Rail franchising ends

The government has announced this week an end to the controversial rail franchising system, which critics have argued for years is inefficient and poor value for money.

Transport secretary Grant Shapps confirmed the end of rail franchising, noting on Monday (September 21), “The model of privatisation adopted 25 years ago has seen significant rises in passenger numbers, but this pandemic has proven that it is no longer working.

“Rail franchising has been broken beyond repair for years but the Covid-19 pandemic has finally forced the government to accept the inevitable.”

The Department for Transport (DfT) said it would now extend the initial coronavirus emergency measures introduced earlier this year in response to the pandemic, where the government covered the losses of railway franchises, bailing out the private firms to the tune of £3.5bn after passengers numbers collapsed.

As part of the extension of the emergency measures, the government will continue to cover rail companies’ losses and will pay them a fixed fee of up to 1.5 per cent of operating costs.

Extension of the emergency measures will now continue provisionally for 18 months, as the DfT works to develop a ‘simpler and more effective structure’ to replace the franchising system.

But the government stopped short of ending rail privatisation altogether, and critics including Unite have warned that private companies will still be cashing in on the UK’s railways, despite their historic record of shambolic performance.

While the franchising system, where private companies bid to run certain routes on multi-year contracts, has come to an end, it is being replaced by a system where private rail companies will continue to manage services on a fixed-fee basis, instead of one that depends on passenger numbers.

Last week, Labour’s shadow transport secretary Jim McMahon highlighted how £100m of the bailout money given to the rail companies went straight into shareholders pockets.

Commenting on the news of the end of the franchising system, Labour’s shadow railways minister Tan Dhesi said, “We welcome the government admitting privatisation hasn’t worked and bringing greater public-sector involvement in managing the railways.

“But today’s agreements mean taxpayers are set to continue paying hundreds of millions of pounds in profit to private rail companies to run the network,” he added. “This is completely unacceptable.

“These agreements paper over the cracks of a broken rail system. It’s time to put passengers before profit and bring our rail franchises back into full public ownership.”

Unite national officer for rail Harish Patel agreed.

“Rail franchising has been broken beyond repair for years but the Covid-19 pandemic has finally forced the government to accept the inevitable,” he said.

“However, yet again the government is failing to act decisively, allowing private providers to continue to profit by receiving huge amounts of taxpayers’ money.  This is simply unacceptable.

“Instead of the proposed new model which will allow privateers a renewed opportunity to feed off the taxpayer and passengers, the government should be permanently renationalising rail services to increase services, improve punctuality and reduce tickets prices.”

By Hajera Blagg