TFW Rail Services to be taken in house by Welsh Government

[craigybagel]

Link to story here

The Welsh government is poised to nationalise its railways after a fall out on the bailout talks with the current operator, The Telegraph reported today.

Ministers are expected to formally announce the transfer of operations to state-owned Transport for Wales on Thursday morning, the newspaper said citing insiders.

Transport for Wales will take direct control of travel on the country’s 900 miles of railway after passenger numbers plunged as a result of coronavirus.

Trains in Wales have been run since October 2018 by a joint venture between Keolis, a subsidiary of France’s SNCF, and engineering contractor Amey.

While the pair will continue to be responsible for tracks and other rail infrastructure, control of services will be handed back to the Welsh Government.

French-Spanish joint venture KeolisAmey took over the running of the Wales and Borders franchise in 2018.

They promised to eventually replace all trains, at a cost of £800m, as well as spend £738m to electrify the South Wales valleys lines, add more services and launch the new South Wales Metro over the next 15 years.

At the time their arrival seemed to mark an end to the troubled tenure for Arriva Trains Wales, criticised for overcrowding on commuter services.

However, it warned at the time that most of the biggest promised changes will not happen for at least a couple of years.

Last month Wales’ Transport Minister wrote to the UK Government to complain after an “additional” £343m of funding for the nation’s railways turned out to be money spent as far back as 2014.

Ken Skates said that despite the UK Government’s talk of ‘levelling up’, they were underinvesting in Wales and this offer “falls short of fair funding from the UK Government”.

He said that the UK Government had underspent by £2.4bn on Wales’ railways and called for powers over investment in infrastructure enhancements to be transferred to Wales.

“It appears very little of this funding package is actually ‘new’,” Ken Skates said.

“Many projects in the announcement have already previously been announced, the £58m for Cardiff Central station, for example. In fact, some of this package, such as the funding for valleys electrification, dates back to 2014.

“A disparate collection of ad hoc projects across Wales does not constitute an ‘ambitious programme’. Our plan for Metro systems across Wales give us the ability to move towards genuinely integrated public transport systems, but sadly the announcements in this package were made without reference to, or join up with, this overarching vision.”

According to Prof Mark Barry of Cardiff University, Wales’ rail network has been underfunded in terms of enhancements by at least £3Bn since 2001.

 

[Starmill]

I don't suppose anyone has a Telegraph subscription?

Wales to renationalise rail as passenger numbers plunge

The crisis comes as Transport for London is days from running out of money

www.telegraph.co.uk

How dramatic.

 

[tomwills98]

This is from Reuters https://uk.reuters.com/article/uk-b...mktg&feedName=topNews&WT.mc_id=Partner-Google

Transport for Wales will take direct control of travel on the country’s 900 miles (1,450 km) of railway, replacing a joint venture of Britain’s Amey and French-owned firm Keolis, the newspaper said.

Transport for Wales, Keolis and Amey did not immediately respond to requests for comment.


According to the report, Wales’s “Operator of Last Resort” was hastily renamed “Transport for Wales Ltd” last week in anticipation of government officials in Cardiff having to step in.

This will be fun to talk about tomorrow morning in work

 

[mirodo]

I don't suppose anyone has a Telegraph subscription?

Wales to renationalise rail as passenger numbers plunge

The crisis comes as Transport for London is days from running out of money

www.telegraph.co.uk

How dramatic.

Wales to nationalise railways
by Ben Marlow, Oliver Gill, Laura Onita, Simon Foy, telegraph.co.uk
October 21, 2020
The Welsh government is poised to nationalise its railways after bailout talks with the current operator broke down and Covid continued to hammer public transport.
Ministers are expected to formally announce the transfer of operations to state-owned Transport for Wales on Thursday morning, insiders said.
Transport for Wales will take direct control of travel on the country's 900 miles of railway, replacing a joint venture that includes French-owned firm Keolis, after passenger numbers plunged as a result of coronavirus.
The Welsh nationalisation comes amid a separate escalating row between London mayor Sadiq Khan and Whitehall, following a threat from Transport Secretary Grant Shapps to strip him of control of Transport for London (TfL).
Trains in Wales have been run since May 2018 by a joint venture between Keolis, a subsidiary of France’s SNCF, and engineering contractor Amey.
While the pair will continue to be responsible for tracks and other rail infrastructure, control of services will be handed back to the state.
Emergency measures were introduced in March in order to keep trains running during the first six months of crisis, with a replacement agreement finalised in England last month but no such deal struck in Cardiff.
The UK Government prepared for a number of operators handing back the keys to franchises by setting up a series of shell companies.
Wales’s “Operator of Last Resort” was hastily renamed “Transport for Wales Ltd” last week in anticipation of government officials in Cardiff stepping in.

Meanwhile, London <bit about TfL removed>

 

[py_megapixel]

I'd imagine this is likely to be portrayed as either an enormous success or an enormous failure... whichever it is, one group of people will point to it as an example.

Personally I hope it works out and goes well for them.

 

[GRALISTAIR]

Personally I hope it works out and goes well for them.

Absolutely. I hope so too. I wonder if they will follow Transport for Scotland general strategy thrust?

 

[2HAP]

Not looking good for the Llangollen Railway, is it?

 

[Domh245]

My first thought is that this doesn't bode well for South Wales metro

 

[tomwills98]

My first thought is that this doesn't bode well for South Wales metro

Keolis Amey still look to be keeping hold of the SW metro stuff, and I don't think the Senedd are going to let it die easily especially as a load of prep has already been built

 

[Hardcastle]

Not looking good for the Llangollen Railway, is it?

That's what i thought when i saw the photo.

 

[LNW-GW Joint]

What exactly is Wales's "Operator of Last Resort"?
Is it TfW (the WG body) under a different name, or is a consultancy standing in the wings like SNC Lavelin in England?

Some of the reporting must be wrong because the main infrastructure will still be with Network Rail, not WG.
Only the CVL (Core Valley Lines) went over to WG ownership in the recent change, managed by Keolis Amey.
I'd guess Keolis Amey will still be the contractor for the the CVL and its upgrade/electrification.
I suppose TfW or its OLR will take over the rolling stock leases and orders for new trains.

Either way, WG is now wholly responsible for the operational losses, which must be very large and getting larger.
I shouldn't think anything with change on DfT GWR/Avanti/XC franchises operating into Wales, at least for now - they've all got direct awards for 2-4 years.

 

[matt_world2004]

I thought tfw was a concession not a franchise and as such keolis Amey should not have been effected by the fall in passenger number.

 

[Cardiff123]

Keolis Amey had pledged £15 milion of their own money towards the new 'transport interchange' (which will include the new bus station when finally built) around Cardiff Central.
Keolis Amey also have already moved their UK HQ from London to Cardiff, and planned to move their global HQ to Cardiff as well.

I thought tfw was a concession not a franchise and as such keolis Amey should not have been effected by the fall in passenger number.

It is a concession model in that Keolis Amey's profits were limited to no more than 5% (I think) and it has to meet strict targets set by TfW, but how could any private operator not be affected by the collapse in passenger numbers since March, no matter what model they are operating under.
Keolis Amey are still a private company and if thet are heamorraging money by continuing to run the trains in Wales, then the bosses at the top will pull the plug.

The DfT only just managed to keep the private operators in England on board, and James Price, TfW CEO, said to a Welsh Parliament committee in June that TfW ended up agreeing to a higher fee than they wanted to keep Keolis Amey on when agreeing the first emergency Covid package that runs out now. Obviously another agreement couldn't be reached.

 

[matt_world2004]

Keolis Amey had pledged £15 milion of their own money towards the new 'transport interchange' (which will include the new bus station when finally built) around Cardiff Central.
Keolis Amey also have already moved their UK HQ from London to Cardiff, and planned to move their global HQ to Cardiff as well.


It is a concession model in that Keolis Amey's profits were limited to no more than 5% (I think) and it has to meet strict targets set by TfW, but how could any private operator not be affected by the collapse in passenger numbers since March, no matter what model they are operating under.
Keolis Amey are still a private company and if thet are heamorraging money by continuing to run the trains in Wales, then the bosses at the top will pull the plug.

The DfT only just managed to keep the private operators in England on board, and James Price, TfW CEO, said to a Welsh Parliament committee in June that TfW ended up agreeing to a higher fee than they wanted to keep Keolis Amey on when agreeing the first emergency Covid package that runs out now. Obviously another agreement couldn't be reached.

With the concession model a franchisee does not get the ticket revenue it gets a payment for its operating costs. Together with fines and rewards for contract performance. It could run with 0 passengers on board and would still get paid. In fact under the concession model. The less passengers you have the bigger your bonus because there are less delays caused by passenger action.

 

[Cardiff123]

What exactly is Wales's "Operator of Last Resort"?
Is it TfW (the WG body) under a different name, or is a consultancy standing in the wings like SNC Lavelin in England?

I can't imagine the OLR in Wales will be a private consultancy, I am pretty sure TfW (an arms-length body of Welsh Govt) will now run the trains directly. Whether any managers from TfW Rail Services (Keolis Amey Wales) will transfer over to TfW to help with the running of the rail side of TfW will be interesting.

I hate to be pedantic @craigybagel but it's TfW Rail Services that is being taken in-house by Welsh Govt, not TfW as your title suggests, as TfW is already a Welsh Govt owned body. An important but subtle difference.

 

[bramling]

I can't imagine the OLR in Wales will be a private consultancy, I am pretty sure TfW (an arms-length body of Welsh Govt) will now run the trains directly. Whether any managers from TfW Rail Services (Keolis Amey Wales) will transfer over to TfW will be interesting.

It will certainly be interesting to see how it pans out. Northern hasn’t exactly been a total success story thusfar, though to be fair they weren’t dealt the best pack of cards in the first place.

Does anyone think the Valleys scheme is actually in jeopardy? I’d have thought the economics of it were a little marginal in the first place, as presumably a lot of the benefits could be achieved with DMUs.

 

[LNW-GW Joint]

With the concession model a franchisee does not get the ticket revenue it gets a payment for its operating costs. Together with fines and rewards for contract performance. It could run with 0 passengers on board and would still get paid. In fact under the concession model. The less passengers you have the bigger your bonus because there are less delays caused by passenger action.

I'm not sure TfW (KA) has a deal like the DfT EMRAs for the impact of Covid.
Certainly the timescales were different and the revenue support offered to KA might have been different too.
WG money for transport is a murky subject with all the devolution provisions, and the divided nature of rail devolution.
TfW also has different arrangements for services in Wales and England.

 

[craigybagel]

I hate to be pedantic @craigybagel but it's TfW Rail Services that is being taken in-house by Welsh Govt, not TfW as your title suggests, as TfW is already a Welsh Govt owned body. An important but subtle difference.

A fair point, and I have edited the title. I always thought it was a silly idea having both entities use the same name but I suppose it'll save on repainting - especially now it might be necessary sooner then expected!

 

[thenorthern]

How will this work with funding?

One of the advantages for private operators is that they can raise capital by borrowing money or getting investment. The Welsh Government however is very limited in what it can borrow and a state owned operator won't be able to get private investment.

 

[matt_world2004]

I'm not sure TfW (KA) has a deal like the DfT EMRAs for the impact of Covid.
Certainly the timescales were different and the revenue support offered to KA might have been different too.
WG money for transport is a murky subject with all the devolution provisions, and the divided nature of rail devolution.
TfW also has different arrangements for services in Wales and England.

No I thought it had a similar deal to London Overground where the farebox revenue went to the regulator and they were paid for running the service

 

[Dai Corner]

Wales Operator of Last Resort Ltd was incorporated on 26 May and renamed to 'Transport for Wales Rail Ltd on 16 October.

TRANSPORT FOR WALES RAIL LTD overview - Find and update company information - GOV.UK

TRANSPORT FOR WALES RAIL LTD - Free company information from Companies House including registered office address, filing history, accounts, annual return, officers, charges, business activity

find-and-update.company-information.service.gov.uk

It was granted an operating licence by the ORR in July

https://twitter.com/foxy_michael/status/1319037083332247553?s=21

 

[Starmill]

With the concession model a franchisee does not get the ticket revenue it gets a payment for its operating costs. Together with fines and rewards for contract performance. It could run with 0 passengers on board and would still get paid. In fact under the concession model. The less passengers you have the bigger your bonus because there are less delays caused by passenger action.

I think you've oversimplified on 'concession model' rhetoric, which has become astonishingly popular on here of late. Suffice to say that all of the contracts have come with their own terms. What you're describing here and what most people really mean when they say 'concession model' is that the contract is based on gross cost rather than net cost.

 

[43096]

I await a snotty response from Rees-Smog and his ilk in Lundinium.

Lundinium is waiting for Ken Skates to turn up, cap in hand, wanting a bail out from Rishi.

 

[Bletchleyite]

I'd imagine this is likely to be portrayed as either an enormous success or an enormous failure... whichever it is, one group of people will point to it as an example.

Personally I hope it works out and goes well for them.

I say good. I hope it does go well. I could see Scotland following, then hopefully parts of England too, if it does.

Not looking good for the Llangollen Railway, is it?

What's the Llangollen Railway got to do with TfW? If you mean their expansion strategy, I can't quite see them having the money to do that any time soon.

Edit: Ah, I see, the photo on the article

It will certainly be interesting to see how it pans out. Northern hasn’t exactly been a total success story thusfar, though to be fair they weren’t dealt the best pack of cards in the first place.

A key part of the problem with Northern is that it's the same management, so they're basically just running it the same as they did under Arriva but without their corporate overlords reining them in a bit. You really need a wholesale management change.

 

[LNW-GW Joint]

No I thought it had a similar deal to London Overground where the farebox revenue went to the regulator and they were paid for running the service

From comments by Prof Cole, I think Keolis Amey has been on its normal franchise terms but with a £50 million extra subsidy for Covid.

 

[arfortune]

My first thought is that this doesn't bode well for South Wales metro

It shouldn't have much impact upon the various Metro schemes across Wales as these are being developed by TfW (Gov) rather than the operator. Of course, the railway's funding is in dire straits at the moment across the UK, so we could see some retiming of developments, but infrastructure is a classic way to get out of a recession and help economies recover. They're also key to help deliver the wider Welsh Gov agendas on climate, wellbeing, jobs etc.

 

[Caaardiff]

What's it likely to mean for the day to day running and current projects?
Will more money be made available to speed up the 769/230 projects? I imagine the WG have been quite frustrated with the whole situation with not much control over it.
Will there be job cuts given that there is a duplication of roles now between RS and Gov? What will happen to HQ in Cardiff, everyone shipped off to Ponty?

It always seems to be a good close working relationship between KA and WG, probably with KA being the puppet and WG pulling the strings. By the sounds of various articles WG have always wanted it this way anyway and have now found a way to get it.

 

[Domh245]

It shouldn't have much impact upon the various Metro schemes across Wales as these are being developed by TfW (Gov) rather than the operator. Of course, the railway's funding is in dire straits at the moment across the UK, so we could see some retiming of developments, but infrastructure is a classic way to get out of a recession and help economies recover. They're also key to help deliver the wider Welsh Gov agendas on climate, wellbeing, jobs etc.

I had been under the impression that KA were doing the conversion & upgrades, and if they're pulling out of the operations side it wouldn't be a great leap to assume that the conversion & upgrade stuff would also follow suit. Of course, if it was awarded separately (but in tandem) then there shouldn't be an issue

 

[Cardiff123]

I had been under the impression that KA were doing the conversion & upgrades, and if they're pulling out of the operations side it wouldn't be a great leap to assume that the conversion & upgrade stuff would also follow suit. Of course, if it was awarded separately (but in tandem) then there shouldn't be an issue

The upgrade and day to day management of the Valley lines infrastructure was awarded separately and is being managed by a separate company, led by Amey, 'Amey-Keolis Infrastructure Limited', and that remains unaffected.

A statement is now up on the Welsh Govt website, here are the 3 key points:

Written Statement: Future of Rail update (22 October 2020) | GOV.WALES

Ken Skates MS, Minister for Economy, Transport and North Wales

gov.wales

A stable platform for building back better is dependent on the right delivery model, suitable for a post-Covid environment and I am pleased to inform members that Transport for Wales have agreed the principles of a new publicly owned model, which will allow them to continue to put customers and communities at the heart of everything they do, with safety as their first priority. I have approved the basis of a new relationship between Transport for Wales, Keolis and Amey which will be made up of three key components:

• From February 2021, the delivery of day to day rail services will be the responsibility of a new publicly-owned subsidiary of Transport for Wales, allowing government to have an even greater role in the delivery of rail services in Wales and the borders, reflective of the new commercial realities of the post Covid-19 environment. With huge uncertainty over passenger revenue, this provides us with the most stable financial base to manage rail services as we emerge from the pandemic.
• Infrastructure management and transformation of the Welsh Government-owned Core Valley Lines will continue to be delivered under the current contract. This will provide stability for the programme to ensure effective delivery of the south Wales Metro transformation work which is already underway.
• A new partnership with Keolis and Amey, led by Transport for Wales, will be developed, which will allow the people of Wales to continue to draw on the international experience and expertise of these partners to help TfW to deliver important commitments such as integrated ticketing, on demand transport systems, cross modal design and delivery, in addition to the ongoing integration of light and heavy rail.

This model will continue to help deliver our vision for a high quality rail service through effective vertical integration of track and train, building on the work already achieved through the transfer of the central Valleys Lines earlier this year.

 

[tomwills98]

What's it likely to mean for the day to day running and current projects?
Will more money be made available to speed up the 769/230 projects? I imagine the WG have been quite frustrated with the whole situation with not much control over it.
Will there be job cuts given that there is a duplication of roles now between RS and Gov? What will happen to HQ in Cardiff, everyone shipped off to Ponty?

It always seems to be a good close working relationship between KA and WG, probably with KA being the puppet and WG pulling the strings. By the sounds of various articles WG have always wanted it this way anyway and have now found a way to get it.

I don't imagine much will change for the customer, and it's too early for info on job restructure and funding reallocations.
Going to Ponty is a requirement of the grant agreement and as St Mary's House is going, we'd be working in a tent. St Patrick's should be staying for the foreseeable