Rail industry reacts to end of rail franchising

The rail industry has reacted to the government’s announcement of an end to rail franchising in a major shake-up for the rail network.

A series of Emergency Recovery Management Agreements are replacing the current model, focusing on high performance targets, simplifying journeys and address the continuing impact of the pandemic on the railway.

Transport Secretary Grant Shapps says the “simpler, more effective structure” will take shape over the coming months, marking the end of rail franchising after 24 years.

Rail industry reaction

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.”

Transport Focus chief executive Anthony Smith 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.”

From Monday, franchising is replaced with more demanding Emergency Recovery Management Agreements. 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 agreements are a transitional stage to the new system.

Chris Burchell, Managing Director of Arriva UK Trains business, said: “While the 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”.

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.”

Mr Hoggarth added: “Today marks another important step on the road to rail reform in the UK with new transitional bridging contracts for rail operators, including TransPennine Express.

“These new contracts build on the work already taking place to reform our railways and will help secure a reliable and resilient service as we move towards a simpler, more efficient and more cohesive railway.

“We remain locked into this work for the duration and have already made extensive submissions to the Williams Review which will help inform the White Paper on rail reform which we understand will be published once the path through the Coronavirus pandemic is clearer.

“We now have a reliable railway service for the first time in years – albeit operating at reduced levels. As services ramp up it is vital that these new levels of reliability are maintained – but we recognise there will be challenges.”

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.”