As predicted in our last blog, it is now clear that the government has no idea what to do when the ‘Emergency Measures Agreements’ run out in September.
After news hit the press that train companies are seeking a 12-18 month extension to their bailout, Grant Shapps was able to bury the story at last week’s Transport Select Committee by ‘strongly hinting’ that the Williams Review will recommend a concession model later in the year.
But since the TSC session, anonymous ‘rail industry insiders’ have been going to the press in droves, claiming that the government is actually in contractual chaos over the ‘Emergency Measures Agreements’. The Railway Gazette had previously reported that there were concerns over a breach of competition law, and their latest article suggests the government is ‘stumbling their way’ towards a concession model, with multiple variations of the EMAs under discussion. It’s also now clear that the option of public ownership via the ‘Operator of Last Resort’ is on the table, with South Western Railway most likely to be next in line for renationalisation, and Transpennine Express and Transport for Wales also reportedly under discussion.
A failure of scrutiny from the Transport Select Committee
Last week, Grant Shapps managed to evade scrutiny on all these issues after a disappointing level of questioning from the Transport Select Committee, which failed to ask about the option of public ownership via the ‘Operator of Last Resort’. With the rail industry well-known to be in crisis over the EMAs, and multiple train companies facing financial collapse, the TSC should have asked about the preparedness of the government’s back up option.
The Transport Select Committee also missed their chance to challenge Shapps on his non-credible promise of the Williams Rail Review, especially his claim “had it not been for coronavirus we would have released a White Paper already.” In fact, the Williams Review was already at a stalemate directly before the lockdown in March. The Treasury had refused to agree funding for William’s plans, due to concerns that they would pose too big a risk to the taxpayer. No money for rail or fare reform had been included in the budget, and on March 14th, the Times reported: ‘it is feared that any national reform of the system may now be years away.‘
This missed opportunity for scrutiny has allowed Grant Shapps to hide once again behind the promise of the ‘Williams Rail Review’ which he now ‘strongly hints’ will recommend a concession model. But the truth is that the review had long since hit the buffers. Now, rumours persist in the industry press that the Williams Review will never be released at all.
The future is uncertain – we need flexibility and accountability
As passengers, we fear an uncertain future under extended ‘Emergency Measures Agreements’, which lock us into a dysfunctional and fragmented structure for the long-term. Under EMAs, this dysfunction is likely to become even worse. New Parliamentary questions from Karen Buck MP indicate that the contracts will be riddled with perverse incentives – train companies are required to cut costs and raise revenue wherever they can, including rail fares.
If the EMAs stay in place, we’ll be sure to see an overly bureaucratic process, with no single point of accountability. Government and rail industry squabbling over contracts, finances and liability are sure to delay any serious rail reform for years. From the smallest commercial or operational issue to the UK’s ultimate transport policy, the railway will be riddled with arguments and perverse incentives of exactly the kind that had ruined passenger trust long before the corona pandemic.
As a case in point, we spent the first two months of the EMAs battling simply to get fair refunds for passengers, a promise made by Grant Shapps on which he later reneged. Controversy over the lack of a pro-rata refund for season ticket holders went on for two months before he was finally required to answer for his initial promise that ‘no passengers would be left out of pocket”. Though the Transport Select Committee highlighted there was only a ‘relatively small amount of money’ at stake, Shapps refused the request in May. He said: “changing the season ticket refund policy now to offer full pro-rata refunds or to allow passengers to pause their tickets would have significant additional cost implications for the rail industry.”
Public health and passenger trust are the first priorities
From 4th July, social distancing will be reduced to 1 metre. There is still no clarity on how this will apply to rail, but even under 1 metre social distancing, the intended full rail service would be limited to 21% to 35% capacity. A leaked briefing from the Department for Transport has warned there is ‘a significant risk that demand will outstrip capacity’.
It’s clear that this situation will require careful and agile management on an ongoing basis, and it’s vital that this is made as accountable as possible. Economic recovery will rely on a flexible, co-ordinated and integrated response to the changing needs of public health and passenger numbers. This needs to happen as part of an integrated transport policy run in the clear and overriding public interest. Accountability must be clearly located with the government and Public Health England/SAGE advice, and without the additional baggage of the train companies’ precarious finances.
The government continues to evade transparency just when action on our failed franchise system is so badly overdue. Meanwhile, the rail industry continues to lobby furiously for a reduction in social distancing, with their long-term future entirely dependent on how soon passenger numbers become profitable again. It’s no way to run a railway – especially at the time of a public health crisis.
A real opportunity to ‘build back better.’
There is one reason to take heart from Grant Shapps’ statements at the Transport Select Committee last week. He did commit to the fact that it is now much easier to begin the process of rail reform than before, stating: ‘There is now the opportunity to move things along a little bit faster.’ It’s vital that the government now acts decisively on the railway, which needs proper funding, structural reform, and an integrated long-term strategy fit for the twenty-first century.
Public ownership presents the best solution to rid the system of perverse incentives at a time when a clear, coherent transport policy is so urgently needed. It would not only save public money, it would also be the quickest way to create cost-efficiency in the system, in turn securing better commitments from the Treasury on railway funding. Making the government fully responsible for the railway would force them to finally take action on rail reform when they clearly have the means and opportunity to do so.
We have no more faith in the Williams Rail Review and believe that public ownership is the best way to expedite the ‘twenty first century railway’ we have so long been promised. Nearly twenty-thousand people have now emailed Rishi Sunak and Grant Shapps urging them to take the railway back into public ownership, part of our campaign collaboration with Bring Back British Rail and We Own It.