Rail Franchising to be Scrapped: Effects on Northern and LNER

[Harvey B]

Before I Start: I was originally going to post this in the "Rail Franchises to be Replaced with Fixed Fee Contracts" Thread but I think this will eventually evolve into it's own discussion. Anyway I'm going to start the thread now.

So, Unless You've been living under a rock since the 10th of September, You will know that Franchises are going to be Scrapped in Favour of Concession Contracts (Similar To London Overground or Mersey Rail)

Franchises to be scrapped as lockdown rail costs rise

Grant Shapps is expected to make an announcement in days on a long-term solution to a troubled industry

www.telegraph.co.uk

[For Those that Can't read the article due to the paywall (Like me) I've put what the Article says below (Copied from @KashmireHawker s Post)]

Ministers are ready to seize control of the railways after more than a quarter of a century of private ownership.

Franchises launched under John Major in the mid-Nineties will be ripped up and replaced by fixed-fee contracts from April, Whitehall proposals seen by The Sunday Telegraph reveal.

Under emergency measures, train operators such as South Western Railway and c2c serving commuters in the South East have been supported with more than £3.5bn in taxpayer funding since the pandemic struck and triggered a collapse in passenger numbers of as much as 95pc.

The arrangement, implemented in March and due to expire next Sunday, guarantees the franchises a fixed profit but is deemed “unsustainable going forwards given the economic position and significant pressure on public finances”, official documents say.

Grant Shapps, the Transport Secretary, is now expected to make an announcement in the coming days on a long-term solution that will permanently abandon franchises.

They will be replaced with “concession” agreements that are similar to outsourcing contracts widely used by the NHS and schools.

It means the Government will bear ultimate responsibility for operations. Fares will be collected by the Exchequer, which will pay train firms a fee.

Between Sept 20 and next April, new “conditional” agreements, called ERMAs, will create a “bridge” to the permanent changes, according to the plans.

They will be confirmed by Dec 13, with operators forced to sign up to a “built in franchise termination” clause – marking a permanent end to private control of the railways from April 2021.

If operators refuse to accept new terms, the Government’s own operator, which already runs the east coast and Northern lines, is primed to step in.

Whitehall officials and train bosses have been locked in confidential talks most of the summer to hammer out a deal for the future of the railways.

Operators have estimated that passenger numbers will only return to 90% of pre-Covid levels in five years’ time, rendering previous franchise agreements economically unviable.

Ministers are desperate to limit the cost to the taxpayer of keeping services running and not prop up otherwise failing franchisees. Industry sources said that this has led to unappealing offers, some of which could lead to operators racking up fresh losses, sparking anger from train bosses and putting weeks into increasingly fraught negotiations.

Keith Williams, chairman of Royal Mail and ex-BA boss, was hired two years ago to conduct the biggest review of the railways since privatization. Draft conclusions, reported by The Telegraph in February, proposed a cap on profits and an end to franchising. These are understood to have been blocked by the Treasury prior to the pandemic.

One senior industry source said: “They are using the current situation to bring in what they wanted all along.”

A spokesman for the Government declined to comment.

It is mentioned in the article that TOC's that don't sign up to the new terms will be brought under government control under the OLR body

If operators refuse to accept new terms, the Government’s own operator, which already runs the east coast and Northern lines, is primed to step in.

Does this mean that Northern and LNER will remain under OLR Control? If so, Does anyone know if this will be a long term measure (I.E: The next 5-10 years) or will it be a short term measure until they can tender put those TOC's? (The Next 18 months-2 years)

If any other TOC's get taken over by the OLR, will they Be short term or will They be long term? (i'm including this as a separate question as The DFT may want to treat other OLR TOC's differently than Northern and LNER).

I also want to hear Your Opinions on this, Would you Keep Northern and LNER long term/permanently OLR Operated or do you think that they will both get re-tendered out as concessions.

Finally, Do you Think The OLR should take over some of the TOC's that have been Ailing anyway and operate those TOC's directly?

 

[pdeaves]

I suspect that government policy on OLRs is, at this stage, limited to 'only step in if there is no alternative'. With all the other things going on, I doubt much thought has been put into tenure duration, etc., yet.