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.