Move marks effective ‘renationalisation’ of the industry

Although the number of people travelling is increasing, many stations and services remain quiet (pictured: London Waterloo)

Train operator debt could be moved onto the public sector balance sheet as a result of the emergency funding measures for rail franchises that were introduced on March 23.

It follows the announcement by the Office of National Statistics this week that it has launched a probe that will investigate whether this debt should remain within the private sector.

Commentators have described the move as effectively the “renationalisation” of the industry.

The ONS said its decision was prompted by the government agreeing the six-month funding package that effectively underwrote any losses. It has seen all revenue and cost risk pass to the government. Train operators continue to run services in return for a “small pre-determined management fee”.

“Alongside transferring the financial risk to government, the Emergency Measures Agreements also imposed some obligations on the private train operating companies, in what is already a highly regulated industry,” added the ONS.

“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.”

One rail industry executive told the Financial Times it would be a “danger” if the move was “dismissed as a technicality”.

“Rail is at a crossroads. The decisions that are taken in the next few weeks will set the direction of travel for the industry for the next decade in terms of the wider reform agenda,” he said.

“What actually needs to be happening right now is the government boldly and confidently saying this is the direction of travel for a renewed public/private partnership.”

It is understood that the government is planning to announce a further 12-18 month funding package for the industry in response to the coronavirus pandemic which has decimated passenger numbers.

“If it is rumbling on and there is a chronic fall in customers then there will need to be help to stabilise the system,” said one official.

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