DfT has “no idea what to do”, say top railway insiders

Strategic indecision and a complete leadership vacuum have paralysed Government and Department for Transport railway strategy.

“Ministers don’t know what to do,” said a senior RAIL source close to the discussions.

“That is the real story at the moment. I wouldn’t credit them with having a plan. They don’t have one.

“The Government is in a pickle. Full stop. There’s not a lot of leadership. In that context, you can see why train operations are all a bit up in the air.”

DfT officials have actually started talking to train operating companies (TOCs) about how to fund passenger services as the railway emerges from the Coronavirus pandemic. But there is no proposed strategic framework - or even agreed thinking - on which tactical plans can be constructed.

On the one hand, Government has no idea what to do next. On the other, an aggrieved (and very powerful) Treasury stands determined not to be ‘bounced’ into a hastily conceived solution, as it believes happened with the rapidly conceived and immediately implemented Emergency Measures Agreements (EMAs) at the start of lockdown.

Rail Minister Chris Heaton-Harris says only that “work is under way within Government to determine the most effective approach once this six-month period ends”.

Operators believe there must be a 12 to 18-month extension of the current six-month EMAs, which expire in September.

They are receiving management fees equivalent to a 2% margin on pre-March 2020 operating costs. Passenger numbers are still no more than 20% of the level before lockdown. If train operators returned to the previous way of running franchises, all would fail within days.

The railway costs around £14 billion a year to operate. In 2018-19, £10.4bn came from fares and most of the remainder from taxpayers. This year revenue could be as low as £2bn. Government has thus far approved £3.5bn of funding to maintain the temporary measures.

“EMAs expire soon,” a senior industry source told RAIL, on condition of anonymity.

“The Treasury felt ‘done over’ with them last time round. They will be all over the next steps. There is a humungous amount of work to be done on those and getting anywhere close in three months would be miraculous.”

• For the full EXCLUSIVE story, read RAIL 908, published on July 1, and available digitally now.