The UK government has announced this morning that it will support the passenger network for at least the next 18 months. This means that it is officially renationalising the railways, doing away with the franchising system that has been in force since the early 1990s. Which implications does this have for freight?
The UK passenger network, which has been running as a network without passengers for almost a year, has had its future secured by the government. Westminster this morning announced that current emergency measures would be extended for at least the next year and a half. That means that passenger operating companies are placed into a concession-style arrangement with immediate effect. Contracts were, according to government sources, signed over the weekend.
Passenger vs freight operations
The business case for passenger train operators looks much more rosy today than it has done for many years. Every operator in England can now breathe easily, knowing that potential losses are written off, and they have security of tenure until Spring 2022. They will have to forego any profit, but it is unlikely that any part of the network would be in the black before then. There is some dissent from train operators who say the concession model works well in urban, metro situations, but is not flexible enough for mixed traffic, long haul operations.
For freight operators the position is very different. Apart from the potential for government-backed contracts – such as HS2 construction, there is no direct support for the sector. Freight has been standing on its own feet throughout the pandemic. Margins are small in the sector, but the overall picture is solvent.
The representative body for the industry, the Rail Freight Group (RFG) has reacted to the announcement. They have today called for full recognition of the rail freight sector in government’s planned reforms for UK railways. The RFG says the government has signalled further changes in future through, what the RFG calls ‘a process of reform that will ensure our railways are entirely focused on the passenger.’