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Will the railway be reclassified?

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Should the railways remain in the private sector? Or are they, effectively, already nationalised after the government’s emergency measures taken as part of its response to Covid-19?

Now the Office for National Statistics has joined the debate on the future of railway operations.

In a statement on its website, the ONS commented: “In response to the coronavirus outbreak and the subsequent introduction of movement restrictions, the government announced emergency measures to ensure that the railways continued to operate in the circumstances of dramatically falling passenger numbers.

“Train operators with government franchise agreements had the opportunity to ‘temporarily transition’ onto Emergency Measures Agreements (EMAs), under which the normal financial franchise mechanisms were suspended (initially for six months), transferring all revenue and cost risk to the Government. The train operators then continued to run day-to-day services for a small pre-determined management fee. Alongside transferring the financial risk to government, EMAs also imposed some obligations on the private train operating companies, in what is already a highly regulated industry.

“The ONS is therefore assessing if these new procedures should affect the statistical classification of the train operating companies within the UK national accounts. The result of the review will be announced as soon as possible.”

Two railway ‘franchises’, Northern and LNER, are already run by the Department for Transport. The remaining train operators, unsurprisingly, want to remain in the private sector, although perhaps under a different set of rules.

Paul Plummer, chief executive of the Rail Delivery Group, which represents train operators, said: “The prospect of reclassification underscores the need for a fundamental reset of the relationship between the public and private sectors in rail, something we have long been calling for and which the Williams review, yet to report, was set up to deliver.

“Government has an opportunity to accelerate the drive to a renewed system as it considers what replaces EMAs, which were put in place in as a short-term response to the pandemic, when they end in September. To ensure passenger numbers recover as quickly as possible, which is good for taxpayers, the economy and the environment, new contracts must lock in incentives for the private sector to grow revenue and run the railway safely and efficiently, while also enabling further reform.”

The trade unions, however, want the railways to be renationalised as soon as possible, and they see the ONS statement as a step in this direction.

Manuel Cortes, general secretary of the TSSA, said: “The government must end the charade of trying to say this is not happening. Instead Ministers should tell the truth and act forcefully to defend the interests of our taxpayers by running these services directly through a wholly owned subsidiary.

“There is no room amid the Covid chaos to continue with any pretence that lining the pockets of private operators is acceptable. The era of privatisation is well and truly over.”

The RMT had a similar message. “The charade of rail privatisation should end and the government should now formalise the inevitable and bring the whole lot into official public ownership and start planning for the future of a publicly owned railway that will be essential to our economic and strategic wellbeing post COVID-19,” said senior assistant general secretary Mick Lynch.

“Rather than risking the chaos of further franchise collapses, and with the taxpayer already paying for services, underwriting debt and wasting cash underpinning private operators profits, there has never been a better opportunity to ditch the fragmentation and waste of franchising and bring the railway officially into full public ownership.”