Rail franchising has ended today after over 20 years as the first steps have been announced by Ministers to help bring the ‘fragmented’ network back together.
The new system is said to create ‘a simpler, more effective structure’ and will start to take shape over the coming months.
The first of major changes have taken place today, with operators moving onto transitional contracts to prepare for a brand new railway.
From today (21st September), franchising has been replaced with Emergency Recovery Management Agreements (ERMAs), which are more demanding, address the impact of the pandemic on the railway and help to deliver on the commitment by the railway to replace the current franchising system.
The agreements have tougher performance targets and lower management fees and allow the government to make a start on reforms, including the requirement that operators coordinate better with each other and to lower their capital costs.
Management fees will be capped at 1.5% of the cost base of the franchise prior to the coronavirus pandemic.
The ERMAs are a transitional stage to a new system, and the biggest change to the railways in 25 years.
Under the current health guidance, the intention is for the operators to run a near full service to make sure there is enough space to help passengers travel safely.
Until passenger numbers return to normal, significant taxpayer support will be needed, including under the new contracts announced today, however, the changes will allow for substantial medium and long term savings for taxpayers.
The Transport Secretary, Grant Shapps, said: “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.”
“Our new deal for rail demands more for passengers. It will simplify people’s journeys, ending the uncertainty and confusion about whether you are using the right ticket or the right train company.”
“It will keep the best elements of the private sector, including competition and investment, that have helped to drive growth, but deliver strategic direction, leadership and accountability.”
“Passengers will have reliable, safe services on a network totally built around them. It is time to get Britain back on track.”
Keith Williams, chair of the Williams Review, said: “These new agreements represent the end of the complicated franchising system, demand more from the expertise and skills of the private sector, and ensure passengers return to a more punctual and co-ordinated railway.”
“I am ensuring the recommendations I propose are fit for a post-COVID world, but these contracts kickstart a process of reform that will ensure our railways are entirely focused on the passenger, with a simpler, more effective system that works in their best interest.”
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