Rail franchise agreements are to be suspended to avoid train companies collapsing due to the coronavirus, the Department for Transport (DfT) has announced.
Operators are being offered the chance to transfer all revenue and cost risk to the Government, and be paid a small management fee to run services.
TSSA welcomed the move, but said it’s sad that it has taken a pandemic for the government to take control of our railways.
The emergency measures will be in place for an initial period of six months.
The DfT said they will “minimise disruption to the rail sector”.
Allowing operators to enter insolvency would cause “significantly more disruption to passengers and higher costs to the taxpayer”, the department added.
The DfT said passenger numbers have fallen by up to 70 per cent, while ticket sales are down by two-thirds.
Rail timetables have been slashed because of Covid-19.
Anyone holding an Advance ticket will be able to get a refund free of charge, while administrative fees have been waived for season ticket refunds.
The terms and conditions of employment for rail workers will not change.
Protect key workers
Transport Secretary Grant Shapps said: “We are taking this action to protect the key workers who depend on our railways to carry on their vital roles, the hardworking commuters who have radically altered their lives to combat the spread of coronavirus, and the frontline rail staff who are keeping the country moving.
“People deserve certainty that the services they need will run or that their job is not at risk in these unprecedented times.
“We are also helping passengers get refunds on Advance tickets to ensure no-one is unfairly out of pocket for doing the right thing.
“These offers will give operators the confidence and certainty so they can play their part in the national interest.”
The department said the maximum fee given by the Government to train operators would be 2 per cent of the value of a franchise before the Covid-19 pandemic began.
It is intended to incentivise companies to meet performance targets, and will be “far less than recent profits earned by train operators”.
The DfT added that the Government-controlled Operator of Last Resort (OLR) “stands ready to step in” for operators which do not accept the emergency measures.
This would effectively mean nationalising franchises.
The OLR already runs Northern and LNER.
It’s sad that it has taken a pandemic
Commenting, TSSA General Secretary Manuel Cortes said: “We welcome this move, but it’s sad that it has taken a pandemic for the government to take control of our railways.
“I am immensely proud of the efforts of our members and all across the transport industry in keeping our network open for key workers and for moving freight around the country.
“Today is not the day to score political points, but I can only hope that at the end of the emergency period the government reflects on whether allowing private companies – predominantly the state owned railway companies of our European neighbours – to make profits at the expense of British passengers and taxpayers, should continue.”