After nearly 2 years of the pandemic, there has been a £16 billion bailout of Britain’s railways. `Now the government is putting the rail industry in crisis by demanding a 10% cut in running costs from April 2022. According to Sir Michael Holden who ran East Coast Rail this would mean in the short term having to take out whole fleets of trains. By doing this it’s impossible to build back services should demand increase.
Since the start of the pandemic in March 2020, Train Operators have been under direct government contract. Under these emergency recovery contracts, they are paid a fixed fee to deliver services with the revenue and cost risk shouldered by the government.
The effects of the pandemic on rail travel patterns and therefore revenue are clear, the financial solution is less obvious. Frequencies on many routes compared to 2 years ago are much reduced at peak times with consequent overcrowding. For example during the peak period from St Albans to St Pancras down from 32 to 14, from Birmingham New St to Euston from 13 to 5. Although service levels as at January 2022 are 78% as at pre covid levels, it appears that peak services are worst affected. This is compounded by staff absence due to covid sickness. Service levels are expected to increase to 85% of pre covid levels by the end of February 2022. Latest figures from the Department for Transport, show passenger usage about ]64% of pre-pandemic levels
The establishment of the Great British Rail organisation is now expected in 2024/5. The government is looking to reduce taxpayer funding which made up a third of the railway’s revenue before 2020. This includes staff costs exceeding £6 billion pa is said to be partly due to low productivity, a claim hotly disputed by the unions. Also the railways’ complexity with 75 types in passenger trains in service and a paper based ticketing system costing £500 million a year,
Commuters are now returning to the office 2-3 days a week, this is partly compensated by a growth in leisure travel. It could be argued that reduced peak hour demand, will allow better use of resources throughout the day. What is certain a new funding model is needed – arguments seem to fall into 2 schools of thought. There are those who believe it is essential to maintain services and low fares to attract passengers. Alternatively there are those who favour cutting costs and maximising current income.
Enthusiasm for building new rail infrastructure as a key tool for ‘levelling up’ has come up against Treasury unwillingness to spend more now. However, according to the rail historian Christian Wolmar, “the £96 billion plan is actually a vote of confidence in the long term future of the railways – however mis-sold”. However, in the short term they’re going to be completely squeezed. Timetables will be thinned out and late night services withdrawn.
There is a conference in London on 16th March called ‘Accelerate Rail bringing together leading figures in the UK rail world. This includes Andrew Haines of Network Rail, Mark Thurston of HS2 and Wendy Morton, Rail Minister for the Department for Transport. The pandemic has changed our world, especially rail travel. What will rail industry leaders propose for the future?
