Just over 24 years after it was introduced in 1996, rail franchising is to be scrapped, the government has announced.

The franchise operators aren’t being scrapped — yet — but will continue to operate under a management contract similar to that pioneered by TfL with the London Overground.

The franchises were effectively suspended already when the government took action at the start of the pandemic lockdown, pumping some £3.5 billion into the railways to keep them running as passenger numbers collapsed.

From this morning, franchising is replaced with Emergency Recovery Management Agreements (ERMAs) — which set targets and performance requirements on the former franchise operators, in exchange for a fee for running the railways. Management fees will now be a maximum of 1.5% of the cost base of the franchise before the pandemic began. The new contracts also require operators to co-ordinate better with each other and drive down the railways’ capital costs.

Under those agreements, the train operators have until mid-December 2020 to agree with the DfT whether they will terminate their pre-existing franchise agreements, although if they refuse, from January they also lose their pandemic financial support, so in reality, they have no choice in the matter and just need to agree on the financials.

A major reform of the railways had been expected but was expected to be contingent on the long-delayed Williams report into the railways, which is now due to be published after the pandemic eases. The ERMAs are a transitional stage to whatever the new system will be when the Williams report is published. The statement from the Department for Transport confirmed that the new arrangement has Keith Williams support, and is the prelude to a white paper which will respond to his recommendations.

The DfT has also stated it intends to begin discussions with the train operators to transition to new, directly-awarded contracts for the longer term, which would come into effect at the end of the ERMAs.

Based on early statements:

Govia Thameslink Railway (GTR) has confirmed that it’s contract will continue to run until September 2021, when the franchise was already due to be put up for renewal.

Southeastern, will continue operating under its EMA until October 2021, or March 2022 if extended.

First Group, with operates the South Western Railway franchise said that its agreement runs until the end of March 2021.

The Emergency Measures Agreement for Great Western Railway (GWR) had already been extended to at least the end of June 2021.

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7 comments on “Rail franchising scrapped after 24 years
  1. It’s always worth noting that LOROL was a much better management contract than Arriva Rail London turned out to be. LOROL had cleaner trains and didn’t skip stops, ever.

    Potentially, this is great news for the passengers. Having the TOCs concentrate on running the trains and being nice to passengers and letting someone else worry about revenue and revenue protection.

    Now all we need is the digital signalling systems…

  2. Melvyn says:

    It seems despite all tge publicity re TFL financial position talks have been taking place between Deputy Transport Mayor Heidi Alexander and DFT regarding transfer of GN services out of Moorgate to TFL something this announcement is likely to work towards .

    There are other services like South Eastern services in London which could transfer to TFL and Mayoral control .

    This announcement surely means a body similar to British Rail needs to be set up with management control outside the control of DFT .

  3. Andrew Jarman says:

    Of course some franchisees could just elect to walk away for good?

    • ianvisits says:

      That’s the point the lawyers get involved and the franchises end up with the double whammy of costs and never being invited to bid again.

  4. Andy McDougall says:

    Almost certainly good news. Let’s just hope the successor arrangements don’t involve the know-nothing elements within DfT trying to micromanage our railways.

  5. david s says:

    I have said for many years that the wrong franchise model was being used for the railways. The amount of money wasted on re-branding a franchise or re-painting trains after they have been moved is crazy. It is time to have one standard livery, with perhaps a small operator sticker for the company running that line. The same way as TfL demand all red buses.

  6. Andrew Gwilt says:

    I think it’s a good idea.

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