Franchising still exists - unde

AFTER a year of paralysis in the rail industry, there finally appears to be some movement from the Department for Transport about the future shape of the industry.

I have learned about some details of the new structure for the railways that are likely to emerge from the combination of the Williams Review and ministerial decisions. Don’t hold your breath and don’t jump to conclusions, but there is likely to be an announcement about the future of the railways in the next few weeks - possibly coinciding with the budget scheduled for March 3.

The story so far is a confusing one. The railways were rescued very promptly as soon as the first lockdown was announced, thwarting attempts by the Treasury to mothball large parts of the network thanks to the argument that they were needed for keyworkers. The financial cost, though, has been enormous - rising at times to £800 million per month, which is perceived as unsustainable by the Treasury.

The pandemic put an end to plans to publish the Williams Review, set up in September 2018 and which was supposed to have produced a quick report on how to improve the structure of the railway - but which is now two years late. Williams was never going to be a genuine independent assessment, but rather a way of giving cover to plans to rein back somewhat on the privatisation of a railway unable to cope with a lower-than-expected growth rate.

Instead, the pandemic forced an immediate suspension of franchising, to be replaced by Emergency Measures Agreements. These were effectively a way of propping up the private train companies by taking back the revenue risk (in other words, responsibility for the fares income) and subsidising the continued operation of services.

In effect, train operations were effectively renationalised as the Government collected any remaining revenue (which at one time plummeted to 5% of normal and even today is only around 14%) and paid the train companies to run the services.

While the operators were clearly relieved that they did not have to continue making their franchise payments, subsequently there have been several disputes with the Department over the payments they have to make to end their contracts.

The Department is arguing that they should pay the losses that they would have made had there not been a pandemic, but some operators are resisting this. The Department is threatening that any owning group that does not pay up will be barred from the new contracts, which are to be called Emergency Recovery Measures Agreements.

The precise shape of these has yet to be decided, but I understand that they will not be the complete break from the franchising concept that has been expected. Instead, they will be a kind of rolling contract that will be