“The UK rail system has its moments, and people like to criticise it. The market works reasonably well, and you don’t want to mess with that too much.
“We want to have plenty of people in the market place. To have only two bidders for a rail franchise is not good. We need European bidders in this market.
“The first test will be the financing of new trains for East Anglia. £1.5bn is a lot to raise. I think the money is there and I think it will get signed.”
Chris Jackson added: “People will continue to invest in UK rail provided there are not wholesale changes to the liberalised market.”
Mark Phillips replied that the Department for Transport would continue to seek the lowest cost operations, and would therefore not wish to pencil in British bidders to the exclusion of others.
Tammy Samuel: “The system ain’t broke. Perhaps the Government should get on with the really important issues around Brexit and just leave transport to get on with it.”
“There is an interesting comparison with the bus industry,” commented Stephen Joseph. “Right now the Government is working on the Bus Services Bill, which allows for extension of franchising outside London. The British companies are defending their territories. Some of the foreign state-owned operations in rail are starting to look at the bus networks. If there is decent competition they will bid.
“Go-Ahead announced £100m profits, and nearly all of that came from buses. These operators are marking large returns. A franchising operation giving lower returns but fixed over longer periods will be attractive to new entrants. It could be more attractive to state-owned operations from abroad than to companies like Stagecoach. So I would play down the idea that non-UK bidders could get cold feet.”
CONCLUSIONS
During the referendum campaign, the transport industry almost universally supported remaining within the EU.
Many of the biggest train operating groups and a majority of companies in the railway supply chain are international organisations trading globally. Some are based in the UK. Others have substantial UK operations but have their origins elsewhere.
The only substantial transport sector opposition to the Remain camp came from the RMT union, which argued that the EU would prohibit the return of the whole industry to public ownership. Most unions and the TUC favoured Remain because of EU protection for workers’ rights, including the Working Time Directive and safety regulations.
So there was an expectation ahead of the panel meeting that Brexit would spread unease and uncertainty, leading to a reluctance to invest. At the very least, there would be a slowing down in the rate of growth in rail passenger numbers.
