Posted 17th June 2020 | 2 Comments

Rail bailout has cost £3.5bn so far but there’s no end in sight

Updated 17 June 08.55

THE cost of keeping the passenger railway operating during the Covid-19 pandemic has reached £3.5 billion, according to rail minister Chris Heaton-Harris. He was answering a Parliamentary question raised by Labour MP Ian Mearns, who represents Gateshead.

Mr Heaton-Harris said: ‘Since the outbreak of Covid-19 the government has approved £3.5 billion of additional expenditure to ensure that vital rail services continue to operate. Of this additional expenditure, £2.9 billion relates to the 2020/21 financial year. It is not yet possible to provide an estimate of the total cost incurred to date.’

The rail minister was also unable to say what will happen after September, when the present Emergency Measures run out. Until then, normal franchises in England have been replaced by management contracts under which the Department for Transport pays operators’ costs and collects all revenue. The operators are receiving management fees calculated as up to 2 per cent of each franchise’s ‘cost base’, and the minister revealed that there will no payout until the end of the first six months of Emergency Measures.

He added: ‘A proportion of the fee will be conditional on operators meeting performance, passenger experience and efficiency targets.’

Answering a further question from Mr Mearns the rail minister said: ‘Work is underway within government to determine the most effective approach at the end of the initial six months period of the Emergency Measures Agreements. This work will take account of the impact of Covid-19 on demand for passenger rail travel in both the short and long term, and the associated economic and financial impacts on the railway. The Secretary of State shall continue to keep Parliament informed of developments.’

The Rail Delivery Group’s director of nations and regions Robert Nisbet said: ‘In response to journeys decreasing by up to 96 per cent due to coronavirus, the government is providing rail companies with temporary support so we can keep workers moving during this time of national need. We will continue to work together with government as we emerge from the crisis to ensure a reformed railway can work for passengers, support jobs, connect communities and help the economy grow.’

Meanwhile, campaigners backing full renationalisation of the passenger railway are claiming that the train operators have been lobbying ‘behind the scenes’ for the measures to be extended until September 2021. The lobby group Bring Back British Rail said it was demanding that transport secretary Grant Shapps should ‘prioritise safety, save public money, and help improve services in the long-term by bringing rail back into public ownership for good’.

Their view has been echoed by the RMT. The union’s general secretary Mick Cash said: ‘The Government must come clean about its plans for the future of our railways as these backroom deals to prop up and bail out Train Operating Companies simply cannot continue for the long term. Rail privatisation is a failed ownership system and it’s clear that these fat cat train operators can only survive a major crisis with the Government bailing them out with billions of pounds of taxpayers money. It’s time the Government used that money to invest in our railways and bring them under public control rather than keeping the failed system of privatisation on life support.’

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Melvyn, Canvey Island , Essex

    Until, the 2 metre distancing rule is reduced to 1 metre rail will not be able to carry proper loads of passengers yet alone the normal loads back in February!

    Look out for services transferred to Mayor Khan to try and blame him for financial losses ahead of delayed mayoral elections next year .

  • Michael Breslin, Liverpool

    Over the past few weeks, Grant Shapps and TOCs have been telling people to stay away from rail services if they don't have access to a car because infection risks are higher. My concern is that, when all restrictions are lifted, commuters and leisure travellers may be reluctant to return to rail, believing that it is still unsafe. I therefore sincerely hope that there will be a concerted effort by Shapps, the DfT and all TOCs to tell people that rail travel is not dangerous and even offer some form of inducements by reducing both season tickets prices and off-peak fares.