Report claims possible rethink over National Rail Contracts

The government is said to be poised to reintroduce a degree of commercial freedom in National Rail Contracts, with the intention of allowing operators to increase profits.

It is reported that the owners of operators are urging the government to loosen the tight restrictions of the present contracts. These were introduced in the wake of the Covid-19 pandemic which led to the conventional franchises being suspended in March 2020 and then cancelled in September.

Emergency agreements replaced the franchises, in which the Department for Transport collected the revenues and paid the operators’ costs, plus a management fee. They have now been replaced by new-style National Rail Contracts, which also involve a management fee and very little commercial risk for the operators.

The Financial Times has reported that talks over changing the terms of these contracts have already started, amid concerns that passenger numbers, although rising, have not yet returned to pre-Covid levels on some routes. At the same time several operators, including nationalised LNER, say their passenger levels are now higher than they were in 2019.

LNER is one of four renationalised operators in England. The others are Northern, Southeastern and TransPennine Express. Caledonian Sleeper, ScotRail and Transport for Wales have also been taken over by their respective devolved governments.

The need to attract more passengers and increase earnings was emphasised by transport secretary Mark Harper last week. He told the Commons Transport Committee: ‘There are only two ways you can make the rail industry sustainable. You either drive up revenue or you reduce costs. And taking costs out means reducing services.’

Meanwhile, plans to create a new ‘guiding mind’ called Great British Railways, which would have its headquarters in Derby and control passenger contracts as well as the infrastructure, are apparently suspended for now. The government has not allocated any Parliamentary time to debating an Act of Parliament authorising GBR this side of the forthcoming General Election.

Back to News

Related Articles