Rail industry reaction to the biggest change in the industry for a quarter of a century

The rail industry has reacted to the government’s announcement of its plans to keep the railway running for passengers and the end of the franchise system.

New ‘recovery’ contracts announced on Monday morning by the government aim to end the complicated franchising model and deliver a simpler, effective model to reform Britain’s railways.

The Department for Transport says the agreements are focussed on high performance targets and simplifying journeys are first steps to a network that puts passengers back in control.

Paul Plummer, chief executive of the Rail Delivery Group, said: “We welcome the ongoing support to keep trains running for passengers and the government’s confirmation of an end to the franchise system, which we have long been calling for.

“These transitional contracts should be a stepping-stone to a better railway. This needs to harness the experience, innovation and investment private sector operators bring, with local train companies taking the decisions that affect their passengers. It should be overseen by a new guiding mind for the whole industry and underpinned by a simpler to use fares system.

“A renewed and reinvigorated partnership between the public and private sectors will be the best way to improve services and help regrow the market for train travel which is good for economic recovery and the public finances. Combined with the measures the industry is taking to keep trains clean, this announcement means people can continue to travel with confidence.”

From Monday, franchising is replaced with more demanding Emergency Recovery Management Agreements (ERMAs). They’ve been described by the government as having tougher performance targets and lower management fees.

Management fees will now be a maximum of 1.5 per cent of the cost base of the franchise before the pandemic began. The ERMAs are a transitional stage to the new system, the biggest change to the railways in a quarter of a century.

Anthony Smith, Transport Focus chief executive, said: “Passengers will be reassured to hear that there is an agreement to keep the trains running for the foreseeable future. A stable, reliable railway is key to getting Britain moving again and helping rebuild the economy. The industry must continue to focus on maintaining rigorous cleaning regimes and good performance so that existing and returning passengers can travel with confidence.

“We know that lockdown has radically changed people’s travel patterns. Government and train companies must now also work together to offer what passengers are keen to see and provide tickets that fit the way we live and travel now such as flexible season tickets and better value for money fares across the board.”

ERMAs pave the way for wider rail industry reform that prioritises the passenger. In 2018 Keith Williams, the chairman of Royal Mail, was asked to review the railways after a chaotic timetable change and the failure of some franchises.

Today’s announcement, which has his full support, is the prelude to a White Paper which will respond to his recommendations. The White Paper will be published when the course of the pandemic becomes clearer.

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. The Department for Transport has made clear to us that our work in jointly overseeing rail operators in the North will continue under the Emergency Recovery Measures Agreements (ERMAs).

“We have seen significant progress towards greater oversight in the North, both since the timetable crisis of 2018 and throughout the pandemic. Local decision-makers have helped shape operating decisions for the benefit of passengers and this needs to continue.

“These new transitional contracts will help us prepare for further reform as we work towards a more cohesive railway which can respond better to passenger needs as reflected in our submissions to the Williams Review.”

Chris Burchell, Managing Director of Arriva UK Trains business commented:  “While today’s announcement provides vital continuity for ​customers, employees and businesses, as the railway evolves and adapts to the changing conditions arising from the pandemic, we must also look​ further to the future.​

“Railways are at the heart of economic recovery, providing vital services that connect communities and enable economies to thrive while contributing to Europe’s net zero carbon targets.

“The pandemic has highlighted and underlined the urgent need to deliver accelerated change. There is increasing demand for flexible ticketing solutions right now, so a simpler fares system must be a critical part of the future operating model.  Now, more than ever, it is ​crucial the railways are further reformed and modernised to meet the challenges faced long into the post-pandemic future. ​

“These agreements should be a steppingstone to a new way of running the railway with a more customer-focussed model which empowers train ​operators to be agile and innovative, as well as drive greater investment and efficiencies for the taxpayer.​  A new public-private partnership is key to achieving this, one which fully leverages the private sector’s record of attracting people to travel by rail and ​supports public finances.​”

FirstGroup Chief Executive Matthew Gregory said: “The Government has extended its funding of the rail industry whilst demand for services remains heavily affected by coronavirus, and we are pleased that the vital nature of rail services to communities and local economies is being recognised.

“Passengers can be confident that public transport is safe and across our rail networks we have increased service levels to provide more capacity as schools restart and many more workplaces and other facilities reopen. We are now operating around 90% of the rail services we were prior to the pandemic.

“We will continue to bring all our expertise to bear alongside Government and industry partners to deliver the next phase of recovery of the rail network.

“Together with the earlier GWR extension, these agreements reinforce our balance sheet position and provide a potential path for our rail business to move onto a new contractual footing over time, with a more appropriate balance of risk and reward for all parties. We have long advocated for a more sustainable long-term approach to the railway, with passengers at its centre, and we look forward to working constructively with the DfT to make this a reality.”

The Rail Freight Group have called for full recognition of the rail freight sector in Government’s planned reforms for UK railways.

Maggie Simpson, RFG Director-General, said: “Rail freight operators continue to operate in the private sector, as they have done for the past two decades. They, and their customers, expect their needs to be placed at the heart of the railway, alongside, and no less than, the needs of passengers.

“Rail freight is essential for decarbonising transport and supporting economic recovery. Network Rail and the Department for Transport must continue to support growth, deliver for our customers and ensure fair and equal access to the network for freight services.”   

Photo credit: Arriva

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