By Ben Kerrigan-
The British government is taking emergency measures to support and sustain necessary rail services as operators face significant drops in their income.
The Department for Transport said it will temporarily suspend normal franchise agreements and transfer all revenue and cost risk to the government for a limited period, initially 6 months. Operators will continue to run services day-to-day for a small predetermined management fee. Terms and conditions of employment for rail workers will not change.
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The government is calling for passengers to avoid all none essential travel and will reduce transport as a result from today. Passengers holding an advance ticket will be able to refund it free of charge. All season ticket will also be able to claim a refund for time unused on their tickets. Ticket holders should contact their retailer for details.
The railways have already seen up to a 70% drop in passenger numbers. Rail fares revenue has also reduced as people increasingly work from home and adopt social distancing, with total ticket sales down by two-thirds from the equivalent date in 2019. The government has provided today’s offer to minimise disruption to the rail sector, vital to the wider UK economy, through these difficult times.
Allowing operators to enter insolvency would cause significantly more disruption to passengers and higher costs to the taxpayer. The management fee will allow operators to act in the national interest in tackling COVID-19. Fees will be set at a maximum of 2% of the cost base of the franchise before the COVID-19 pandemic began, intended to incentivize operators to meet reliability, punctuality and other targets.
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In the event that an operator does not wish to accept an Emergency Measures Agreement, the Government’s Operator of Last Resort stands ready to step in.
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