and March 2022 for AWC, after which a management contract will be negotiated.
WELSH ‘PRIVATISATION'
Elsewhere, the termination fees required have been contested and terms are still being negotiated for a number of contracts. A different situation has occurred in Wales, however, as an ERMA was not offered to KeolisAmey, the Wales and Borders franchise holder, and Transport for Wales took over direct control of services from February 7, 2021.
The delivery plans for the South Wales Metro project are unaltered, and KeolisAmey will continue to be responsible for the project. As part of the plan, the ownership of the Core Valley Lines, those that serve Cardiff, has been transferred from Network Rail to the Welsh Government to enable a conversion from heavy rail to light rail (metro) standards.
COST CUTTING
The terms of the ERMAs mean that fare income is paid directly to the DfT, with the train operating companies being paid to cover the cost of running a specified timetable. There has since been a severe reduction in services on a number of routes outside peak periods to save money. A more contentious clause is that no staff pay rises are to be allowed for a period of two years.
No financial support, other than the nationwide furlough scheme, has been made available to provide open access train services. As a result,
Hull Trains and Grand Central have suspended services during the two lockdown periods, and similarly no funding has been made available for Eurostar operations, where strong lobbying has taken place to prevent a threatened financial collapse.
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