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finance

What next for the UK's deserted public transport network?


Since the fall of Mussolini, few politicians can have declared quite so unselfconsciously as Grant Shapps that: “I just want to make the trains run on time.” But, as the transport secretary ruefully told MPs this week: “I didn’t expect to see that happen by having a fraction of people using it.”

More than 98% of services ran punctually in April, underscoring the old rail industry joke that it would all work fine if it wasn’t for the passengers. Yet the trains are only continuing to run due to an extraordinary level of subsidy after coronavirus forced most of the population to stay home.

Only 4% of the usual rail passengers travelled at the start of lockdown – rising now to a little under 10% as restrictions ease. In March the government was faced with the inevitable collapse of franchises, where train operators’ profit or loss depends on the passenger fares they attract. That business model has been crippled by the pandemic. The government implemented emergency measures agreements (EMAs), effectively nationalising and paying for the entire cost of the railway, while taking in a few crumbs of revenue.


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UK rail requires at least £4bn in annual subsidy in normal times, when fares bring in almost £1bn per month. But fare income has now shrunk dramatically. Each passenger journey, on average, has cost the public purse around £100 since lockdown. The question of what value the Treasury is getting for its money will increasingly need answering should it continue to advise people to avoid public transport because of Covid-19.

As a senior government official in rail, who asked to be unnamed, put it: “Either the government picks up the difference or things stop running.” What will happen? “I don’t know. It’s an awful situation.”

Right now rail is halfway through the EMAs; in three months these will be replaced, probably by further transitional agreements. The consensus appears to be that nothing other than a similar management contract, with the government underwriting all revenue risk, will keep the privately owned franchise operators on board. One rail director, again demanding anonymity, said anything like a return to a pre-Covid-19 franchise would lead to companies simply handing back the keys.

For now, many private firms have been pleasantly surprised by the bailouts – bus operators as much as rail companies. A different but equally generous scheme has guaranteed the bus operators’ income on a pre-lockdown scale, with £651m from the state in two tranches till August – in some cases, paying firms for services they are not even running. Local authorities continue to contribute pre-crisis levels of subsidy for school buses and concessionary travel – even though the older Freedom Pass holders are the most likely to have been shielding at home.

A third sector, urban transport – such as the tube, trams and light rail – has been the Cinderella of bailouts, receiving a comparatively belated, begrudging survival package, imposing harsher conditions, on London in particular, in return for Treasury cash.

And the problem is not simply financial – unsustainable and unpalatable though the sums might be – should the current situation be prolonged. As DfT figures show, road traffic is swiftly rising: the use of motor vehicles has gone from 35% of normal levels in April to 77% on the last recorded weekday, 22 June.

Congestion is likely to soar, many fear, with all its attendant costs, not least air pollution, whose serious health consequences rival – and appear to exacerbate – those of Covid-19.

Shapps said it was “heartbreaking to advise passengers not to use public transport”, but adds: “We want to protect lives and livelihoods and we cannot recommend people go back to using it.”

Others disagree, including David Brown, the chief executive of Go-Ahead Group. The business runs two of the UK’s biggest rail commuter franchises in Thameslink and Southeastern and around one in six buses nationwide.

He adds: “We understand the cautiousness of politicians but we are very worried that negative public transport messaging will take a long time to recover from. At some point that really has to change, otherwise we will not get people back.”

Although Shapps stressed that the alternatives should be first walking and cycling and then car, there are signs the initial boom in “active travel” could prove fragile. Weekend cycling figures have reached three times normal levels, while retailers are selling out of bikes and repair shops have long waiting lists. But weekday figures are already sliding from a lockdown peak as cars return.

Lilian Greenwood, a Labour member of the transport select committee, says: “This is a huge opportunity to get more people walking and cycling – but if traffic levels increase at the rate they are, then all those people getting on their bikes are going to jump off them again because they don’t feel safe.”

Even in a best-case scenario, where the pandemic recedes and the health fears and need for social distancing disappear, the societal changes under Covid-19 might persist: more home-working, less commuting.

Greenwood adds: “The real risk is that people are going to be put off using public transport long-term because they don’t feel safe – it’s really worrying for the future of public transport and the wider consequences.”

In the last decade rail franchises were awarded, along with investment in infrastructure and rolling stock, based on assumptions of growing passenger numbers that now seem more skewed than ever. Even a small drop in numbers could make many services commercially unviable.

Brown proposes one remedy: “We have to start doing traffic demand management, and reducing the cost of the peak.” Trains that are jammed at peak times run empty or sit idle during the day; staggering the start times of workplaces could allow more commuters to travel at lower cost.

Reshaped services can only cut costs so much – but raising fares will further deter passengers. Rail was already overdue reform. Coronavirus may indeed, Shapps indicated, have sped it along the track towards the concession model – where operators are paid a fixed fee – expected to be backed by a review of the rail system overseen by former British Airways boss Keith Williams. Or indeed to the full nationalisation envisaged by Labour, adding franchise operation to the tracks and stations controlled by state-owned Network Rail. A three-year extension to the contract operated by state-run LNER on the east coast line, announced on Friday, perhaps hints at the slim effective difference.

Either way, funding will be an issue. Brown says: “It doesn’t matter what system, or country, we operate in: we need people back on public transport.”



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