Nationalisation by default?

[py_megapixel]

With the huge effect the pandemic has had on the railways, franchisees are struggling, and probably will be for some time.

So one would assume that bidding for rail franchises is incredibly unattractive. I personally wouldn't be surprised if we get to a point where simply nobody will bid for some or all franchises

So what can the DfT do? Simply write franchise agreements which pay private operators huge premiums, to make them artificially attractive? Surely not, because that displeases both sides of the debate. Those who are more right-leaning, and who might ordinarily support privatisation, are annoyed because public funds are being wasted, and those who are more left-leaning, and who might ordinarily support nationalisation, are annoyed for the same reason, but additionally because the railways are still nominally private.

So what does that leave? All I can think of, other than just the trains not running, is that DfT takes control of the service - presumably via the OLR - in the same way that they have when franchises have defaulted or performed poorly. In the case of the VTEC and ARN these arrangements seem to be continuing indefinitely.

Spoiler: Acronyms used in this paragraph

DfT - Department for Transport
OLR - Operator of Last Resort
VTEC - Virgin Trains East Coast
ARN - Arriva Rail North

So it seems entirely possible that we could end up in a situation where the railways slip into nationalisation through franchises being gradually taken out of private hands, not as part of any sort of plan to nationalise the railways, but accidentally, as a result of there being no other option.

Now just to be clear - although I generally lean slightly towards the nationalisation side of the debate, I don't want this to happen!!! If it did, then the railways will probably be run on the basis of "no growth" in a cost-cut fashion, indefinitely. But I still think it could happen.

 

[swt_passenger]

Gradual change to management contracts, already happening, and as seen and discussed in numerous other existing threads?

 

[JonathanH]

This sets out the government's thoughts on the matter (which as swt_passenger notes is the subject of a number of other threads):

Rail franchising reaches the terminus as a new railway takes shape 

New system will end franchising model and deliver a simpler, effective model through high performance targets and simplified journeys.

www.gov.uk

Today’s announcement, which has his full support, is the prelude to a white paper which will respond to his recommendations. The white paper will be published when the course of the pandemic becomes clearer.

The Transport Secretary, Grant Shapps, said:
* The model of privatisation adopted 25 years ago has seen significant rises in passenger numbers, but this pandemic has proven that it is no longer working.
* Our new deal for rail demands more for passengers. It will simplify people’s journeys, ending the uncertainty and confusion about whether you are using the right ticket or the right train company.
* It will keep the best elements of the private sector, including competition and investment, that have helped to drive growth, but deliver strategic direction, leadership and accountability.
* Passengers will have reliable, safe services on a network totally built around them. It is time to get Britain back on track.

Until passenger numbers return, significant taxpayer support will still be needed, including under the transitional contracts announced today. But the reforms will enable substantial medium and longer-term savings for taxpayers.

Keith Williams, chair of the Williams Review, said:

"These new agreements represent the end of the complicated franchising system, demand more from the expertise and skills of the private sector, and ensure passengers return to a more punctual and co-ordinated railway.

I am ensuring the recommendations I propose are fit for a post-COVID world, but these contracts kickstart a process of reform that will ensure our railways are entirely focused on the passenger, with a simpler, more effective system that works in their best interest."

All suggests that the government sign contracts with the operators to run a service largely specified by the DfT. Whether there is sufficient interest from those operators is what we will have to wait and see.