06:00 25 August 2022
The Dutch national rail company has sold its Abellio UK business to its UK management – including its 60% stake in Greater Anglia – so what difference will it make for passengers and staff?
For some, the simple answer is not at all – but there are also fears that it could increase uncertainty at a time when the whole industry is in transition.
Changes are occurring as a result of the government takeover of the rail industry. Whoever runs the trains themselves, whether it’s the Dutch company Abellio or the UK takeover team, will have to do exactly as they are told by the Department for Transport or, potentially after 2024, the new body Great British Railways.
But rail expert and author Christian Wolmar warned there were still huge uncertainties surrounding the industry.
He said: “Legislation to put Great British Railways on the statute books has yet to start going through Parliament. We will probably have a new Transport Secretary next month. What will happen then? ?
“The deal to set up a company to take over Abellio UK looks like a bit of a rush job. I don’t think anyone can say for sure what will happen next.”
Since the pandemic and the dramatic drop in rail passenger numbers in 2020, the government has poured billions into the rail industry. His prize has been to take over all the major decisions of the private companies that operate the trains.
The government sets almost all tariffs. He is heavily involved in timetable making – he decides which trains run, when and where.
The crucial thing when it comes to Dutch Railways and the management buyout team is fare allocation.
Until 2020, the government subsidized loss-making services and levied a charge on profitable lines – mainly commuter routes – operated by rail franchises.
The government regulated most fares – set an upper limit – but the companies decided whether or not to go up to that limit, which they usually did.
Now the rates are set by the government. It tells railway companies what they should charge passengers. There is no margin
Before 2020, franchisees had to pay them (or get the subsidy) but they kept the rest of the revenue from the fares and if there were any profits, they could keep them to invest or return to shareholders.
This pattern was broken with the loss of passengers, especially commuters, during the Covid shutdowns. Passenger numbers may now be back to between 70% and 80% of pre-pandemic levels, but commuters have not returned and there would still be huge losses if services were operated on the old model.
Now the government takes all the fares and pays the companies a flat fee to run the trains – it’s the same whether the train is full or empty.
But the government has set margins very tightly – income is guaranteed but the opportunity to make substantial profits running a railroad is gone.
A rail insider said: “The government is taking all the risk, but the potential rewards for the rail companies are very small indeed.”
He felt the deal would make very little difference to passengers and staff – it was government action that mattered rather than company ownership with a management contract.
Mr Wolmar agreed the government was still calling all the shots in the rail industry – but felt it gave no additional stability to the railways which are still in recovery mode and at the mercy of politicians whose attention can be concentrated elsewhere.
He said: “We just don’t know what’s going to happen next or what importance the next Prime Minister will give to rail.
“The government could block this deal. Everything could collapse. The whole industry needs stability.”
Will the new owner improve the trains?